"Why is crypto crashing" has been one of the major questions trending recently, and in case you haven't been following the crypto news, the recent crypto crash has resulted in losing over $60 billion.
And despite all that, I still believe that if properly managed, crypto can be a good addition to your investment portfolio, and you'll know why if you keep on reading.
With the crypto markets going a wild ride lately, the million-dollar (or million-bitcoin in this case) question is: why is crypto crashing, and is the crypto market still worth the investment?
Since you have landed on this page, dear reader, the chances are that you're interested to know the answers to why is crypto crashing, and this is exactly what you'll find in this article.
Why Is Crypto Crashing?
Crypto crashing is not something new in this industry, and you can learn more about the industry's biggest dip in this article.
Crypto crashing cannot be linked to one reason only because there are several factors, such as rising inflation, geopolitical crises, shifting US monetary policy, and the Terra scenario, that have taken their toll on the entire crypto market.
To make matters even more complicated, in 2022 the correlation between crypto and stock markets reached an all-time high.
If you were keeping up with the traditional finance world, you'd know that even the big tech firms have been suffering from the factors mentioned earlier.
Is it still worth the investment?
Institutional Smart Money is Still Tapping Into Crypto
Plain and simple, the massive eye-watering price swings didn’t stop institutional adoption from continuing to grow slowly.
As major financial institutions including Goldman Sachs, J.P. Morgan, and Wells Fargo, as well as major corporations such as PayPal, Meta Platforms, Walmart, Twitter, and others, are all lining up to find a way to monetize the crypto technologies.
Earlier this week alone, Mastercard CEO Michael Miebach forecasts that SWIFT, the worldwide cross-border settlement platform, will most likely cease to exist in five years, SWIFT explores CBDCs, and Binance has partnered with Majid Al Futtaim to offer crypto payments in the UAE.
So to put it in Lehman's terms, smart money sees this “crypto winter” as a good buying opportunity.
Well, if big corps are pouring money into it, higher risk can result in an even greater reward, from my perspective, a smart person should buy carefully as crypto is not a “get-rich-quick” thing, it’s more of for the long haul type of investment.
Is Buy the Dip a Good Advice?
So according to Forbes, at $28,800, bitcoin is still nearly 175 percent higher than it was a year and a half ago, compared to the S&P 500's 21 percent gain over the same time period. Usually, such downturns can present a smart investment move as bitcoin is on sale.
However, some may not agree and give in to FUD (Fear, Uncertainty, Doubt) although, for many Bitcoin HODLers, this is just another day in the office.
Although charts might look scary and alarming in red, to me personally, waking up to cheaper bitcoin is always wonderful depending of course on your tolerance for risk and turbulence.
According to a study conducted by blockchain analytics startup Glassnode, 60 percent of Bitcoin investments will be profitable at a price of $33,600 per unit.
Given the adage “buy the dip” this sounds like a good deal! While is correction is not as severe as the one the market witnessed back in 2017-18, BTC has lost 50% of its value in the last 6 months.
if you compare its price over a 5-year period, you’ll find that BTC has increased by over 1,300%, so BTC is still up! Considering “If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes” a piece of investment advice from Warren Buffet, it's almost a plausible scenario that maybe a little wise risk can pay off.
Final Thoughts
The bottom line is "In bull markets, you make opportunities, while in bear markets, you make money,". Even when pessimism reigns supreme in down markets, we believe that both bull and bear markets provide unique investing possibilities.
While I believe volatility is a feature of the nascent industry, realistically, not every fall is a good purchasing opportunity, thus we recommend doing your own daily research on the crypto market to discover the ideal buying opportunity.
By Areej Salem
The views/opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Al Bawaba Business or its affiliates.
