The cryptocurrency market has remained extremely volatile since the beginning of 2022, scaring off retail investors. Too many global factors and the current geopolitical uncertainty have had a significant impact on the crypto market lately.
Of course, you can’t deny the possibility of hard times ahead as crypto tends to largely move in tandem with stocks. However, kThe crypto market correction has created fear in the market but here are three truths every crypto investor must face. KCrypto analyst Lark Davis shared three “scary” facts of the crypto market and explained how to face fear and take bold action in difficult times.
1. Inflation
The USA announced February 2021 inflation figures and reached the highest level of the last four decades with 7.9 percent. In other parts of the world, inflation is at its peak. The EU reported an inflation rate of 5 percent, while the UK reported an inflation rate of 4.9 percent.
It should be noted that this is the average inflation figure and the prices of basic necessities such as fuel have increased substantially. Of course, this was expected given the trillions of dollars printed during the COVID-19 pandemic.
Currently, if you need to protect your money, you may need assets like crypto that have delivered strong returns over the past decade. Bitcoin (BTC) and other top cryptocurrencies have yielded over 150% annualized returns over the past decade.
2. Geopolitical uncertainty
The Russia-Ukraine war has been an important lesson for investors around the world. While Russia launched its “military operation” in Ukraine, the West imposed heavy sanctions, starting an “economic war” with Russia. As a result, the Russian ruble has lost 50 percent against the dollar in the past two weeks.
This represents a great erosion of wealth and purchasing power for Russian citizens. Apart from this, various forms of capital control have emerged inside and outside of Russia. Russians cannot use most foreign payment services to move their money out of the country.
While fiat currencies are bound by various limits, crypto is not. With crypto, you can easily send money to friends and family outside of your country of residence.
3. Being greedy when others are afraid
As the legendary investor Warren Buffett said, “Be greedy when others are afraid.” Crypto analyst Lark Davis has shared some statistics that interest in crypto has fallen to its lowest level since July 2021. This is because there is a lot of fear in the market after the last correction. Davis believes these are actually the right indicators that long-term investors should consider gradually filling their bags, adding:
“The more fear and despair we see, the more people sell out, the less interest in google trends… the better time to buy. You may not want to hear this, but it’s true.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.