The dominant cryptocurrency market has dropped approximately 70% from its November highs. Capital markets are now under severe pressure this year as a consequence of the Federal Reserve’s actions and the prospects of a recession, and cryptocurrencies have been one of the most challenged asset classes.
The crypto market appears to be crashing as Bitcoin (BTC) dropped its value below $33,000 for the first time in almost a year, along with Ethereum (ETH) and Cardano (ADA), another cryptocurrency also plummeting and running down through the bear market.
The long-term investor always wins
On Thursday, Sumit Gupta, Co-founder, and CEO of CoinDCX, recommended investors hold on to their existing investments for the long term if they are confident. Planning to sell out of fear and terror is not a smart option according to him. He explained that these days, the financial markets are acting aggressively. It’s not just crypto; the consequences are also seen in the stock markets.
The Valkyrie Bitcoin Strategy ETF, which is focused on Bitcoin futures, is down more than 50% this year, much in line with the underlying currency’s performance. In the short term, Leah Wald, the CEO of Valkyrie and a crypto investor herself, is apprehensive.
“We have historically survived these types of storms,” she stated, “but we are clearly in a bear marketplace currently – it never feels really good.” On a “short time horizon, I’m concerned about the markets, and I believe we’re in for a lot of suffering, at least for the next few months, though no longer.”
Is it a Good Idea to “Buy the Dip”?
The “buy the dip” idea is based on the assumption that price dips are now only temporary dips that will correct spontaneously over time. Dip purchasers always try to profit from when prices drop by buying at a discount and enjoying the fruit when prices rise again after a while. The crypto market is a very volatile place to deal with. Prices may rise to previous levels, and they may also fall even further, throwing your investment at risk.
Bitcoin prices, for instance, have exhibited some seasonality so far, falling in value to varying degrees in the springtime before recovering in the early summer. However, as with any investment, past success is no indication of future outcomes, particularly in the volatile world of cryptocurrencies.