Why the Current “Crypto Crash” is Not the End of the Journey
Regardless of market conditions, WadzPay’s core promise of bringing accessible payments to everyone, remains true. WadzPay is focusing on the utility of digital currencies such as Stable coins in the payments space, so the primary use case is unaffected by market movements.
Despite that, the editorial team at WadzPay has prepared an assessment of the current ‘state of affairs’ for the digital currency market.
On 19th May 2021, the crypto market crashed by as much as 50% behind some negative news surrounding cryptocurrency. It has been five days since the ‘bloodbath’, and it seems the crypto market is still experiencing volatility. Some say this is a major correction, where it’s just a temporary dip before cryptocurrency surges ahead to new highs. Others say the crypto bubble finally burst, so we are heading to “crypto winter” which implies a few years of low prices.
We don’t know which one it’s the right prediction. Only time will tell. However, we can always learn from the past. In fact, Bitcoin has crashed 80% or more three different times since 2012! Thus, the current 50% drop is not worse than what happened before. If Bitcoin crashed 80%, it would be trading at $13,000 yet it’s holding firmly above $30,000 and rallying.
This “crypto crash” might not really matter for crypto veterans who already experienced the previous crash in 2018. Bitcoin has a history of wild volatility, always expecting the unexpected. Yet, for first time crypto traders, this could make them realise how volatile the crypto market really is. It’s important to keep in mind that you only lose money when you decide to sell the tokens for less than you bought it for, known as “crystalizing your losses”. If you leave your money invested when the price of the coin is low, you are not technically losing any money.
Some speculators/investors panic during “crypto crashes” and they decide to sell. They are not thinking long-term when it comes to cryptocurrency. CoinDesk reports the recent crash caused $8 billion in forced liquidations on May 19 alone, since investors had purchased Bitcoin using margin trading. Margin trading is essentially trading done via ‘borrowed cryptocurrencies’ and is often compounded with additional risk for leveraging at multiple times the principal amount. This creates narrow margins within which traders will get liquidated, which is especially risky during times of great volatility. It’s safer to stay invested in spot crypto tokens in the hope that prices rise again, instead of confirming you lost the money because you sold it when the prices went down.
WadzPay’s CEO, Anish Jain, is contemplating this current “crypto crash” as well. “This dip will only mature the markets,” he said. “It ensures that people are aware there will be downtrends as well as uptrends like in every trading sector. One should invest with a long-term view point rather than for making a quick buck.”
In retrospect, Bitcoin history teaches us that there is no shortcut in getting rich. Even if you buy some Bitcoin today, there will be sharp and lengthy setbacks along the way before you can receive some neat profits.
Not investment advice.
24 May 2021
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