Volatility is a part of the investment game. There are several causes for a market to become volatile. The global market often weakens as geo-political tension approaches, gets back on its feet long before it ends, and almost treats human calamity with indifference. And that’s not what we say, but what we have seen over the course of history. Earlier, it was Covid-19 today it’s the Russia-Ukraine Crisis, however, the crypto crash is quite similar.
The President of Russia has already done his part in shaking up the entire global market be it cryptos or stocks, bonds, and commodities. While the peace-loving global citizens condemn this act of Russia against Ukraine, leaders at NATO have also expressed their strong condemnation of this reckless and unprovoked attack on Ukraine. On the other hand crypto prices also took a hit with Bitcoin plunging below $37,000. According to the latest data from CoinGecko, the entire crypto market is down by 3% which is nearly $1.75 trillion.
However, the quick and important question is what should crypto investors do during these times. We understand that our crypto community must have several questions such as whether it’s the right time for more investments? Whether the prices will plunge more or How to strategize the next investment moves? Well, before we get answers to all these questions, let us first understand and analyze the trends we have seen in the crypto space during such crashes and what we can deduce from them.
How Crypto Market has historically weathered Crisis
The crypto crash as we see today is nothing new for the crypto veterans. Today’s Digital Gold, Bitcoin has crashed up to 80% or even more several times since its inception. Keeping the long historic crashes in mind, this 50% drop since its last all-time high in November 2021 is considered mild by industry analysts. Crypto assets are very different from the other investment tools. The real-world use-cases, supply, and demand for the crypto asset and its fundamental applications are of more importance when predicting their future movements. The past crypto crashes have happened when the long-term utility of the crypto assets, say Bitcoin, was questioned.
For instance, Bitcoin faced a major pullback when China had proposed restrictions on crypto in 2017. The current crash in the crypto market is seen after Russia declares war on Ukraine, a nation that was on its way to becoming a crypto hub. History has proven that similar limitations put upon by different nations on the crypto assets have resulted in such market crashes. Whenever something puts the long-term future of Bitcoin in dark, there is a temporary plunge in the demand and thus, the price drops. However, If we go by the historic events, the crypto market usually takes these as non-events and rises back.
Historic fall in Bitcoin and its Pull-back
| Event | Percentage drop in Price | Price after crash | Price recovered -Year-end |
| June 2011 | -99% | $2 | $4 |
| August 2012 | -56% | $7.50 | $15 |
| April 2013 | -83% | $80.04 (3 May 2013) | $748.57 (31 Dec, 2013) |
| December 2013 | -50% | $448.89 (18 Dec, 2013) | $1017.82 ( 6 Jan, 2014) |
| December 2017-December 2018 | -84% | $6111.85 (6 Jan, 2018) | $4075.55 (7 Jan, 2019) |
| March 2020 | -50% | $4765.77 (13 March, 2020) | $28580.5 (31 Dec, 2020) |
| May 2021 | -53% | $33750 (23 May, 2021) | $66461.6 (20 Oct, 2020) |
Source: CoinMarketCap (From 2013-Present)
Crypto Community’s say on the NATO & Russia-Ukraine Crisis
The crypto community just like the entire world wishes peace. Many big names from the crypto world took to their Twitter handles to express their grief about the current situation of Ukraine and Russia’s hostile behavior. Vitalik Buterin, co-founder of Ethereum expressed his disappointment about this course of action. He also said that this war was a crime against the Ukrainian and Russian people. In another tweet, he mentioned that he was not at all neutral towards this situation and sided with Ukraine.
Reminder: Ethereum is neutral, but I am not.
— vitalik.eth (@VitalikButerin) February 24, 2022
The onset of war was also condemned by Ryan Sean Adams, founder of Bankless. He tweeted feeling helpless on seeing the current situation of Russia and Ukraine. Despite all this, the crypto community is quite bullish. According to the founder of Crypto Pragmatist, Jack Niewold, times of great fear have actually been strong buying opportunities.
Interestingly enough, times of great fear have actually historically been strong buying opportunities.https://t.co/3P2CoGJlpk
— Jack Niewold (@JackNiewold) February 21, 2022
What happens next? Importance of DYOR
Looking at the historic data, it is evident that Bitcoin has always pulled itself back from the deep and dark phases. And every such crash has only helped the crypto asset gain a new all-time high. Will that happen again? Well, no one knows. Not even the best of crypto analysts can guarantee a pullback or the time when it will rise back.
A crisis like this has always played in favor of long-term investors be it any investment tool. As an investor, one must always picture the long-term scenario and make the next moves. Uncertain times definitely see a risk-off trend, but these times also empower retail investors to receive a share of the pie at a very cheap rate.
But, you must keep in mind, that:
Investment is all about research. Although many investors think it’s a great time to average out their investments one must only invest as much as one can afford to lose.
At times like these, one must read and research about the investment tool with a long-term perception in mind. Strong fundamentals, great use-cases, and real-life application should be among the top priorities while choosing any investment class so that when tough time strikes, they can weather the storm. We always recommend our investors do their due diligence before investing in any crypto asset.
Additional Read: Will Bitcoin touch $100,000?
Summing it Up!
A crisis will always find its way to markets, however, one must always think long term. Investors who plan to make the most out of such situations must study the asset class and consider its long-term implications rather than just going by the social – media-led trends. Bitcoin has always faced such events and emerged beautifully out of it, and as for this crisis, we can only hope for the best.
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Disclaimer: The above views, information represent the independent views of Primestack Pte. Ltd, Neblio Technologies Pvt. Ltd, and/or their affiliate entities and are for informational/ educational purposes only. The content, information or data provided above is not an offer, or solicitation of an offer, to invest in, or to buy or sell any interest or shares, digital assets/ cryptocurrencies or securities, or to participate in any investment or trading strategy. Any statement or communication made above shall not be treated as legal, financial, investment or tax advice by the reader. The calculations, data, risk-return formulations, performance or market capitalization indicators captured above are based on the independent data sourcing including collation of public information and/or analysis performed by analysts, advisors or employees of Primestack Pte. Ltd/ Neblio Technologies Pvt. Ltd and/or their affiliate companies and/or any third party. Past performance is not indicative of any future results. The reader(s) are hereby advised to consult their financial/ legal/ tax advisor(s) before making any investment.
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