IIn a cryptocurrency market awash in red, even “diamond hands” are struggling to hold their own in this unstable environment. Despite recent selloffs, Bitcoin has not been the worst performer among digital currencies.
While the main cryptocurrency is basically the tide that lifts all boats. It looks like the boats have been rocked far more than the tide looking at the top 10 coins based on market cap.
The second-largest crypto Ethereum has fallen almost 50% since the start of the year after hitting an all-time high in November last year. Compare that to Bitcoin’s decline, which is closer to 40% year-to-date.
Solana is down over 70% so far this year and Cardano is down around 65% so far in 2022. Needless to say there is a lot of pain to be had. Bitcoin investors may use less aspirin than other cryptocurrency investors targeting those specific coins.
It’s quite a sign of the times where digital assets are correlated with stock indices as inflation fears continue to swirl in many markets, regardless of asset type. Even safe-haven bonds have not been immune to volatility.
“Investors are fleeing cryptocurrencies at a time when stock markets have plunged from highs of the coronavirus pandemic for fear of soaring prices and deteriorating economic prospects,” CNBC Reports. “U.S. inflation data released on Wednesday showed prices for goods and services jumped 8.3% in April, more than analysts expected and near the highest level in 40 years.”
Even some stablecoins that are essentially designed to mimic the stability of fiat currencies have been anything but stable. Take TerraUSD for example, which crashed amid volatility.
“The collapse of TerraUSD, one of the world’s largest stablecoins, sent shockwaves through cryptocurrency markets on Thursday, pushing another major stablecoin Tether below its dollar peg and sending bitcoin to its lowest level in 16 months”, Reuters reports.
bitcoin price given by Y-Charts
Buy the dip
Investors who have not been deeply shaken can take advantage of the current opportunity to buy the dip. It’s hard to gauge when the market pain will be over, but with Bitcoin falling less than 50% from its all-time high last year, the opportunity is also hard to pass up.
One way to buy the dip without buying into the cryptocurrency itself is through ETFs like the ProShares Bitcoin ETF (BITO). The fund allows investors to gain Bitcoin exposure in the security of a traditional market exchange without having to add a layer of security by transferring Bitcoin to a digital wallet.
Either way, the last thing investors should do is act out of emotion.
“I wouldn’t recommend starting to sell out of fear and panic. It’s not happening for the first time! Remember, a long-term investor always wins,” said Sumit Gupta, co-founder and CEO of CoinDCX.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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