Johannesburg, 01 Jul 2021
With the recent pullback in the crypto market, people are calling for the end of the crypto sector… again. What’s new, right?
It’s always interesting how people try to push the dramatic narrative, with the present being a great example. I mean the proof is in the pudding: look at all of the negative crypto PR flooding smartphone screens globally. With headlines citing everything from ‘China crypto crackdowns’ to ‘bear markets’ and even ‘theft’ – yet, we’ve seen this all before. Remember the COVID-19 crash of 2020? What about AIG, Bernie Madoff, Enron and let’s not forget about Steinhoff? The list goes on.
The point is that you read and hear about financial disasters, black swans, prosecutions and collapses no matter what asset class, industry or sector.
It’s funny how human behaviour works, and yet we fall for it every time, regardless of how many times certain types of scenarios tend to repeat themselves. Humans have a knack for loving the dramatic, and the media understands this very well. The dramatic brings eyeballs and eyeballs make headlines. That is why the next stock market crash, lockdown or ‘Bitcoin bubble’ headline is always one click away.
This makes it nearly impossible for anyone to see an objective reality when we’re constantly bombarded with negatives and fixated on prices.
Forget the noise – understand the asset
Crypto is like early-stage tech investing.
Prior to crypto-currencies, getting in on early-stage tech advances were only afforded to high net worth individuals through means of networking, venture capital or private equity. Big fancy names made to keep the everyday person out.
The fact is this, crypto-currencies are an innovative and disruptive technology, and for the first time ever, the everyday person can get a piece of the pie.
Early bird gets the volatility
Throughout history, innovative “tech” has always brought volatility.
Whether it be the horse to the motorcar (combustion engine), the handwritten letter to the e-mail (internet), or the centralised systems to the decentralised ones (crypto) – it happens.
The reason being that disruptive innovations do precisely that: they disrupt, and they ruffle the feathers, so to speak.
Disruptive tech, like the internet, tends to amass extreme amounts of hype years before the technologies are ready for real-world application. Investors flood in at the early-stage private company level and try to help them grow to the companies you see listed on the stock exchange.
This is happening with crypto today.
A whole parallel financial ecosystem is being built, live, in front of your eyes. Of course, there are going to be growing pains, mistakes and failure – but that’s the price of true progress.
“The only difference between crypto today and someone investing in an early-stage private tech company is that those private companies don’t have live prices mainlined straight to you; a second-by-second monitor of their adoption. This is an unusual feature for early-stage companies and one that is contributing to the volatility you see,” says Brett Hope Robertson, Investment Analyst at investment platform Revix.
So... is crypto dead?
The short answer is no.
Since the beginning, Bitcoin has seen multiple corrections; it’s a function of an immature market and a natural occurrence as they fight for mass adoption.
Since 2013, we have seen four significant corrections in the Bitcoin price: July 2013, January 2015, November 2018 and March 2020. It becomes clear that after every significant correction, Bitcoin along with the rest of the crypto-currency market has always risen from its ashes, and not only does it rise, but it comes back to set new all-time highs.
On average, Bitcoin fell over 79%, but still managed to recover more than +3 887% over its four biggest corrections. This means if you had invested R1 000 prior to a major pullback and you didn’t sell it, you would have R8 380 on average by the time it reached its next high. If you bought in at the bottom of the pullback, you would have made R39 870 on average. These are substantial returns for an asset that was pronounced ‘dead’ over a couple hundred headlines.
The point is, as far as crypto volatility goes, what we are experiencing now has happened before, and this is by no means uncharted waters. Bitcoin’s current correction reached as low as -56% before starting to find support and reversing. Since 2015, these corrections have also started to become less severe as Bitcoin becomes a more mature asset class.
Another way to navigate these waters is with something called the Fear and Greed Index.
This indicator gauges current crypto market sentiment and, in its basic form, shows how scared or ecstatic people currently are about the crypto market. The index is made up of multiple market factors such as volatility, momentum, social media and surveys (to name a few).
Below you can see that we are currently in a stage of ‘fear’.
Bitcoin has been in this stage before, namely, in December 2018 and March 2020 – with both of these times coinciding with Bitcoin price lows. The preceding 12 months showed a +108% and +1 354% Bitcoin price appreciation, respectively.
Hope Robertson elaborates: “The fundamental case for crypto-currencies hasn’t changed. These pullbacks are a function of the early-stage crypto market and have historically provided great buying opportunities for investors.”
While the market may be in a stage of fear, history shows that the words of Warren Buffett ring true: “Be fearful when others are greedy and greedy when others are fearful.”
Gain crypto exposure, reduce your risk
Diversification works for every investment category, and it works for crypto too.
Crypto-currencies are high-risk investments, and with this higher risk comes the potential for higher returns. Many fear this risk, but one way to reduce this risk is through diversification.
To get diversification at the click of a button is a dream product for crypto investors and now the dream is a reality.
Revix is an easy-to-use investment platform that offers three different equally weighted baskets, which we call “bundles”. Imagine a crypto version of the S&P 500 – in which each bundle enables you to effortlessly invest in the largest and most reputable crypto-currencies at a low cost through a single investment.
The Top 10 Bundle gives investors diversified exposure to the top 10 crypto-currencies as measured by market cap, with each crypto having a 10% weighting in the portfolio. Your bundle is rebalanced monthly, keeping you up to date with the fast-moving market without you having to lift a finger. It includes Bitcoin, Ethereum, Cardano and Polkadot. The advantage of this bundle is that it provides exposure to new and emerging cryptos that frequently outperform Bitcoin’s returns. The Top 10 Bundle has outperformed Bitcoin by more than two-and-a-half times over the last year.
The Smart Contract Bundle gives investors diversified exposure to the five largest smart contract focused crypto-currencies. Much like a contract, a smart contract enables the terms of an agreement or deal to be executed. Yet, what makes it ‘smart’ is that it can execute this contract without the need for a third party. In much the same way that Android and iOS operating systems work with mobile applications, smart contract focused crypto-currencies enable developers to build applications with smart contracts functionality atop of their blockchains. The Smart Contract Bundle (+358%) has outperformed Bitcoin (+197%) over the last year.
The Payments Bundle gives investors diversified exposure to the five largest cryptos looking to revolutionise digital payments by making them cheaper, faster and more secure. It includes the likes of Bitcoin, Ripple, Litecoin and Stellar. The value of this bundle is up over +235% over the last 12 months.
All these bundles offer a great way to gain exposure to the area of your choice, all at the click of a button. And, what’s great is that you can sell out of your investment at any time after purchasing it, so you’re not locked in an investment if you don’t want to be.
We know it’s a wild market, but with the help of the Revix Bundles, that ride becomes less scary and a lot more secure.
“With the recent pullback in the crypto market, we believe this is an opportune time to get into the asset class of the future.
"You know what they say about a dip… make your move!” concludes Sean Sanders, CEO of Revix.
Sign up today at Revix using the promo code “MOVE” and get R100 worth of Bitcoin deposited straight into your account after your first successful investment; do not be left behind, invest in a bundle today. T&Cs apply.
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