Even with the market at its lowest, Cryptocurrency mining continues to consume increasing amounts of computer power, meaning it’s still growing.
The global crypto markets witnessed a brutal bloodbath last week, losing almost USD 500 billion. Bitcoin which is the poster boy of crypto markets had dropped below USD 30,000 for the first time since July 2021, almost 50% down from its peak last November.
Smaller coins like Ether, Avalanche, and Solana have fallen too, but to everyone’s surprise, it was the Non-Fungible Tokens (NFTs) that took the biggest hit, the Bored Ape Yacht Club (BAYC) and many other such NFT collections saw their price plummeting 29 percent over the past 7 days in dollar terms.
There has been a lot of panic since the dive and investors are not only losing their heads but also watching their portfolios shrink.
We are now at a place where experts always ask us to be and most importantly capitalise before it’s too late: jump in when everything is sinking.
When a stock market corrects itself downwards, a question that’s inevitably asked is whether investors might be able to profit from associated plunging price movements.
Buying the dip
The phrase ‘buying the dip’ – a reference to making money on the back of a stock market fall – is popular among active investor ‘day traders’ and cryptocurrency investors facing a backdrop of volatile markets.
Finder’s Jan. 2022 Cryptocurrency Adoption Index ranks Kenya 12th for cryptocurrency ownership out of 27 countries surveyed globally. Cryptocurrency ownership in Kenya is however behind countries like Nigeria (21%) and Ghana (17%).
On May 6 during the first plummet, many Kenyan crypto traders rushed to online marketplaces to purchase it at the low price hoping that it would spring back to over $40,000 in a few days only to be burned a few days later when the prices sunk further.
For many financial experts, the crypto meltdown is the “I told you so” moment they have waited for almost three years now. They are now gloating over the steep fall in crypto prices. “Let this Luna crash be a lesson. Most cryptos will meet the same fate sooner or later. Cryptocurrency is just a fad to suck out the money from people who became rich recently in developing nations,” tweeted Sadaf Sayeed, CEO of Muthoot Microfin.
Praveen Kumar, the founder and CEO of Belfrics Group, believes these are great entry levels for investors to start building a robust portfolio in cryptocurrencies. In fact, investors should continue to buy the dip from hereon as the long-term fundamentals of some well-known cryptocurrencies like Bitcoin, Ethereum, Litecoin, etc. are still fairly strong.
The founder and CEO of MuffinPay, Dileep Seinberg, thinks otherwise.
“..regulations will promote the value of promising good projects in crypto. But we need to wait for a few months. The dip has always benefitted crypto investors. But this time, it needs to HODL for a long time to see the benefit,” says Seinberg.
Sumit Gupta, Co-founder and CEO of CoinDCX, on Thursday, suggested investors to hold on to their investments for long term if they have a strong conviction.
“I wouldn’t recommend to start selling out of fear and panic. This isn’t happening for the first time! Remember a long term investor always wins,” the CEO of CoinDCX said.
He further said, “The financial markets are behaving irrational these days. It’s not just crypto; the impact is being seen around the equity market as well.”