We saw a spectacular crash in the last week or so in the crypto space. Some coins on the top 100 lost more than 65% in value while Bitcoin lost 40% and even touched the $30,000 mark for a brief moment.
As of this writing, Bitcoin is coasting at around $37000.
The question everyone in the crypto space is asking is, are we out of the weeds yet? Are we in the clear or is the danger of a bear market lurking around?
The probability of a bear market?
We cannot rule out the probability of crypto entering into a bear market. However, in my opinion, this will be a short-lived bear market.
I personally think, as the broader market starts recovering sharply with life returning to normalcy, we might enter into good 3-5 years of exuberance and inflation, which should also help crypto asset class in general.
As the options of investment start thinning out because of the inflation eating up the dollar value, more and more people might be forced to look into Bitcoin that is deflationary.
So, even if we enter into a bear market, it will quickly reverse and follow the broader market trajectory. Are there guarantees? Certainly not.
Follow technology trend, not market ups and downs
When you look at what happens in the crypto space or for that matter, any market, you will probably have a nervous breakdown when the market goes up and down.
That is even more prominent with Crypto space where the swings are dizzying.
How can you be sane in these volatile times?
One point of view that helps me personally is to look at the technology trend rather than the daily/weekly market swings.
In my personal view, crypto is here to stay. Bitcoin has at least a decade ahead of it (unless a better technology threatens its reign).
Even if we say only 10% of these smartphone users will eventually come into crypto over the next 10 years, that gives us around 430 million users, a 6x from its current base.
However, remember, as we add more and more users, the value of the crypto asset class will not increase proportionally, it will increase exponentially.
In my view, if crypto has a 10x potential for the next 10 years, I am happy with that. Which other investment can 10x your money in a decade?
Again, this is not a guarantee. This is my personal basis and it keeps me sane.
That is why when the market collapses, I just distance myself to keep my sights on the technology trend rather than the market action.
You can find any point of view that works for you.
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