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Cryptocurrency Markets Are Riding The Bear, So HODL On

Rohit Chintapali Jun 23, 2022

Cryptocurrencies across the board have mimicked Bitcoin's nosedive. While there was some genuine expectation of a crypto market dip for some time now, most investors were not ready for it to go below USD 20,000. Now, the idea of Bitcoin hitting USD 15,000 is something that stokes fear amongst most crypto enthusiasts.

At the time of writing, Bitcoin is holding steady, just above USD 20,000 after going under USD 18,000 few days ago. But there have been murmurs of the possibility of it going as low as USD 13,000. International strategists have looked at crypto rallies of the past, and they suggest that Bitcoin tends to drop about 80 per cent from all-time highs. For instance, it fell to nearly USD 3,000 after hitting USD 20,000 in 2017. More recently, the cryptocurrency breached USD 68,000, reaching its all-time high in November 2021, and now it continues on its downslide. The comparisons should perhaps help enthusiasts pace their expectations even as it hangs around the present level.

Credit: CoinDesk

Volatility The Essence Of Crypto

The world's favourite digital currency is now at the levels it had hit back in December 2020, when the Covid-19 pandemic was still ranging – albeit – in waves. But the biggest of Bitcoin enthusiasts aren't as phased by the bear markets.

Being an investor in the crypto space since 2016, Tejas Balasubramanya (founder of Atmana) has seen the market through its bear runs. "I haven't been anxious as I am a long-term believer in Bitcoin and its future", he said.

In November 2021, when Bitcoin hit its highest peak in the market, the crypto market capitalisation came close to USD 3 trillion. So, if all altcoins were under one company at that point of time, their capitalisation would beat Apple and Tesla. Of course, crypto value has continued to depreciate since hitting the massive peaks of 2021.

Today, the cryptocurrency market cap has come below USD 1 billion, and if experts are to be believed, the graph may venture downwards still. But true enthusiasts are sticking to their guns, either HODLing or buying the dip.

"I am definitely going to buy the dip. Such opportunities might not be frequent. I was a buyer when Bitcoin was at USD 50,000, and I am a buyer now at USD 20,000. I believe that Bitcoin is the digital equivalent of Gold", Tejas added.

Buying in the times of bear makes sense even in traditional markets, and when a name like Elon Musk advocates for buying the dip, that greatly reaffirms the faith of most crypto investors. In fact, it might even attract new investors to venture into the world of crypto.

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While traditional investors have stayed away from crypto markets owing to limited understanding and a general aversion to risk, it would be fair to say that digital currencies, as an asset class, attracts investors who like the romance of being in such a volatile segment. And for enthusiasts like Tejas and Musk, the current downslide only presents opportunities.

There have been larger-than-life detractors, including Warren Buffet and Bill Gates, who have made fair points criticising crypto and questioned its legitimacy. But that hasn't phased enthusiasts who have thronged to this high-risk market. After all, crypto has appreciated 200+ per cent since 2019, outmaneuvering all other asset classes in recent years.

"Bitcoin is one of the blue chips, and it's a great entry opportunity for the long-term investors. They can consider buying on dips in three to five tranches over the next two quarters", advised Khaleelulla Baig, co-founder and CEO of Koinbasket. "Despite multiple regulatory challenges and crackdowns, and as observed in the past with multiple tests, cryptocurrencies are here to stay".

What Now?

If forecasts are to be believed, the cryptocurrency market cap is projected to grow nearly 20x at least in the near long-term. This notion was backed even by US investment bank JP Morgan, which had predicted in January that crypto would rally as high as USD 146,000 in the long run – giving gold stiff competition as an alternative currency.

Khaleelulla Baig also seems to think on similar lines. "We estimate the total crypto market to surpass USD 10 trillion market cap in the next five years", he said. But he warns investors against allocating too much into crypto. "It's a risky asset; investors should not allocate more than 5-10 per cent of their money in the crypto portfolio".

No matter how long the bear market lasts in crypto, the market still holds potential. But new entrants and enthusiasts need to be careful of how much they buy into the dip as risk remains large. But for those who are scared – HODL on!