The cryptocurrency bubble has begun to deflate. Opinion

In the entire modern history of humanity, there has never been such a giant financial bubble that has formed today in the cryptocurrency market.

Bitcoin became a giant bubble back in 2014. Since then, it has grown another 115 times.

A Brief History of Market Bubbles

• Bitcoin: 2016 – 2017 (+3725% to 12/11/2017);
• NASDAG Composite: 1994 – 2004 (technology bubble burst);
• Residential real estate prices in the USA: 2001 – 2011;
• Japanese stocks: 1983 – 1993 (the “lost decades” began);
• Gold price: 2001 – 2011.

At the same time, it would be a mistake to think that cryptocurrency is completely useless and there is no point in it, but if economists estimated the actual price of the bitcoin, then it would be about $100, but not $60,000.

 The most famous investor in the world, Warren Buffett, even said that he would not buy all the cryptocurrency in the world even for $25 because it has no value.

The founders of bitcoin did a brilliant thing: for the provision of their computing power, users receive a virtual currency, and due to the artificial restriction on the emission of currency and thanks to the possibility of exchanging for real money, they made a real pyramid, which is not only the largest in history but also the most survivable.

That is, bitcoin is always subject not to inflation but to deflation, and this became very attractive for the first investors. However, then the demand was already formed by the black market since illegal transactions were made in bitcoin for massive amounts.

Bitcoin is outdated, and most new cryptocurrencies work on much more advanced technologies. If you compare bitcoin with a phone, this is a black, white Nokia around smartphones appear.

Another thing is that the demand for bitcoin is supported by many funds that invest in crypto, the most popular currency. Therefore, the need for bitcoin strongly depends on the market for other currencies, and a slight fall in the bitcoin rate leads to a collapse of more minor currencies.

For example, now bitcoin has fallen from $67,000 to $22,000, that is, three times, and the second most popular currency, Ethereum code, has fallen 4.5 times.

The fall is simple – the cryptocurrency market has long been tied to the US stock market, and there is already a lot of the same ETF for cryptocurrency.

The relationship is approximate as follows – a 10% drop in the S&P 500 index leads to a 50% drop in bitcoin, and a 20% drop in the index leads to a 75% drop in bitcoin.  

It follows that if the S&P 500 falls to 3300, then Bitcoin could already be worth $10,000, and smaller-cap cryptocurrencies will lose much more. For example, if Bitcoin falls seven times from its peak, Ethereum will fall ten times.

Stock exchanges are trying to stop the fall

The most famous exchange Binance, “temporarily” stopped the withdrawal of bitcoin, and all May, the founders of cryptocurrency exchanges tried to convince everyone that there would be no fall and that there would be a new “rocket” soon.

The fact is that stocks of cryptocurrency exchanges are falling much faster than bitcoin. For example, shares of the Coinbase exchange fell from $348 to $49, and the founders of these exchanges say that they buy shares of their companies at a reasonable price.

Such a fall in shares will lead to the fact that they are unlikely to be able to get bank loans, which they need because there is no profit to be seen. They claim there will be no profit because they are actively investing funds, but for some reason, the yield was when bitcoin was at its peak, and trading volumes were higher.

Zero risk

This year, there are already several cases of the cryptocurrency falling hundreds of times (altcoins) and even stablecoins zeroing out. Still, we don’t see the risk of bitcoin zeroing because too many funds are tied to it, and it will be in demand for a long time.

We expect that there will be just a smooth transition to other more modern cryptocurrencies, which, among other things, will be in demand precisely as a means of payment. For example, Durov’s currency, TON Coin, is gradually being integrated into Telegram, and many services have already appeared where the price is in his cryptocurrency. In addition, a new paid TG subscription will likely be in his cryptocurrency.

How to make money on this?

Some “advanced” investors suggest buying 5% of their investment portfolio Ethereum coins, a little bit of Coinbase shares and AMD shares, which are also, albeit to a lesser extent, dependent on cryptocurrency.

If you are not a long-term investor, then now would also be an excellent time to buy a video card.

Institutional investors actively recommend digital assets to clients.  

According to a study by the Bitcoin Revolution cryptocurrency platform, institutional investors actively recommend crypto assets to their clients.

 More than 5,500 professionals and 23,000 retail investors from 23 countries took part in the survey.

As a result of the survey, it turned out that the majority of professionals responsible for making decisions about institutional investments advise clients to pay attention to digital assets:

“Institutional investors are actively recommending crypto assets to their clients, and retail investors are starting to use them not only for trading. This trend needs to be monitored to assess the impact of the current financial climate on the adoption of cryptocurrencies outside of the original ecosystem.”     

As the survey showed, 68% of the surveyed institutional investors actively recommend cryptocurrency, while 15.2% do so with caution. Only 6.4% do not recommend their clients to contact crypto assets. In addition, about 40% of retail and institutional investors started trading digital assets just two years ago.

In the next five years, 72% of institutional investors intend to increase their savings in digital assets, and this figure is 73.1% among retail investors.

In addition, 33.8% of institutional investors plan to learn more about the new industry, 33.4% are looking to expand their knowledge base for the sake of their company and clients, and almost 30% intend to invest in expanding digital asset offerings.

Investing in companies working with cryptocurrencies

For investors, it also makes sense to invest money not directly in cryptocurrencies but in companies that specialize in working with cryptocurrencies. Let’s look at some of them.

 But, first, let’s look at some of them.

Microstrategy Inc

The first way would be to invest in shares of MicroStrategy. The company provides retail, financial, insurance and telecommunications businesses with software and services that allow them to send reports and analyze data through a web application. It also offers consulting services, support and training.

Although the company develops software, it has about 129 thousand bitcoins, which is a lot of billions of dollars. The more expensive bitcoin, the more expensive the company’s assets and its shares are worth. As a result, shares sank more than 75% in a year.

Marathon Digital holdings

The next option would be to invest in Marathon shares Digital holdings. This company mines cryptocurrency, most often bitcoin. Marathon Digital has about 7.5 thousand bitcoins. The more expensive bitcoin, the more expensive the companies’ assets are, and the more profitable it is to mine cryptocurrency.

It was possible to buy Marathon shares on foreign exchanges and over-the-counter trading if there was a qualified investor status or an account with a foreign broker.

Riot blockchain

The third option would be to invest in the stock of Marathon Digital Holdings, namely Riot Blockchain. This company is also active in bitcoin mining. She specializes in buying cryptocurrencies and blockchain businesses and supports blockchain technology companies. This company owns large amounts of cryptocurrencies, including.

Buy Riot shares Blockchain is available on exchanges if you have the status of a qualified investor or an account with a broker – for example, CFD Forex.com and CityIndex, Plus500 online broker, eToro and AvaTrade online trading platforms.

Coinbase

And the last option would be to invest in Coinbase shares. This American cryptocurrency exchange platform operates remotely, without an official physical office. That is the same crypto exchange, one of the few top ones on which the sale of various cryptocurrencies occurs. The exchange shares began publicly traded not so long ago, from April 2021. The exchange earns commissions from transactions with cryptocurrencies – the more popular and volatile cryptocurrencies, the better for the exchange business. Unfortunately, shares sank almost 80% in a year.

We have considered all the most appropriate ways to invest in cryptocurrencies by purchasing company shares. If your portfolio consists of dividend stocks, you can earn dividends focusing only on substantive facts. After the existence of the facts, the stock price usually starts to rise until the cut-off date, so you can also earn on dividend trading.

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