Here’s why crypto experts are ignoring the bitcoin crash

Yet long-term investors are ignoring the extreme declines in the value of digital coins and the collapse of 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 is nearly 70% below its high of $68,000 per coin in November. Ether, the second most valuable digital currency, has lost about a third of its value since Friday and has fallen 75% below its highs.
Of more concern are the structural issues that prevent investors from withdrawing their money from crypto exchanges. Binance, the world’s largest cryptocurrency exchange, suspended withdrawals for a few hours on Monday, saying some transactions were “stuck.” The Celsius network, which has 1.7 million users, has temporarily halted withdrawals due to “extreme market conditions”. They didn’t say when they would reopen trading, saying only that it “would take some time.”

It’s only June. Winter is coming.

So far, at least, leaders in the cryptosphere aren’t too worried. They say this is normal and that a crypto bear market is not the same as a stock bear market: the lows are more extreme, but so are the highs.

“Crypto bear markets typically fall between 85% and 90%,” said Jason Yanowitz, co-founder of Blockworks, a research platform for crypto investors, executives and builders. Over the past decade, two prolonged crypto downturns have seen bitcoin lose over 80% of its value, but the coin has rebounded — and more.

During the crypto bear market from 2017 to 2018, bitcoin fell 83% from $19,423 to $3,217. But in November 2021, the coin was valued at $68,000.

Over the same period, etherium fell from $1,448 to $85, a drop of around 95%. As of November 2021, the coin was valued at $4,850. The bear market between 2013 and 2015 also saw bitcoin fall around 82% from $1,127 to $200.

“If you bought [bitcoin] at the peak of the 2017 bull run (around $20,000), you saw an 80% decline from the following year. But if you continued to hold, you’d be up almost 60% right now, even after the crypto market’s most recent decline from all-time highs last November,” said Felix Honigwachs, CEO of Xchange Monster.

Bitcoin Plunges Below $23,000 As Crypto Slump Continues
Given new crypto (it started in 2009), Yanowitz said, it’s understandably more volatile. It points to Amazon (AMZN), whose stock price hit highs of $113 per share at the end of the ’90s internet boom before crashing 95% to $5.51. It closed Tuesday at $102.31, but before its 20-1 stock split took effect on June 6, it was trading well above $2,000 per share.

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

Other tech stocks are down significantly right now, he said, not just cryptocurrency. Shares of Uber (UBER) have fallen by more than 50% since the start of the year, Lyft (LYFT) is down 67% and netflix (NFLX) fell nearly 72%.

Yet digital currency raises serious concerns. Fewer investors were exposed to the sharp declines in crypto during the last downturn, so more are now at risk of losing money this time around. Some new crypto-adjacent companies may also falter during the downturn in this crowded crypto market, but the value of coins will likely rise again in the long term, BAND Financial co-founder and managing director John Browning said on Tuesday. .

As Warren Buffett famously said, “It’s only when the tide goes out that you learn who’s been swimming naked.”

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