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Is The Crypto Crash A Sign Of Trouble Or A Time To Buy The Dip?

Key Takeaways:

  • Bitcoin plunged in value this week, and other cryptos followed suit
  • Some investors are losing their life savings, while others are considering buying the dip
  • Q.ai’s Crypto Kit can help investors navigate the crypto world amid uncertain times

It’s been a turbulent time for the markets, in general. The last few months, er, years, have been especially uncertain for investors at large. But, as much as the markets are moving up and down these days, cryptocurrencies have really been through the ringer. Bitcoin and other cryptocurrencies fell in value on Thursday following a digital asset sell-off that has already wiped almost $600 billion in market capitalization in a single week.

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To kick off the week, Bitcoin plummeted in value on Monday, causing nearly 40 percent of holders to lose all the money they’d invested in it. The value of a single coin fell far below last year’s post-crash low in July and, now, it’s worth just half the value it was when it reached a market high last November. At the time of writing on Thursday, according to data from Coin Metrics, Bitcoin was down to $26,848.20.

Other cryptocurrencies are following suit, many of which have seen double-digit losses in value, including Avalanche, ApeCoin, Cardano, Shiba Inu, and Solana. Some blockchains have even pressed pause on the trade of some coins as they work to stabilize the markets.

This is not the first time that Bitcoin has crashed—even this year. In January, the crypto market witnessed a massive loss, clearing more than $1 trillion. However, in an effort to curb inflation, the Fed’s rate hikes have made it more expensive to place bets on the markets, further reducing investor support for cryptocurrencies.

Another piece of the puzzle contributing to the slump is the fall of stablecoins. Stablecoins—digital tokens tied to the value of traditional assets—generally offer stock market stability. While Bitcoins offer value due to limited availability and sheer investor confidence, stablecoins peg value to legal tender like the U.S. dollar.

Some stablecoins back their value by holding actual US dollars in reserve. But, the supply of some stablecoins is controlled by algorithms that keep them consistent with the value of the dollar, which should preserve some government confidence.

Still, TerraUSD coin and its sister coin, Luna, for example, also fell this week. While TerraUSD is supposed to remain at $1, it fell to 60 cents on Monday and then halved to below 30 cents on Wednesday. Luna fared even worse this week. So much so that Terra’s parent company tapped into emergency reserves of Bitcoin—used to back TerraUSD—to boost the stablecoins’ value but to little avail.

Overall, the combination of the Fed’s recent rate hikes, relentless market volatility and the loss of confidence even in stablecoins is wreaking havoc on digital assets. As Bitcoin and other alt coins keep creeping down this week, crypto investors are biting their lips from the edge of their seats.

While some have invested hefty chunks of change and lost life savings in a matter of moments, others who have been careful yet curious about crypto are wondering if now is a good time to “buy the dip” or if the crypto crash could keep crumbling.

However, getting in on the crypto mayhem may not be as easy as it seems. Investing in crypto typically involves putting together and navigating a totally separate digital wallet—and then selecting the right investments, managing your risk and executing trades in a space that’s most certainly uncertain.

That’s where Q.ai’s Crypto Kit comes in to help. You can easily invest in a group of exchange traded trusts that hold major cryptocurrencies, like Bitcoin and Ethereum, including the likes of Grayscale Bitcoin Trust and Grayscale Ethereum Trust all in one app with your other investments. The Kit also provides access to a diversified fund, Grayscale Digital Large Cap Fund, which also invests in some smaller holdings that are subject to change over time.

Better yet, it rebalances weekly to adjust to changing crypto market conditions. Q.ai leverages alternative data sets focused on social media and news sentiment to garner insights on short-term moves. From there, our algorithms augment longer-term trends with the short-term sentiment trends to find the right balance for your portfolio.

Learn more about Q.ai’s Crypto Kit here.

Download Q.ai for iOS today for more great Q.ai content and access to over a dozen AI-powered investment strategies. Start with just $100. No fees or commissions.