Fasten your seatbelts, please!

As so often before, Bitcoin is leading the way in this unpleasant situation in mid-June, dragging down altcoins and equities in large numbers as it plunges. However, the most severe crash in months may only be the beginning of a longer bearish movement, which does not necessarily have to be a bad thing – as so often, the investment horizon is the measure of all things. Day traders will be pulling their hair out, investors who think in terms of years will iron out this crisis in their performance charts like so many before. But how did it come to this?

The issue of energy is immanent in cryptomining. And in a situation like this, where energy prices are rising uncontrollably, the geopolitical situation is tense, Corona has us in its grip, Terra has crashed and the planet is heading for stagflation in large parts, you can’t blame anyone for not being in the best mood and most willing to invest. To make matters worse, interest rates are being raised in the US, making the dollar more expensive and bond yields higher.

Bitcoin sell-off

When cryptocurrency mining threatens to become a losing proposition, some miners sell off their Bitcoin holdings to cover their running costs. Supply and demand have always determined the price of a product or service. The extremely high energy prices are forcing miners to dump stocks, which inevitably leads to a price collapse. But alongside Bitcoin, the overall crypto market capitalisation has also been dangerously reduced and shows no signs of slowing down. Right now, the are crypto markets are worth a mere $980 billion – that was $3 trillion in cumulative market capitalisation not too long ago in November 2021 time!

Gone with it?

The crypto capital decline is not only noticeable in Bitcoin, but in all cryptos. In addition to BTC, the ETH price also fell by 20% in 24 hours. It is only just above the all-important $1k mark. If it falls below this level, there is a threat of further losses. Besides BTC and ETH, FTM or AVAX have also lost over 20 % – a crazy situation in which crazy things also happen: The crypto tracker “Whale Alert” reported that a wealthy investor moved 10,000 BTC to a crypto exchange in a single transaction. When a whale moves a quarter of a billion dollars just like that, it does not go unnoticed and triggers uncertainty. When such a large sum is moved to a crypto exchange, one can certainly assume intentions to sell.

Especially in a critical situation like this, it is incredibly important to keep a cool head. Now the principles that were propagated before the entry come into play: Only invest what you are prepared to lose! Position yourself broadly! Investing is not a sprint, but a marathon! So hold your breath and dive through.

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