By Samantha Yardley
Seasoned crypto investors and newbie coin collectors alike felt the pain of the first significant market correction of the year recently after cryptocurrencies enjoyed a COVID-induced boom as investors lost trust in traditional fiat currencies.
“Be fearful when others are greedy. Be greedy when others are fearful” Warren Buffett
However experienced one may be in the high-octane world of crypto investing, there’s no denying this fairly new and wholly unregulated market is extremely volatile and vulnerable to price manipulation from ‘big whale’ firms and propaganda campaigns from high-profile individuals like Elon Musk, who has the power to alter the marketplace beyond recognition with a single Tweet.
Crypto coins like Bitcoin are a digital decentralized currency that allows people to bypass banks and traditional government-issued payment systems. Financial analysts liken it to commodity investing, placing it on par with gold because it provides a hedge against inflation. With real-world applications beginning to embrace these alternative currencies; Ethereum being used as a payment means for NFTs (Non-fungible Tokens) and Cardano’s ADA recently signing a ground-breaking deal with Ethiopia to roll out the world’s largest blockchain deployment, there’s no denying cryptocurrencies have the very real ability to change the way we manage our wealth.
After a steady period of gains throughout the year, cryptocurrencies like Bitcoin enjoyed the perfect storm for growth in 2021, offering the perfect juxtaposition against a tumultuous fiat market, heavily influenced by a unique set of coronavirus-effected variables. Those with an existing portfolio reaped the financial rewards, whilst the attractive lure of get-rich-quick trends attracted inexperienced financiers looking to expand their investing repertoire.
By mid-April, Bitcoin hit an all-time high of $64,000, which represented a mind-blowing 450% increase in just six months. Fast forward to just one month later in mid-May and that price had plummeted to $30,000 sparking fear amongst the crypto community that led to mass sell-offs and even culminating in suicides as widespread panic took hold.
The crash stemmed from Tesla founder Elon Musk’s decision to suspend plans to let customers pay in Bitcoin, followed by his subsequent ambiguous media campaign regarding the company’s stance on their existing Bitcoin holdings. The propaganda drives spooked investors into a mass sell-off, which was then further exasperated by China’s decision to ban cryptocurrencies.
With any period of recession, you never lose until you sell, and shrewd investors are taking advantage of this unique set of circumstances to buy the dip and ‘HODL’ (Hold On For Dear Life) until the market recovers. Analysts describe these challenging times as a chance to shake out weak hands and although highly speculative, with Wall Street and asset managers starting to take notice of this dream-town potential for capital gains, there’s nothing to stop crypto skyrocketing back on its meteoric rise to the moon.
This is not financial advice