bitcoin: A long-term approach for investors during crypto market volatility


The global economy has faced several challenges in recent years since the emergence of Covid-19. The rise in the global pandemic has disrupted supply chains worldwide, leading to higher production costs, exacerbated by the war between Russia and Ukraine, and as a result, US inflation has risen to a 40-year high.

To contain inflationary pressures, central banks are raising interest rates, affecting returns in many asset classes around the world.

Several assets are subject to market volatility, including the S&P 500 Index, which recently veered into bear territory after falling over 20% from its recent high. Bonds have also suffered, and with signs of a global recession looming, crypto markets have also taken a hit. Investors are concerned across asset classes as yields have fallen significantly, but the impact on crypto is more severe due to market volatility.

Investor confidence has taken a back seat as Bitcoin’s price has fallen significantly since the start of the year and investors are concerned about their future returns. However, it should be noted that such high volatility is not alien to this asset class, as similar bullish and bearish cycles have been observed in the market in the past. Still, crypto has ultimately emerged to outperform every other asset class.

There is an emerging class of investors who are investing in crypto for the first time as they seek faster ways to grow their wealth amid declining returns in other asset classes such as real estate, bonds, etc. But these investors are worried about their wealth now that prices have fallen and sentiment is low. However, when we observe historical returns, it is evident that crypto is a long-term game, and those investors who got into the space early and have stuck with their investments have seen superior returns compared to any other asset class. Although bitcoin has retreated from its 2021 peak, it is still 10x higher than it was five years ago.

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Each crypto cycle offers an opportunity for industry players to create innovative and robust products for the ecosystem. The crypto crash of 2018 led to innovative use cases and blockchain protocols emerging in decentralized finance (DeFi), allowing investors to lend and stake crypto assets.

Similarly, the first-ever crypto ETF launched in the US last year, offering investors a new regulated way to gain exposure to the asset class.

The current cycle presents an opportunity for the industry to focus on infrastructure weaknesses on the security and compliance side. The industry has been observed to develop new protocols in recent years to ward off recurring scams and hacks. Investors can dedicate this phase of their research into projects to make their platforms security robust and combat market weaknesses.

In this current bear market, investors are advised to take a long-term view of their crypto investments and may also explore other ways to engage with crypto assets. There are passive ways to get involved where you can lend your crypto assets to exchanges and earn interest while your funds are frozen. Similarly, there are systematic plans for crypto where investors can commit a fixed amount to invest on a regular basis

Crypto assets without the hassle of choosing the coins as investment professionals do extensive scrutiny and research to choose the right coins.

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There are many smart tools introduced by the crypto exchanges to help investors who want to get involved in trading. For example, CoinDCX offers a limit order that can be used to decide on a price limit or parameters for buying and selling cryptocurrencies. Likewise, one can opt for a stop order – another smart tool for buying or selling crypto once the price of the crypto hits a certain price known as the stop price.

Many such tools are available and investors need to take advantage of them by going through the content available on the site.

Additionally, investors should exercise caution when selecting assets and rather than relying on friends and family or social media hype to help select assets for investments, investors are strongly advised to conduct their due diligence and look into emerging opportunities and Investing use cases is growing fundamentally.

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Crypto exchanges have created online educational platforms for investors, offering tutorials in English and regional languages, as well as educational content on crypto assets and blockchain to raise awareness.

In past cycles, bitcoin has fallen 50% or more and even surpassed 80% at depth, but each time it has fully recovered and set new all-time highs.

If history is to be proven correct, the current bear market appears to be no different and instead offers an excellent opportunity to better understand this space.

Knowledge is your best weapon for identifying fundamentally sound projects. Blue chip coins with the largest market caps that have sustained past cycles may be a safer bet in the current bear market.

In summary, as an investor you can:

-Take a long-term approach to crypto investing

-Explore passive ways to gain exposure through various interest earning options available, as well as systematic plans by regularly allocating a fixed amount to invest in crypto assets

-Opt for a few smart tools available on crypto exchanges that help in smart trading

– Possess due diligence before investing by referring to educational content; You need to look out for use cases

Finally, the current bear market is an opportunity to understand this space and build better for a stronger Web 3.0 future.

(Ramalingam Subramanian is Head of Brand, Marketing & Communications at CoinDCX)



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