Crypto is one of the biggest, if not the most prominent, themes in investing last year and continuing forward in 2022. Whether you are a believer or non-believer in crypto, it is undeniable that news related to crypto can affect the market, other currencies, and the overall interest of investors. Billionaires have even joined in on the fun, from Elon Musk on Dogecoin to Mark Cuban on NFTs; some billionaires genuinely love the ideas. Beyond crypto, VC firms like Andreessen Horowitz have been focused on investing in startups in the crypto and DeFi space. With thousands of ERC-20 tokens tied to different Web3 projects like DAOs or NFT gated clubs, the volatility of crypto markets is starting to mean a lot more than it once did. So far in 2022, however, crypto has been deep in the red. Bitcoin has erased the last seven months of gains, once again sitting at a price level around $30,000 – a far cry from its near $70,000 November highs.
It appears that crypto markets are moving in tandem with tech stocks, which have continued to fall rapidly since the start of the year amid concerns surrounding the fed’s tighter monetary policy. Although crypto isn’t part of the stock market, per se, it is still categorized as a higher-risk investment, and therefore, will also feel the effects of investors de-risking their portfolios amid policy concerns. This shows that crypto may not be shielded from macro-economic factors that move the stock market. Another factor driving the crypto markets is Russia’s central bank, who’s proposed banning the use and mining of cryptocurrencies. Since Bitcoin is generally the reference point for the crypto markets, it’s interesting to see experts take their stances. Many have taken a technical analysis approach, speculating a support level at a 30,000-price point if Bitcoin stays there for about a week. Others beg to differ, citing that the median historical bear market for Bitcoin is to be down 78%, and right now, we’re only around 50%. What do you think about crypto’s bearish start to 2022? And are you planning to buy the dip?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.