Bitcoin, SHIB and altcoins are heading for a broader market downturn, but financial advisors are urging worried investors not to panic. Here are expert comments on the latest price movements…
Bitcoin, SHIB and Altcoins are Falling: what do analysts say?
As we reported on Somanews, bitcoin has fallen below $27,000 today, which is almost a one-year low. Shares of Coinbase, one of the largest crypto exchanges, fell to a record low after the company warned of a decline in trading volume. Coins pegged to the US dollar are also experiencing a crash, fueling debate about the value of algorithmic stablecoins.
Consultants say the turmoil is a good time for investors to balance their portfolios and perhaps better understand which coins will have long—term value. Cryptocurrency analyst Gritt Trakulhun, who invested in Titan, said: “Bear markets are often a great time to save money, as you think in the long run. “It’s definitely a difficult market, but now is a good time to develop a strategy.”
Billionaire entrepreneur Mark Cuban noted on Monday that “speculation has raised the shares of several Internet companies that the cryptocurrency is in a state similar to the dotcom bubble, but eventually reached the bottom.” Trakulhun said that while a bubble is not imminent, investors should focus on shaping their portfolios according to a long-term strategy that takes into account a time frame of at least three years.
Bitcoin Hedges Inflation Risk
Bitcoin rose on Thursday after US inflation data showed a continued sharp rise in consumer prices last month. BTC dropped below $27,000. It has lost more than half of its value since peaking in November. The fall once again raised doubts that Bitcoin acts as a protection against inflation. The hedging function is a function that is often referred to by proponents who claim that its fixed volume of 21 million units will withstand devaluation. Instead, the cryptocurrency has largely followed the largest technology stocks, the Nasdaq 100 index, which is very sensitive to price increases.
Matt Hougan, investment director at Bitwise Asset Management, argues that Bitcoin is both an asset with short-term risk and long-term protection against inflation. Hougan said lower prices make sense in risk-prone markets because investors tend to discount assets whose value is mostly related to the future. “Bitcoin is still immature, and investors investing in bitcoin are betting on the outcome, partly where it is widely accepted as a means of saving, such as gold, or will move into other major use cases,” Hougan said.
Investors turn to these coins when altcoins like SHIB fluctuate.
According to experts, market volatility is a good time for investors to exchange their altcoins for less risky cryptocurrencies. Trakulhun of Titan said that investors should stick to cryptocurrencies that they believe have a solid foundation and durability. “At the moment, it’s better to focus on cryptocurrencies that you firmly believe in than diversify your portfolio with altcoins that you don’t really understand,” Trakulhun said, adding that 90 percent of altcoins “won’t recover.” But he thinks the survivors will recover.
Although the collapse of the cryptocurrency is likely to become even more terrible, according to experts, any further fall is a good excuse for investors to balance their portfolios and avoid excessive investments in cryptocurrency. Eliezer Ndinga, director of research at 21Shares & Amun, said cryptocurrencies should make up 5 to 10 percent of your total portfolio, depending on each investor’s risk appetite.
Stablecoins and NFT: what’s new?
Algorithmic stablecoins are also being tested. These coins are offered as a way to overcome the crypto chaos by pegging their value to the US dollar or another reserve asset. However, on Wednesday, TerraUSD (UST) fell to 45 cents, instead of trading at $1 as planned. TerraUSD supporters are trying to raise about $1.5 billion to support the token. Ndinga said that this is a good reminder to investors to rebalance their portfolios and make sure that the stablecoins they own are fully secured, such as Tether, USDT and USDC.
Market sentiment affected all segments of the crypto market, including non-interchangeable tokens (NFT). According to the cryptographic data tracking platform Dune Analytics, the average daily trading volume on OpenSea, the largest NFT market, fell by more than 34 percent from January to May. The number of active users on the platform fell by 51 percent.
Zachary Friedman, chief strategy officer of Secure Digital Markets, said that this market turbulence is the first real bear market cycle for NFTs, which makes it difficult to determine where prices are going. According to the expert, for investors looking for NFT projects that can prove to be durable and with strong foundations, this turbulence may be a good time to restructure the portfolio.“In a bear market, compared to when things are flying by and you’re motivated by the fear of missing out, you really get more time to do your due diligence and assess the adequacy of a project,” Friedman said.