The crypto market in freefall : A deteriorated macro-economic context

Bitcoin has just crossed the symbolic bar of $30,000 and Ethereum that of $2,000. The entire crypto market is experiencing a violent fall that looks like the potential start of a bear market . So is it time to buy the dip ?

The Crypto Market in freefall

The past few days have seen an acceleration of the fall in the crypto market. At the top spot, Bitcoin is now trading below $30,000 and has seen a drop of more than 20% over the past 7 days. Same thing for Ethereum, which is now trading around $2,000 and has seen its price drop by almost 28% in one week.

Solana, XRP, Cardano or even Avalanche suffered even more resounding falls, sometimes by almost 50% over the week. We can also mention the particular case of Luna who collapsed following the depeg of the UST and is now exchanged for a few cents. A fall of more than 99% of its value as never seen for a project of such magnitude.

This degraded market could mark the beginning of a longer term downtrend according to various observers. The British financial regulator, The Financial Conduct Authority (FCA) has notably sent several warning messages to crypto investors.

Crash of cryptos: Should we buy the dip?

A deteriorated macro-economic context

The crypto-asset market is not insensitive to a more than degraded macro-economic and geopolitical context . Galloping inflation, logistical concerns with the health situation in China and the war in Ukraine are all obstacles to economic growth.

The co-founder of the crypto-trading platform Coinrule, Oleg Giberstein, believes that the crypto sector is experiencing the same tension as the rest of the economy. This causes this fall of the last days. He declares :

 It’s not just the crypto sector that’s going down, everything’s going down, and the economic outlook for the next 6-12 months is bad. Central banks have difficult choices to make: reducing runaway inflation can also lead to slower economic growth. That’s why investors shy away from overly risky investments like cryptocurrencies and tech company stocks.

For him, the crypto-asset market looks complex for the next two years. Is this the start of a bear market? Only the next few months will confirm it or not.

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Is it time to buy the dip?

The idea behind the notion of buy the dip is to buy the dips caused by a correction before the price starts to rise again. It’s a way of shopping, balances for some investors, when we think that the price of the asset will go up in the more or less long term.

In a market as volatile as cryptocurrencies and in a trend that is no longer bullish, this can be risky. Oleg Giberstein says about it: “ Many newbie investors have burned their fingers trying to catch falling knives”. 

For the time being, it is impossible to know if the hollows formed are indeed the bottoms or if the prices will continue to fall. If the market corrects more severely, or even if we enter a bear market phase, it seems preferable to enter in stages, in particular in DCA (Dollar Cost Averaging) on ​​a few assets chosen beforehand.

We can think of Bitcoin or Ethereum which are holding up well and are solid projects in the crypto ecosystem. Other more recent projects such as LBLOCK, which offers an innovative approach to online gaming,  can be an interesting investment track. This project offers you a fairer and more transparent online draw solution unlike traditional lottery mechanisms.

In the decentralized finance sector, DEFC offers a decentralized exchange that is an alternative to PancakeSwap or Uniswap. A token that can be interesting if one is interested in this field of the future that is DeFI.

Finally, you have to monitor the tokens that react the best , dig into the subject and do your research to invest in projects that will be there in the future and can start rising again when the market sees better days! Cosmos, Solana, Near or even Avalanche each have great promise. The future will tell if they materialize!

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Investing Press
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