Despite the crash, investors are risking buying bitcoin

capricious but still attractive. Despite the “crypto winter” that hit decentralized cryptocurrencies in early May, enthusiasts continue to shop for their favorite tokens, led by bitcoin. The asset, which influences all other prices (NFT, Ether, stablecoins, etc.), hit rock bottom in June, below $19,000, the lowest level since December 2020. The drop is staggering, at -72% from the high. His in November 2021 (priced at $68,991). Overall, the collapse of all cryptocurrencies was more pronounced, with the global value dropping by 800 billion in one month, even briefly dropping below $1,000 billion in June.

However, the pro-Bitcoin coins are not admitting that their preferred assets have been decimated by the central bank rate hike which has led to the tightening of monetary policy and the death knell for risky positions in the midst of rising inflation. exactly the contrary. Not only do they think there is enough to reduce the fall, but a slump in the turbulent waters of bitcoin at around $20,000 per unit would above all be a sign of a favorable period for shopping, old stock market sayingBuy at low price.

“Buying a dip is just sales. We try to increase exposure when Bitcoin is at an all time low. So I started buying it again, as soon as it started moving below $45,000. There, at $20,000, the buy back is much stronger.”explains to exhibition Owen Simonin, a leading cryptocurrency influencer in France and CEO of Just Mining, a company that specializes in investing in digital currencies.

Bitcoin vs bubble

“This doesn’t mean that Bitcoin can’t drop any further. But since I have a lot of cash, I am selling stablecoins (crypto-backed cryptocurrency, editor’s note) for cryptocurrency, Bitcoin and Ethereum because I believe cryptocurrency will bounce back. This is it. The way I collected my biggest profits in the past.”, justify. However, the downward averaging strategy is not without risk: the value can always fall again by 99%, after an initial drop of 99%. This is notably what happened to Internet stocks when the bubble burst in 2000, when they criticizedbuy dip“.

Other crypto experts also denounce the practice that they consider to be “maximum bitcoins” (those who consider the token created by Satoshi Nakamoto to be the only true cryptocurrency). ” Unfortunately, for the majority of altcoins (altcoins), ‘buy the dip’ simply doesn’t work in a bear market.warns someone on Twitter.

whales and bear

But for big investors – it’s called whales »this is “alcohol market’, it could specifically be an opportunity to maintain their positions, or even strengthen them BitInfoChartsBetween June 14-18, 2022, one of the largest whales swallowed 1,698 bitcoin, bringing the value of his portfolio to more than $2 billion. An ardent crypto supporter, the eccentric Elon Musk, the head of Tesla and SpaceX, also confirmed on Twitter on June 19, in the midst of the meltdown, that he would continue to support dogecoinThe cryptocurrency that was initially created as a gag, has kept itself afloat thanks to its influencer star. However, this crypto has lost more than half its value since January. An investor also filed a complaint against Elon Musk, his company Tesla, and SpaceX for this unlimited support for dogecoin, demanding at least $258 billion.

“The cryptocurrency market is currently experiencing its fourth bear market, which is a stressful time for investors, especially in the short term, but this phenomenon should not spell the end of bitcoin and the cryptocurrency market.”Vincent Pouille, market analyst at IG France.

deja vu

In fact, for the most skilled in the cryptocurrency markets who are willing to take risks, it is the deja vu argument that wins. “We are living a replica of 2018. It’s the same little music, every 4 years, since 2009”, So Fun Owen Simonen. “It’s cyclical. These crashes always happen after the halving (the computer process inherent in bitcoin that reduces the number of tokens that reward miners and therefore the scarcity on which their value is based).says the entrepreneur who is betting on the long-term decline in the volatility of the precious token and Ether because “ More flexible “.

In 2011, the lowest level recorded on Bitcoin was $0.29, and the subsequent upward movement allowed the cryptocurrency to reach $32 in June of the same year. The second bull market (bullish market, editor’s note) was observed in 2013, with a yearly low of $13.16 and a high of $1,242. The third, which made cryptocurrencies known to a large number of investors, occurred between 2015 and 2017. The August 2015 drop was $200 and the bull market for more than two years, drove Bitcoin to a historic high of $20,000. All of these bull markets have been accompanied by impressive bear markets, but so far bitcoin has always hit all-time highs after that,” explains Vincent Bowie.

Finally: “The last bull market ended last November at a historic high of $69,000, up 1,700% (from $3,900 in March 2020) and that naturally leads to a new bear market, which we are in right now.”.

Cryptocurrencies: Three questions about the crash that knocked Bitcoin off its base

On Twitter, Zonebourse market strategist Nicolas Chiron is headed in the same direction, even illustrating the phenomenon with double curves. Markets are volatile, but innovation and productivity are on the rise. Think long term and you will come out a winner.”he adds.

Even better, bitcoin will be boosted by crashes, according to those who maintain their faith in the token despite storms. “This crisis allows the natural Darwinian selection of various ‘cryptocurrency’ projects (many of which have anecdotal or even non-existent utility) and above all allow to bring back the incomparable characteristics of Bitcoin at the front of the stage: decentralization, immunity, digital scarcity, resistance to censorship, monetary system. Immutable, immutable means of payment without trusted third parties, scalability via the Lightning Network, individual monetary sovereignty, etc. »says Jonathan Herskovici of StackinSat, whose startup has developed a “Bitcoin Savings Scheme” that promises better investments than traditional banking products.

Organizing a roller coaster

However, the new champions of cryptocurrency, once enlisted for revenge, must lower their sails. With the crash, cryptocurrency buying and selling platform Coinbase was spotted in real time and announced that it would cut 18% of its workforce, or about 1,100 jobs. “It looks like we are entering a recession after an economic boom that lasted more than 10 yearsAmong the justifications for these mass layoffs, Brian Armstrong, the company’s co-founder and managing director, provided.

The recession could lead to another ‘crypto winter’ and it could go on for a long time.still afraid.

Confronting it, rival Binance and its 120 million clients take the opposite view. With 6,000 jobs already filled, the Chinese will create another 2,000 by the end of the year. current crisisIt raises concerns, but we expected it, it’s not strange”Crypto billionaire Changpeng Zhao, one of the most listened-to voices in this environment, was opposed.

Also, while the arrival of institutional money to the crypto star in 2020 has changed the situation, further increasing Bitcoin’s correlation with the markets, these players are holding their positions in the sector for the time being. Thus, Goldman Sachs, one of its analysts who predicted a bitcoin price of $100,000, does not appear to have been diminished by the recent drop. The investment bank is in discussions with Singaporean exchange platform FTX to facilitate derivatives trading in the markets, according to Specialized Press.

Something else remains unknown, with sector regulation, which some now want to be a full-fledged model for banking regulation. This cryptocurrency rollercoaster is fueling regulators’ arguments to come and put “guarantees,” in Europe as well as in the United States. According to the European Central Bank, which has identified 16,000 cryptocurrencies, the market has lost more than half of its value in just six months. Everywhere, the authorities are tightening the screws to improve the regulation of a market that is still young, in order to favor central bank (MNBC) digital currencies in the long term.

“The market will be regulated but not prohibited.”Owen Simonen, who planned to resell these bitcoins, gets angry “When there is madness, hit seven”. “I am looking forward to the day when Bitcoin can be defined as a store of value which will bring it stability. It is the currency of the future, in 5-10 years time”he’s excited.