- The crypto market correction has set fear on the market but here are three realities that every crypto investor needs to face.
- Analyst Lark Davis explains how to face the fear and take bold measures in tough times.
The cryptocurrency market has remained extremely volatile since the beginning of 2022 scaring the sh*t out of retail investors. Too many global factors and the current geopolitical uncertainty have been influencing the crypto market recently.
Of course, one cannot deny the possibility of tough times ahead as crypto tends to move largely in tandem with equities. But crypto analyst Lark Davis shares three “terrifying” realities of the crypto market. Davis explains three strong reasons as to why holding up to crypto is a smart move in the long run.
1. Inflation
The U.S. has released its inflation numbers for the month of February 2021 peaking at a staggering 7.9 percent, its highest in four decades. Inflation in other parts of the world is also peaking out. The EU has reported 5 percent inflation while the U.K has reported a 4.9 percent inflation rate.
Note that this is the average inflation number and the price of essentials like fuel has shot up by nearly 30 percent. Well, this was very much expected considering the trillions of dollars printed during the COVID-19 pandemic time.
Well, in this case, if you have to protect your money, you need assets like crypto which have given strong yields over the last decade. Bitcoin (BTC) and other top cryptocurrencies have given yields upwards of 150 percent on annual basis over the last decade.
2. The geopolitical uncertainty
The Russia-Ukraine war has been a learning lesson for investors across the globe. While Russia launched its “military operation” in Ukraine, the West levied severe sanctions launching an “economic war” with Russia. The result is that the Russian Ruble has collapsed 50 percent against the dollar over the last two weeks.
This represents a massive erosion of wealth and purchasing power for Russian citizens. Apart from that, there have been several capital controls in and out of Russia. Russians aren’t even able to use most of the foreign payment services to move their money out of the country.
While fiat currencies are bound by boundaries, crypto is not. With crypto, you can easily send money to friends and family outside your country of residence. The reality of crypto isn’t limited to Russia but even to other countries across the world.
3. Be greedy when others are fearful
As legendary investor Warren Buffett says “Be greedy when others are fearful”. Crypto analyst Lark Davis shares some stats that the interest in crypto has dropped to the lowest since July 2021. This is because there’s too much fear on the Street following the recent correction.
Davis believes that these are actually the right indicators wherein long-term investors should consider filling their bags in a staggered manner. Davis adds:
The more fear and despair we see, the more people selling and leaving, the lower the interest in google trends… the better time it is to buy. You may not want to hear it, but it is true.
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