Crypto

Crypto pundits are shrugging off bitcoin’s crash, here’s why

Still, long-term investors are shrugging off extreme declines in the value of digital currencies and the collapse of the exchanges that make them available to investors.

Bitcoin, the world’s most valuable cryptocurrency, fell to around $21,000 on Wednesday. It has lost a quarter of its value since Friday and is almost 70% down from its high of $68,000 per coin in November. Ether, the second most valuable digital currency, has lost around a third of its value since Friday and is down 75% below its highs.
More concerning are the structural issues that make it impossible for investors to withdraw their money from cryptocurrency exchanges. Binance, the world’s largest cryptocurrency exchange, halted withdrawals for a few hours on Monday, saying some transactions had “stuck”. Celsius Network, which has 1.7 million users, temporarily halted withdrawals due to “extreme market conditions.” They did not say when the exchanges would reopen, stating only that “it would take time.”

It’s just June. Winter is coming.

Coinbase lays off 18% of its workforce and warns of the

So far, at least, the leaders of the cryptosphere are not too worried. They say this is par for the course and that a bear market in crypto is not the same as a bear market for stocks: the lows are more extreme, but so are the highs.

“Crypto bear markets typically drop 85% to 90%,” said Jason Yanowitz, co-founder of Blockworks, a research platform for crypto investors, executives, and builders. In the past decade, two long crypto slumps saw bitcoin lose more than 80% of its value, but the currency rallied — and then some.

During the cryptocurrency bear market from 2017 to 2018, bitcoin plunged 83%, from $19,423 to $3,217. But by November 2021, the coin was valued at $68,000.

During the same period, etherium fell from $1,448 to $85, a drop of around 95%. As of November 2021, the coin was valued at $4,850. The bear market between 2013 and 2015 also saw Bitcoin drop around 82%, from $1,127 to $200.

“If you bought [bitcoin] at the peak of the 2017 bull run (around $20,000), it saw an 80% decline over the following year. But if it continued to hold, it would be up nearly 60% right now, even after the cryptocurrency market’s most recent drop from all-time highs last November,” said Felix Honigwachs, CEO of Xchange Monster.

Bitcoin Falls Below $23,000 as Crypto Crash Continues
Given how new crypto is (it started in 2009), Yanowitz said, it is naturally more volatile. he points to Amazon (AMZN), whose share price hit highs of $113 a share in the late 1990s internet boom before plummeting 95% to $5.51. It closed Tuesday at $102.31, but before its 20-1 stock split took effect on June 6, it was trading well above $2,000 a share.

“I really don’t agree with people who say there’s no way to recover from something like this,” Yanowitz said. “I think people look at crypto and think it’s weird or not real. If you don’t think crypto is real, you probably think it’s overvalued.” But this decline is not as bad as the last cryptocurrency bear market, he added.

Other tech stocks are down significantly at the moment, he said, not just cryptocurrencies. Actions of Uber (Uber) have fallen more than 50% so far this year, lyft (LYFT) is down 67% and Netflix (NFLX) It has fallen almost 72%.

Still, there are big concerns about the digital currency. Fewer investors were exposed to the sharp declines in cryptocurrencies during the last recession, so now more stand to lose money this time. Some crypto-adjacent startups may also falter during the downturn in this crowded crypto market, but coin values ​​are likely to rise again in the long run, John Browning, co-founder and managing director of BAND Financial, said in a note on Tuesday.

As Warren Buffett said, “It’s only when the tide goes out that you find out who’s been swimming naked.”

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