Cryptocurrencies across the board have mimicked Bitcoin’s fall. While there had been a real expectation of a bearish crypto market for some time now, most investors were not ready for it to drop below $20,000. Now, the idea of Bitcoin hitting $15,000 is something that stirs fear among most crypto enthusiasts.
As of this writing, Bitcoin is holding its own, just above $20,000 after dropping below $18,000 a few days ago. But there have been rumors about the possibility of it dropping as low as USD 13,000. International strategists have looked at past crypto rallies, and they suggest that Bitcoin tends to drop around 80% from all-time highs. For example, it fell to nearly $3,000 after hitting $20,000 in 2017. More recently, the cryptocurrency broke through a $68,000 breach, hitting an all-time high in November 2021, and now it continues to fall. Comparisons should perhaps help enthusiasts pace their expectations even if they are around the current level.
Volatility The essence of crypto
The world’s favorite digital currency is now at levels it reached in December 2020, when the Covid-19 pandemic was still – albeit – in waves. But the biggest bitcoin enthusiasts aren’t so phased by bear markets.
As an investor in the crypto space since 2016, Tejas Balasubramanya (founder of Atmana) has seen the market through his bear runs. “I haven’t been anxious because I have long believed in Bitcoin and its future,” he said.
In November 2021, when Bitcoin reached its highest peak in the market, the crypto market capitalization approached $3 trillion. So, if all altcoins were owned by a single company at that time, their capitalization would exceed Apple and Tesla. Of course, the crypto value has continued to depreciate since hitting the massive highs of 2021.
Today, the cryptocurrency’s market capitalization has fallen below $1 billion, and if experts are to be believed, the chart could venture further down. But true enthusiasts stick to their guns, either HODLing or buying the dip.
“I will definitely buy the dip. Such opportunities may not be frequent. I was long when Bitcoin was at $50,000, and I am now at $20,000. I believe Bitcoin is the digital equivalent gold,” Tejas added.
Buying in bear times makes sense even in traditional markets, and when a name like Elon Musk advocates buying the bear, it greatly reaffirms the faith of most crypto investors. In fact, it might even inspire new investors to venture into the world of crypto.
While traditional investors have steered clear of crypto markets due to limited understanding and general risk aversion, it would be fair to say that digital currencies, as an asset class , attract investors who love the romance of being in such a volatile segment. And for enthusiasts like Tejas and Musk, the current decline presents nothing but opportunity.
There have been larger-than-life detractors, including Warren Buffet and Bill Gates, who have criticized the crypto and questioned its legitimacy. But that hasn’t phased the enthusiasts who flocked to this high-risk market. After all, crypto has appreciated over 200% since 2019, outpacing all other asset classes in recent years.
“Bitcoin is one of the blue chips, and it’s a great entry opportunity for long-term investors. They can look to buy on dips in three to five tranches over the next two quarters,” he said. advised Khaleelulla Baig, co-founder and CEO of Koinbasket. “Despite multiple regulatory challenges and crackdowns, and as seen in the past with multiple tests, cryptocurrencies are here to stay.”
If predictions are to be believed, the cryptocurrency market capitalization is expected to increase by almost 20x at least in the near term. This notion was even backed by US investment bank JP Morgan, which predicted in January that the crypto would climb to as high as $146,000 in the long term, giving gold stiff competition as an alternative currency. .
Khaleelulla Baig also seems to think along the same lines. “We estimate that the total crypto market will exceed market capitalization by $10 trillion over the next five years,” he said. But he warns investors against too much crypto allocation. “It is a risky asset; investors should not allocate more than 5-10% of their money in the crypto portfolio.”
No matter how long the crypto bear market lasts, the market still has potential. But new entrants and enthusiasts should be careful how much they buy on the downside, as the risk remains high. But for those who are scared – HODL on!