A look at the price charts currently makes for a subdued mood. The pressure on the crypto market is too great. Not so long ago, highs were still being celebrated, but now things are going downhill. This is no reason to panic, because we already know from the past that cryptos have always risen from the trough. Of course, those who were looking for quick money without risk are likely to be disappointed and much poorer by now. Cool calculators, long-term planners and iron hodlers know that now is the time to keep your assets together and even add to them if necessary. You just have to keep your eyes open and interpret the various signals correctly.
Fidelity remains optimistic
One of these signals is the behaviour of large, institutional investors. As we have reported, Fidelity, one of the largest pension funds, has entered the crypto business and allows its clients to invest part of their retirement savings in Bitcoin. And from Fidelity comes a clear announcement: CEO Abby Johnson remains bullish for the crypto sector in the long term despite the dramatic sell-off of the past few days. He sees this “crypto winter” as an excellent post-buy opportunity. Assuming nerves of steel, the figures prove him right: Bitcoin has already lost more than half of its value this year, and Ether’s losses are even higher at almost 70 percent (as of mid-June).
The wheat is now beginning to be separated from the chaff: Those who have been managing as if there were no tomorrow will be the first to lose ground due to a lack of strategic reserves: Coinbase, one of the largest crypto exchanges, announced the dismissal of 18 percent of its employees relatively early. The reason given was too rapid growth during the bull market – but if you build up a nest egg in good times, you may have to make such decisions later.
Since time immemorial, economic crises have turned out to be excellent opportunities for cool strategists and bold investors. This includes Abby Johnson, the world’s tenth richest woman with over $20 billion as of March 2022, according to “Forbes”, and head of the traditional Boston investment house Fidelity Investments. She has been investing in bitcoin since 2014. Those who can remember: Back then, you could get 1 BTC for less than 250 US dollars! In view of the last eight years, her attitude is understandable – it is already her “third crypto winter”, explains the investor Johnson in the context of the “Consensus 2022” crypto conference. And honestly admits that she too feels “terrible about the lost value”.
Buy the dip
This, however, is where she differs as a crypto bull from a crypto bunny: Despite the huge selling pressure, Johnson remains convinced of the positive outlook for cyberdevs. “There have been a lot of ups and downs, but I see it as an opportunity,” Johnson classifies the current crypto bear market. “I was brought up as a countercyclical, so my reaction is reflexive: if you think the fundamentals of a long-term case are really strong, it’s time to double down and get in extra strong when everyone else is getting out.” It seems logical that Johnson will use the current dip to re-buy Bitcoins.
Where she is very much critical is the governments’ push for regulation, which is having a growth-inhibiting effect on the crypto market. In this context, we are observing a paradoxical situation: on the one hand, miners are being condemned and in some cases mining is completely banned, while on the other hand, everyone wants their piece of the pie and to nibble away at the investment success of the citizens by means of crypto taxes. The evil of it all…
Johnson, for her part, is calling on lawmakers to draft transparent rules for dealing with cryptocurrencies. This would take a lot of uncertainty out of the market, reduce volatility and thus enable innovation. Of course, you can’t just blame governments for the current slide: Inflation is at a very high level worldwide, which is now leading to tighter monetary policy on the part of central banks: Liquidity is to be withdrawn from the markets, but this depresses the sales and profits of companies. Added to this are high energy prices, which traditionally act as inflation drivers. The growth outlook has been lowered by the OECD – also a negative signal for conservative investors. And the more risk-averse crypto-fans are also scaling back their risk levels: “Crypto-fans are used to volatility, but these downward roller-coaster rides are getting harder to digest. Now that the era of cheap money is coming to an abrupt end, traders are becoming much more risk-averse and turning their backs on crypto assets,” Susannah Streeter of Hargreaves Lansdown tells Bloomberg.