Cryptocurrency investors have already begun to sell their digital assets against the background of the subsidence of bitcoin and altcoins. W...
Bitcoin quotes began to fall rapidly at night from January 20 to 21 - then it fell to $ 38,287 - the lowest since August last year. On January 27, cryptocurrency No. almost $69 thousand in November. Overall, the cryptocurrency market has lost more than $1 trillion as leading tokens such as ether and solana have followed bitcoin. Ethereum's value has more than halved since reaching its peak in November, while Solana has fallen even further, down 65%.
Despite Goldman Sachs’ forecast that the first cryptocurrency will deduct a significant market share from gold in 2022, these events give investors reason to talk about the likelihood of a “crypto winter.” “Crypto winter” describes the bear market of digital currencies. This happened in late 2017 and early 2018 when bitcoin dropped 80% from all-time highs. Signs of the onset of crypto-winter are confirmed by the former head of the cryptocurrency department at Meta, David Markus. However, it is still too early to be upset, including for young traders who want to learn the basics of cryptocurrencies.
“It is during the crypto winter that entrepreneurs build the best companies,” Markus wrote on the social network.
Meanwhile, Vijay Aiyar, vice president of corporate development and international development of Luno crypto exchange, expressed the opinion that the fall of cryptocurrencies does not yet indicate a possible long-term decline.
“Corrections for BTC are usually in the 30-50% range where we are now, meaning we are still within normal correction territory,” Aiyar said.
“Last year, venture capital inflows amounted to a record $33 billion,” Olshevich stressed.
He also noted that there are several spot bitcoin products traded on an exchange outside the US, in addition to exchange-traded futures funds and other ETFs. They have an indirect impact on US bitcoin trading, along with many companies holding digital asset in their treasuries. All this, in his opinion, indicates a “great leap forward for digital assets.”
Despite the optimistic expectations of experts, investors are looking for ways to get the most out of virtual currency.
How investors can survive the crypto winter
While some investors may be tempted to “short” Bitcoin and other cryptocurrencies (i.e. bet that the price will continue to fall), experts advise against doing so.
“The time to short is probably over and it will be an emotional decision based on the idea that the market will ‘go to zero’,” said Scott Melker, a crypto miner and investor. “Buying positivity is now exponential, and the benefits of a short launch are extremely limited.”
Instead, one should think about increasing the security of crypto assets, for example, through staking. Staking is essentially blocking your cryptocurrencies on the blockchain for a minimum amount of time to create passive income. Unlike a bank savings account, staking can help you maximize your money and make a profit. Staking can be done through exchanges like Kraken or Coinbase, or through a software or hardware wallet.
“Staking is a great way to increase exposure to a platform or asset that you strongly believe in,” says John Woo, president of the blockchain startup Ava Labs. “Income is easier to predict, often [it] is fully known in the course of operations, and far exceeds what people can expect from something like a high-yielding bank account… I see the bet… as a way to constantly increase their assets in the networks they are tuned to, both in the short and long term."
In addition, experts advise using dollar-cost averaging. The essence of this investment strategy is to divide the amount to be invested, and then invest in a certain asset (for example, stocks or cryptocurrency) at regular intervals, regardless of whether the market is rising or falling. This is a case for a bear market, contributing to the gradual expansion of its portfolio, experts are convinced.
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