Crypto Crash: Crypto-haters are wrong
Bitcoin and other digital currencies experienced a major sell-off this week following the crackdown by China.
However, the crypto cynics should not rebuff cryptocurrencies.
It’s been something of a turbulent week for crypto. Around $400 billion has been wiped off the total digital currency market since last Friday, when a key Bitcoin mining hub instructed miners to cease operations.
This followed reports that the People’s Bank of China ordered banks to freeze all payment channels supporting cryptocurrency trading.
Bitcoin experienced a wild trading session on Tuesday, briefly falling under $30,000 – viewed as a key support level – before moving back into positive territory.
Yet, as I was quoted by Yahoo Finance, amongst other media, long-time, serious cryptocurrency investors have not been overly concerned with the recent volatility, and see it more a case of ‘here we go again.’
The new lower prices will be used as a key buying opportunity for many investors, both experienced and less experienced.
Even investors in China – a major Bitcoin and wider crypto market – will find ways to top-up their portfolios at the lower entry points.
We can also expect more pullback in the Bitcoin price in the near-term, which will also be used proactively by investors.
We’ve found that investors are not in crypto to make a quick buck. Quite the opposite. They’re in it for the long-term to generate and build wealth.
As it stands, there are five main factors driving investors towards crypto.
The first is inflation. Concerns about inflation are growing as economies re-open and pent-up demand is unleashed, yet met with supply shortages.
Bitcoin is widely regarded as a shield against inflation, predominantly due to its limited supply, which is not influenced by its price.
Second is institutional support. Investment is growing from major institutional investors, bringing their capital, expertise and reputational pull with them.
Third, regulation. Global financial watchdogs are increasingly looking into setting up a regulatory framework, as they’re taking crypto more and more seriously as a financial asset and a medium of exchange.
Fourth is demographics. Millennials – who are the beneficiaries of the largest-ever generational transfer of wealth, thought to be over $60 trillion from baby boomers to millennials over the next three decades – have grown up on tech. They are digital natives. And, of course, cryptocurrencies are, by their very nature, technology-driven.
Five, cryptocurrencies are the future of money. Savvy investors recognise the intrinsic value of crypto for trade and commerce in our increasingly digitalised world.
As a result, cryptocurrencies are regarded as the future of money.
Although the crypto-haters have knocked the digital assets this week, shrewd investors aren’t spooked by the volatility, as they are confident in their long-term trajectory. Click here for my YouTube, LinkedIn profile and Twitter accounts