The sell-off of cryptocurrencies is a sign of growing trepidation signaling a shaky industry fundamentally. Some analysts are drawing comparisons to the 2008 housing meltdown. While the crypto industry’s collapse does coincide with versions of bank runs and lack of regulatory oversight, the overall effect is relatively small, and there’s no reason to believe that the crash will cause significant turbulence across the broader economy, open account
Bitcoin value has fallen by more than 70% since its peak in November last year
The recent fall in the price of Bitcoin may be unnerving for long-term investors, but that doesn’t mean you should hold off from investing in it. After all, the currency was once considered a haven against inflation and market volatility. But with the Fed tightening monetary policy, bitcoin prices are no longer immune to the fluctuations of risk assets like stocks and bonds.
This fall in the price of Bitcoin results from a broader sell-off in cryptocurrencies, as investors flee riskier assets in search of safer havens. On Monday, Bitcoin’s price plunged below $20,000 for the first time since November 2020.
It has lost more than seventy percent of its value since its peak in November. This is an extremely bleak outlook for a cryptocurrency that has soared nearly $69,000 during the global pandemic.
Ethereum is trading at half of where it was one month ago
After a record-breaking November, Ethereum is now trading at roughly half of its high. The biggest cryptocurrency by market cap has fallen over 80% since its record high in November.
Ethereum is now being exchanged for around $1,050, well below the $1,000 level. Its metrics indicate some demand for cryptocurrency but no immediate catalyst for a massive move. For now, investors are holding on to a better market.
The reason Ethereum is down half its price so dramatically is simple: many of the major players in the industry are lowering their prices to get investors to pay more for the currency. In the past few weeks, the price of Ethereum has traded between $2,000 and $4,000 per unit.
However, there’s still plenty of room for upside in this cryptocurrency, and its price could easily reach $12,000 by the end of the year.
Coinbase layoffs could lead to another crypto winter.
The news of Coinbase’s planned layoffs comes amid a broader cyclical downturn in the cryptocurrency market. The company has laid off over 1,000 employees this year, and its stock price has lost over 33 percent since May 31.
The layoffs are accompanied by an announcement that employees will receive 3.5 months of severance pay, plus two weeks for each additional year of employment. The layoffs are expected to cost the company $40 to 45 million, including severance costs.
The company laid off approximately 8% of its workforce in early 2019. Many other cryptocurrency exchanges have reduced staff and closed up shops in early 2019.
Even the Ethereum incubator Consensys slashed 13% of its employees last December and spun off several of the incubated “spokes” to make the cuts. In February 2020, the company will fire 14% of the remaining staff. This is a sign that a new crypto winter could be on the way.
One way to deal with the cryptocurrency plunge is to apply the dollar-cost-averaging method. This method can help investors cope with the market’s volatility and allows them to focus on the benefits over time. For example, in May 2011, Bitcoin was trading for $3.50, and if you’d invested the same amount then, you would have $12 million today. But as of writing, it’s trading for $42,000.
Unlike other investing strategies, dollar-cost averaging is safer than making a single investment and selling it all at once. While the risks are lower, investors still have a chance to benefit from market volatility. And holding onto digital assets has proven to be profitable in the past. Dollar-cost averaging is the safest way to buy during a market correction. For buying and selling cryptocurrencies you can use bitcoin trading software Because it is automatic software , it will easy for you to predict. And it doesn’t make much money, even just a few dollars each time.