Crypto Experts Ignore Bitcoin Crash, Here’s Why

However, long-term investors are still ignoring the extreme drops in the value of cryptocurrencies and the collapse of the exchanges that make them available to investors.

Bitcoin, the most valuable cryptocurrency in the world, It dropped to nearly $21,000 Wednesday. It has lost a quarter of its value since Friday and remains nearly 70% below its high of $68,000 per coin in November. Ether, the second most expensive digital currency, has lost about a third of its value since Friday and is down 75% from its highs.
More worrying are structural problems This makes it impossible for investors to withdraw their funds from cryptocurrency exchanges. Binance, the world’s largest cryptocurrency exchange, paused withdrawals for a few hours on Monday, saying that some transactions had been “paused”. Celsius network, which has 1.7 million users, has temporarily suspended withdrawals due to “extreme market conditions”. They did not say when they would reopen the exchanges, noting only that it would “take time.”

It’s only June. winter is coming.

For now, at least, the leaders in the cryptocurrency world are not too concerned. They say this is on par with the cycle and that a bear market in cryptocurrency is not like a bear market for stocks: the bottoms are more extreme, but so are the highs.

“Downside cryptocurrency markets typically fall between 85% and 90%,” said Jason Janowitz, co-founder of Blockworks, a research platform for crypto investors, CEOs, and builders. In the past decade, two prolonged cryptocurrency declines have seen bitcoin lose more than 80% of its value, but the coin has bounced back — and then some.

See also  Oil prices hit their lowest levels since the Ukrainian invasion, amid fears of a recession

During the cryptocurrency bear market from 2017 to 2018, Bitcoin fell 83%, from $19,423 to $3,217. But by November of 2021, the coin was worth $68,000.

During the same period, Ethereum fell from $1,448 to $85, down around 95%. In November of 2021, the value of the coin was $4,850. The bear market between 2013 and 2015 also saw Bitcoin drop by about 82%, from $1,127 to $200.

“If you buy [bitcoin] At the height of the uptrend in 2017 (around $20,000), I saw an 80% drop over the following year. “If it continues to hold, it will be up about 60% right now — even after the recent slump in the cryptocurrency market from all-time highs last November,” said Felix Honeyjoacks, CEO of Xchange Monster.

Bitcoin drops below $23,000 as cryptocurrency crash continues
Yanovitz said that given how the new encryption works (it started in 2009), it’s naturally more volatile. pointing to Amazon (AMZN), whose stock price reached as high as $113 a share in the internet boom of the late 1990s before crashing 95% to $5.51. And Tuesday closed at 102.31 dollars, but before that 1-20 stock split It went into effect on June 6, and was trading well above $2,000 per share.

“I really disagree with people who say there is no way to recover from something like this,” Janowitz said. “I think people look at cryptography and think it’s weird or it’s not real. If you don’t think crypto is real, you probably think it’s exaggerated.” But he added that this pullback isn’t nearly as bad as the last cryptocurrency bear market.

He said other tech stocks are dropping significantly at the moment, not just cryptocurrency. shares Uber (Uber) It has fallen more than 50% year-to-date, Lift (LYFT) decreased by 67% and Netflix (NFLX) It decreased by 72%.

There are still major concerns about the digital currency. Fewer investors were exposed to the cryptocurrency plunges during the last downturn, so there are more now losing money this time around. Some of the new companies neighboring cryptocurrency may also falter during the downturn in this crowded crypto market, but that currency values ​​will likely advance again in the long term, John Browning, co-founder and managing director of BAND Financial, said in a note on Tuesday.

See also  Weekly unemployment claims in the US

As Warren Buffett famously said, “Only when the tide goes out can you tell who has been swimming naked.”

Leave a Reply

Your email address will not be published.