Crypto Experts Ignore Bitcoin Crash, Here’s Why

However, long-term investors are still ignoring the extreme drops in the value of cryptocurrencies and the collapse of the exchanges that make them available to investors.

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

It’s only June. winter is coming.

For now, at least, the leaders in the crypto world are not too concerned. They say this is par for the cycle and that a crypto bear market is not the same as a bear market for stocks: the bottoms are more extreme, but so are the highs.

“Downside cryptocurrency markets typically fall between 85% and 90%,” said Jason Janowitz, co-founder of Blockworks, a research platform for crypto investors, CEOs, and builders. In the past decade, two prolonged cryptocurrency declines have seen bitcoin lose more than 80% of its value, but the coin has rebounded — and then some.

During the cryptocurrency bear market from 2017 to 2018, Bitcoin fell 83%, from $19,423 to $3,217. But by November of 2021, the coin was worth $68,000.

During the same period, Ethereum fell from $1,448 to $85, down around 95%. In November of 2021, the value of the coin was $4,850. The bear market between 2013 and 2015 also saw Bitcoin drop by about 82%, from $1,127 to $200.

“If you buy [bitcoin] At the height of the uptrend in 2017 (around $20,000), I saw an 80% drop over the following year. “If it continues to hold, it will be up about 60% right now — even after the recent slump in the cryptocurrency market from all-time highs last November,” said Felix Honeyjoacks, CEO of Xchange Monster.

Bitcoin drops below $23,000 as cryptocurrency crash continues
Yanovitz said that given how the new encryption works (it started in 2009), it’s naturally more volatile. pointing to Amazon (AMZN), whose stock price reached as high as $113 a share in the internet boom of the late 1990s before crashing 95% to $5.51. It closed Tuesday at $102.31 but before the 20-1 stock split went into effect on June 6, it was trading above $2,000 per share.

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

He said other tech stocks are dropping significantly at the moment, not just cryptocurrency. shares Uber (Uber) It has fallen more than 50% year-to-date, Lift (LYFT) decreased by 67% and Netflix (NFLX) It decreased by 72%.

There are still major concerns about digital currencies. Fewer investors were exposed to the cryptocurrency plunges during the last downturn, so there are more now losing money this time around. Some of the new companies neighboring cryptocurrency may also fall during the downturn in the crowded cryptocurrency market, John Browning, co-founder and managing director of BAND Financial, said in a note on Tuesday, but that coin values ​​are likely to advance again in the long-run.

As Warren Buffett famously said, “Only when the tide goes out can you tell who has been swimming naked.”

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