Bitcoin and other cryptocurrencies’ tumbling values earlier this week will not spook smart investors.
Instead, they will embrace the current volatility as they have done before, significantly boosting their crypto portfolios in order to build long-term wealth.
It’s been a wild few days in the digital assets sector. Bitcoin, the world’s largest digital currency by market cap, has see-sawed between gains and losses around the $50,000 threshold, with traders seeking a steer in the wake of one of the biggest one-day sell-offs this year.
It fell as much as 21 per cent on Saturday, before its value turned positive again.
The price swings came amid a wider risk-off sentiment that also gripped many areas of global stock markets. It occurred as soaring inflation is making central banks tighten monetary policy, threatening to slash the liquidity uplift that benefitted many assets, including cryptocurrencies.
In addition, the crypto market has been monitoring the CEOs of six major crypto companies sharing their analysis of regulation with the US House Financial Services Committee. This forced trading volumes on many exchanges to fall again on Wednesday.
But despite these turbulent swings, I’m confident that serious investors will not be distracted away from the crypto market.
In fact they will use the recent drops as a key buying opportunity to bolster their portfolios.
Indeed, we had a prime example to prove this theory earlier in the week, when an anonymous Bitcoin holder bought more than $150 million during the digital currency’s price plunge. The whale’s portfolio now stands at around $5.9 billion with the new purchases, according to reports.
Whales, individuals or entities, hold enough cryptocurrency that they have the potential to manipulate currency valuations.
Like many other savvy crypto investors, this unknown figure knows that, regardless of the recent volatility, the longer-term value of Bitcoin and other digital assets is on an upward trajectory.
They will continue to drip-feed money into the market and are willing to endure some short-term turbulence for major long-term gains.
This is what happened in September when there was a flash crash – which had the same triggers as the current one – and many were spooked. However, this led to others increasing their exposure, which later pushed the market to a new all-time high in October.
Those in-the-know investors, like the whale who scooped up more than 3,000 Bitcoins over the past couple of days, understand that digital is the clear, obvious future of money.
They won’t be deterred by this or other price dips. Quite the opposite.