Thursday, September 29, 2022

Cryptocurrency Market Crashed Again, Whether Investors Should Get Worried Or Buy Dip?

Bitcoin, yet again falls below 50 percent from its all-time high value. Individuals or businesses, who started investing after April 14 in the market, are now getting worried about their investment portfolio. 

On one hand, the short-term investors have started the panic sale of their assets, while on the other hand, the long-term investors or the market experts are enjoying this correction period.

Cathie Wood, the CEO of Ark Invest, and Michael Saylor, the CEO of Microstrategy, grabbed this opportunity to buy $500,000 and $10 million worth of cryptos, respectively. They think of cryptocurrency as a long-term investment, a digital asset that could provide them high returns in two to three years. 

As per Nischal Shetty, the CEO of WazirX, “This dip will mature the markets more and ensure that people are aware there will be downtrends as well as uptrends in the sector and one should invest with a long-term view rather than for making a quick buck.” 

Personally, I think, an individual should be ready to give his/her two to three years to this industry in order to earn profit from it. Not financial advice from my side, but if the individuals see crypto as a long-term investment, rather a short-term investment, in coming years they will get high returns for that. 

Also, the panic sale during this time is the worst idea because in the future, when the market will start growing, the individuals might have to start over.

Why Crypto Market Fall Suddenly?

In just one month, after a record high performance in the market, Bitcoin started declining and so did the other cryptocurrencies. The market capitalization of cryptocurrency, which on April 14 reached around $2 trillion, slumped down over 50 percent to $1.46 trillion.

After hitting an all-time high in the market, Bitcoin value started fluctuating. But a few days later, when the CEO of Tesla, Elon Musk, tweeted that the electric car company would not accept the Bitcoin payment, the market started declining. 

The low trend was further followed by an announcement by the Chinese authority, where it restricted the banks from providing their services to the crypto-related activities in the country. 

It has happened many times in the crypto world that China banned crypto and doing FUD. But every time, after facing criticism, crypto bounces back.

These two incidents generated a feeling of Fear, Uncertainty and Doubt (FUD) among the investors. For many investors, especially the new one, the crypto volatility came as a shock. No one in the space expected that after performing well in the market for almost five years, Bitcoin will suddenly come down. However, compared to the price of last year, the value of Bitcoin is still 6x high in the market.

Once the world’s most eloquent paranoiac Thomas Pynchon said, “If they can get you asking the wrong questions, they don’t have to worry about the answers.” Being a FUDster means pushing negative rumors about cryptocurrency.

Is There Any Periodic Reason Behind This Fall?

This is not the first time the market has deteriorated. Earlier, also Bitcoin and other cryptocurrencies experienced the same cycle, and every time, it recovers. In fact, these kinds of dip help the market in the surge of the value and provide huge returns to the investors. 

“The large falls in valuations seen this week are, in one way, healthy as they enable the market to clear excess speculative positions and consolidate before its next phase of expansion,” said Anatoly Crachilov, while he points Bitcoin’s growth from the starting of the year to April 2021.

Crachilov has further specified, “We have seen this pattern time and again across multiple cycles and expect this to remain in place until the market matures and achieves a larger involvement of institutional capital.”

If you are a long-term investor you can safely ignore everything Musk tweeted or does about the blockchain tech/Bitcoin. After his last tweet fest about Dogecoin & Bitcoin, it’s clear he didn’t do his homework about the underlying technology and he is talking gibberish. All the market movements resulting from this are just short-term noise. But if you are a short-term trader … he will wreck you so you will never be able to buy Tesla 🙂

Gibberish, also called jibber-jabber or gobbledygook, is speech that is (or appears to be) nonsense. It may include speech sounds that are not actual words, or language games and specialized jargon that seems nonsensical to outsiders.

Right Time To Invest In Crypto

This is not financial advice but we believe the correction phase is the right time to invest in cryptocurrency. 

As per the market experts, the market experienced a similar kind of drop in the year 2013 and 2017 but it still managed to bounce back and recover. They further pointed out that in late-2017, Bitcoin reached its peak of around $20,000 but as the year passed, the digital asset lost 90 percent of its value. 

The market was fluctuating during that time, it somehow managed to gain a position but in 2020, it again crashed down. And by the end of the year, it recovered and reached its all-time high in April 2021.

The previous crashes are a great example which shows that whenever the crypto market falls down, it reaches the correction phase to bounce back and reach high.

Yassine Elmandjra, the blockchain and crypto-asset analyst at Ark Invest, believes the same. She has been part of the industry for a long time and has studied it thoroughly, therefore, Elmandjra claims that this recent fall will be a healthy correction for the market. 

“Crypto has had a breathtaking run over the past couple of quarters, so a strong pullback and consolidation now isn’t surprising—it’s what we’ve seen in all other previous bull markets,” said Pete Humiston, manager of Kraken Intelligence.

Conclusion

Though investors can’t fully be blamed for being skeptical regarding cryptocurrency, they still need to understand that investment requires research. There are very few individuals who study the market before investing their money into it. 

In recent times, most people got into the cryptocurrency industry because of fear of missing out (FOMO). They blindly follow the trend especially, Musk’s tweets and helped the whales in earning high returns. 

Not giving any financial advice, but despite following the trend of sell-off due to market crash, the investors should think of buying the dip at a lower cost, as in the future, it might offer them a high return.

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