The crypto crash has absolutely devastated the entire market, and the future of cryptocurrency looks bleak overall. However, that doesn’t mean there isn’t any hope in this trillion-dollar market. In reality, the crypto market is slowly recovering, and there are lots of opportunities and strategies you can use to still make money!
Know That the Market is Going to Rebound
Right now, it seems like the world is about to end and everything is burning down, but it's not. The thing is, this is not the first time the crypto market has "crashed". Sure, this crash might be more severe than some of the previous crashes, but if you take a look at all of the past examples of something like this happening, you should also take a look at what happened after the event.
There was always a rebound. Prior to Bitcoin reaching its all-time high price of over $66,000 in November of 2021, it saw a massive crash in the summer of 2021, where its price went as low as $31,000. In June of 2022, Bitcoin's price went as low as $18,000, and while that isn't good news for the crypto, it's hardly at a point where it would be impossible for it to recover.
This is why I don't think it would be a bad idea for me to invest in cryptocurrency during this crash. This is because I know the market is going to rebound eventually, even if it may take a few months. "Investing in the dip" has been the primary way people have been investing in cryptocurrency, and once the shock factor of the crash starts to subside, I believe that the prices are going to rise by a lot.
However, I'm not sure if the prices are ever going to reach their peak again. In all honesty, a lot of people have turned away from crypto because of the recent crash, and it's going to be a lot harder to find new people to fill in that gap.
So, at the end of the day, are crypto prices going to hit brand new peaks in 2022? I doubt it. There's still a possibility for that to happen, but it's impossible to predict and, for the time being, it seems highly unlikely. But are crypto prices going to recover? Are people going to continue making returns and profits from crypto trading?
Absolutely. There's no doubt in my mind that crypto is far from dead. Investing in this current dip is absolutely a risky choice, but in my opinion, it might not be such a bad idea for me, at least. Keep in mind that none of this is financial advice, it's just my opinion and analysis.
https://www.youtube.com/watch?v=IzcI_cwwZqQ
Stick With High-Cap Low-Growth Cryptos
In the past few years, we've seen a lot of crypto trends come and go. We saw the rise of NFTs, DeFi, stablecoins, and so much more. On top of that, we also saw a lot of new cryptocurrencies and blockchain platforms that promised to change the world. But in my opinion, those cryptos might not be a very good investment for the time being.
Many of these low-cap cryptocurrencies are so far from anyone's radar at the moment that it's impossible to know whether they will recover or whether they will just go down the same route that LUNA did. Sure, some of these low-cap cryptos might actually be a great investment for the long run. But the main problem with all of that is the fact that no one knows which cryptos are going to survive.
But there are a few cryptocurrencies that we do know are going to survive. Namely high-cap cryptocurrencies like Bitcoin, Ethereum, and even Binance Coin. Now, I'm not saying these cryptos aren't ever going to crash in price or make you lose money, they certainly can do that. But, the market is riskier than ever before, and no one should be at risk of losing 99% of their investment at a time when inflation and interest rates are at their peaks.
If there's one thing you'll notice about Bitcoin and Ethereum throughout this crash, it's that their prices have reached a low, but not so low that it's impossible for them to bounce back (as I already mentioned in the previous point). These cryptos have the most goodwill out of every other in the market, and if you're looking for safety rather than return, these are the cryptos I'd stick with.
Understand Why the Crash Happened
Now, here's a thing I've noticed that a lot of people simply aren't focusing on - understanding the crash. You see, a lot of people only seem to care about the numbers and graphs they see on their screen, not the reason behind those numbers and graphs. This crash didn't just happen out of the blue; it happened for a very real reason. The crypto market was down because the global economy itself was down.
Inflation rates around the world, especially in the United States, were and still are skyrocketing. We haven't seen inflation rates like these in decades. Usually, in times of high inflation like this, governments and central banks will take action to curb consumption and encourage saving. How do they do that? By increasing interest rates.
In May of 2022, the U.S Federal Reserve decided to raise interest rates by half a percentage point for the first time in two decades. The goal of this increase is clear to everyone - to get people to start saving. This also means that people will be less likely to invest in volatile assets - namely stocks and cryptocurrency. That's why we also saw the S&P 500 go from 4,600 points at the start of April to 3,900 points in the middle of May; right after the interest hike was announced.
Similarly, the crypto market started to crash as well on a much higher scale because the asset was much more volatile than stocks. In short, the more volatile an asset, the higher the chance for it to crash because of interest rate hikes.
So, why is it important to understand this reasoning? Well, to prepare you for what's next. Any cut in interest rates, which is highly likely later this year, will likely have the exact opposite effect on the crypto market. Instead of there being a crash, there will be a sharp increase in prices across the board.
But you still have to predict whenever the reserve is going to decrease the interest rates, and that's not a very hard thing to do. Just keep a close lookout for inflation rates. Whenever inflation seems like it's lowering month after month, the reserve is going to decrease inflation rates again, that's almost a given.
If I were to stay ahead of the game and invest right before a decrease in interest rates (which would've come as a response to a decrease in inflation), I could potentially earn a lot of money in crypto returns. The only thing I can do right now is hope that inflation rates can stabilize sometime soon.
Day Trading
This crash has been devastating for people who invested in crypto for the long run, but it's not exactly the end of the world for day traders. Crypto has been one of the top investments of choice for day traders, who previously only saw stocks as a reliable option. This is because the price of any given crypto can drastically go up and down within a day since it's such a volatile asset. These days traders can still earn money today despite the crash.
Being a day trader means that you don't care about what the price was a year ago, a month ago, or a week ago. You don't care what the price is going to be either. All you care about is the price throughout the day.
If I were a day trader, I would invest at the perfect time of the day when the price of any given crypto is low and simply get my returns whenever the price is higher. There are even ways you can automate this with the help of a few apps. This can lead to some great returns in a short period of time, but of course, the risk is always there.
Take the Chance to Diversify Your Portfolio
If there’s one thing every successful investor will tell you, it’s to diversify your portfolio.
Diversifying your portfolio doesn’t mean you have to abandon crypto in general, all you have to do is invest in other things as well. Looking away from crypto might’ve seemed impossible in the past, but now, with the crash and everything associated with it, it might be time to look towards some other investments on top of your crypto investments.
Everything from stocks to real estate to farmland. These are all great ways you can create a safe cushion for yourself and, in the long run, make crypto investing safer for you. In fact, having a diversified portfolio will mean you’ll be able to take much larger risks when it comes to crypto.
Do you think the crypto market will rebound? Let me know in the comments below!
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