pattersonbeckwith.com The price of Bitcoin fell by 67% to $17,000 for the first time in 5 years. The fear index dropped to level 6 (an all-time low). So is it worth getting involved at all, or is it all a “bubble”?
I first heard about the concept of cryptocurrency back in 2015. Then Bitcoin reached its first all-time high, then I watched it become worth $17,000 in 2017, and in 2018 I even came into contact with it.
And why is it scary to invest in cryptocurrency?
Then I bought Bitcoin at a cost of $ 3500 for 1 cue ball. I ended up selling everything for $10,000 that same year, and that was the end of our relationship.
There was another wild rise in 2021 when the value reached $69,000 per Bitcoin. Then there was a “BOOM” in the world of cryptocurrency: whatever coin you take, everything is x10, x50, x100, etc. But in the fall of the same year, a downward trend in value began, which continues to this day.
Yes, because there is a constant uncertainty: “What will happen in the future?”. Plus, strong volatility, which occurs due to the manipulation of the market by large players, because their main goal is to EARN.
To determine the level of fear or greed in Bitcoin, they even created an indicator that determines what is happening with market participants at the level of emotions: FEAR or GREED.
On June 19, 2022, this index reached a minimum value of 6, which meant “very, very scary,” because the price of Bitcoin reached its lowest level in 5 years – $17,000 per Bitcoin. Now the index is at 30, still scary.
In general, the value of the coin has fallen by more than 50% since the beginning of the year, and by more than 67% since the peaks of 2021.
What conclusions can be drawn? Fear is justified by the fact that for most people it is not clear how it all works. I often hear in my consultations: “I won’t invest there, I don’t understand how everything will turn out”, “This is a bubble, I don’t want to lose my money”, etc.
But in fact, there is a certain cyclicality, a regularity of the market. Most often, as I said above, the market is manipulated to make money. They catch up with fear so that many people leave, fixing losses, at this moment they buy to the maximum, then they create a stir again and exit when the price already reaches high values.
This is how big players act, they are also called “Whales”, and everyone who came to get as much as possible, they are called “Hamsters”. Basically, they lose money because they do not understand the laws of the market.
Some experts predict that the current “crypto winter” may last for several years, and only the most reliable coins will survive the global financial crisis.
Others say the current dip could be the best time to buy digital assets that will inevitably rise in value due to the huge promise of blockchain technology and the new generation of the web3 internet.
And then there are those who continue to predict the imminent collapse of the “cryptocurrency bubble” and, in fact, the death of bitcoin, which has existed for 13 years.
In conclusion:
I think it is worth investing in crypto, but with a conscious approach, having a strategy and allocating no more than 20-30% of the total capital to it. It can give good returns, but at the same time, there may be a drawdown. Therefore, I do not go there for 100%, but only for 30% of the total investment.