Is Crypto Going to Crash Again?
Will we witness another mass correction?
Now that’s a question that deserves an answer.
Well, the short answer is… yes. The long answer is the reason you are reading this article.
The crypto market crashed hard this year, taking the total market cap from over $2T to under $1T in a matter of weeks. The stock market went down as well this year, creating a whirlwind of dilemmas for investors from all walks of life.
Are retail and institutional investors going to witness another crypto crash soon? At the time of writing this article, the market is still down well over 50% from where it stood several months ago. Could the market fall even further than its current condition?
Prices have held steady the past few weeks with slight upticks in Bitcoin and Ether among other coins. Bitcoin dominance is sitting at 39.6% as it remains the biggest asset by market cap in the crypto space. The recent SEC smack across Coinbase’s cheek doesn’t help boost crowd sentiment in any way. As it stands right now, the future looks grim with a glimmer of hope.
What Goes Up Must Come Down
The saying, “What goes up must come down” is a fair depiction of the crypto market. At the same time, the opposite is true with the following argument, “What goes down must come up”. Back in 2008, the real estate market crashed, creating a devastating time for many people invested in housing. Since that time, real estate has shot up and buyers are purchasing homes from sellers for thousands over the asking price.
When it comes to crypto, daily fluctuations in exchange rates are common and are even expected. But large-scale crashes like what we are experiencing now, does not happen nearly as often. What goes down must come up may not be true for hot air balloons, but generally it is true for markets such as real estate, stocks, and cryptocurrencies.
Bitcoin has experienced higher lows each year. Look at the following Tweet from Bitcoin social media influencer, Dan Held:
Bitcoin yearly lows:
— Dan Held (@danheld) March 15, 2021
2012: $4
2013: $65
2014: $200
2015: $185
2016: $365
2017: $780
2018: $3,200
2019: $3,350
2020: $3,800
2021: $27,734
Bitcoin HODLers are the floor. They are the revolutionaries that have preserved and grown Bitcoin.
Do you still want to bet against them?
Though Bitcoin this year has dipped below the 2021 all-time low of $27,734, the above Tweet gives a clear picture of the potential trend that Bitcoin and other cryptos can follow. What goes down must come up has been evidenced in past yearly lows. What will the yearly low be in 2025? 2030? Based on the data, the numbers could climb significantly higher.
Preventing future crashes
What ideas, decisions, or actions will help keep the crypto market from crashing again? Even though cryptocurrencies were allegedly deemed as a non-correlated asset class, the market does tend to react to motions like inflation or news of big tech layoffs. Lowering the inflation rate of the world reserve currency, the US dollar, would more than likely affect the crypto market in a positive manner.
Methods to prevent future crashes may include:
1. Not relying on algorithmic stablecoin systems
2. Not investing in “too good to be true” platforms
3. Keeping coins and tokens safe from hackers
4. Performing due diligence on new projects
5. Getting rid of pump and dump mentality
Crashes can tend to happen due to greed-filled decisions made by retail and institutional investors alike. Making smart, long-term decisions will increase your chances of a successful investing career. A definition of a contrarian investor is a person who invests into an asset when the masses may be pulling out. Investing into a blockchain or crypto project you are confident in may produce great results long-term, even though other investors may not agree with that decision.
The Last Word
Ultimately, the question to ask isn’t whether or not crypto will crash again. A better question one could ask is, “How can I grow my portfolio, even during turbulent times?”. Or, “How can I make smart decisions with my crypto that will benefit me and my family long term?”
Will crypto crash again? Yes, it will, but no one knows when that will occur. Instead of taking that self-defeating approach to the situation, focus attention on growth and on what you can do today to make a difference for the future.
Curious where to turn? The team at Stoic AI can help. Feel free to reach out or to view our line of trading products that assist retail investors in their crypto journeys.
Related articles
How to Invest in Crypto During Market Swings
Stoic Team to Launch a Market Neutral Strategy
Warning: Highly-Volatile Crypto Market Ahead
What is Web3? - Web 3.0 vs Web 2.0
Disclaimer
Information in the article does not, nor does it purport to, constitute any form of professional investment advice, recommendation or independent analysis.