Despite the recent bear market in cryptocurrency, investors need to stay focused on the long-term potential of the space.
While Bitcoin (BTC), as the flagship crypto, is down about 58% from its $69K Nov. all-time high, this is not the first time that the market has seen a significant dip. In fact, in December 2013 and 2017, Bitcoin sunk 50% and 84%, respectively.
In March 2020 BTC nosedived again by 50%. This was followed by another 53% dip in May 2021 that resulted in a whopping $1T in value being wiped off the global crypto market in a single week. However, what is important to remember is that Bitcoin has always recovered from these dips and gone on to reach new all-time highs. Additionally, we are talking about a crypto asset that has catapulted from a few pennies in value to tens of thousands of dollars per coin. But let’s be clear: that’s not the only reason to be optimistic.
It goes without saying that the underlying technology of Bitcoin – the blockchain – is incredibly powerful and has the potential to change the world. The believe is that as more people learn about Bitcoin and blockchain technology, they will see the huge potential of this new disruptive tech and invest in it.
So, even though the price of Bitcoin – which remains to be seen at what price point it will currently find support at – may be volatile in the short-term, the consensus among analysts is that it will continue to rise in the long-term as more and more people adopt it.
Also, let’s not forget Wall Street’s important role in all of this.
As the world of finance becomes increasingly digital, it’s no surprise that Wall Street is turning to cryptocurrency. From Bitcoin to Ethereum (ETH), there are a growing number of options for investors to choose from. And with the recent announcement that the Street’s most influential firm, Goldman Sachs (NYSE:GS), is opening a Bitcoin trading desk, it’s clear that the mainstream financial world is taking cryptocurrency seriously.
So why is Wall Street turning to cryptocurrency?
There are a few key reasons. First, cryptocurrency is seen as a hedge against inflation. With traditional fiat currencies, central banks can print more money whenever they want, which can lead to inflation. With cryptocurrency, there is a finite supply of tokens, so inflation is not a concern.
Second, cryptocurrency is seen as a way to diversify one’s portfolio. With the volatility of the stock market, many investors are looking for ways to protect their assets. Cryptocurrency offers a way to do this, as its prices are not tied to the equity market.
Third reason Wall Street is turning to cryptocurrency is the already-mentioned blockchain technology that underlies it. Blockchain is a distributed ledger system that is secure and transparent. This makes it an attractive option for financial institutions, who are always looking for ways to reduce risk.
So far, Wall Street’s commitment to cryptocurrency has been mostly limited to trading and investing. But with the recent announcements from Goldman Sachs and other major financial institutions including Citi (NYSE:C), Wells Fargo (NYSE:WFC), JP Morgan (NYSE:JPM) and Morgan Stanley (NYSE:MS), it’s clear that this is changing. We’re likely to see more and more Wall Street firms get involved in the cryptocurrency space in the months and years to come.
So, although the current bear market may be disheartening, it is important to stay focused on the big picture and not panic. This dip is nothing more than a correction and it’s only a matter of time until we see another bull run. In fact, adoption is only going to increase from here as businesses and consumers alike begin to understand the value and potential that blockchain technology offers.
Disclaimer: This article is provided for informational purposes only. It is not intended to be used as investment or financial advice
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