Cryptocurrency’s future hangs in the balance as bitcoin prices plummet

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Investors around the world are wondering about the future of cryptocurrency as federal regulators attempt to rein in the industry and prices continue to fall, asking the question: where is crypto headed?

In recent reports, the cryptocurrency market has lost over US$2 trillion (RM8.91 trillion) since its peak in November 2021. Combine the huge losses with regulatory nightmares and bankruptcies, it is an industry that some investors wouldn’t touch with a 10-foot pole. In the past few weeks alone, the SEC has announced investigations into Coinbase, a crypto exchange that recently had an official charged with insider trading and is currently plagued by bankruptcy rumors. Other regulators have ordered cryptocurrency broker Voyager Digital to stop telling customers that their deposits are protected against loss by the Federal Deposit Insurance Corporation when in fact they are not.

Despite these alarming numbers and trends, around 46 million Americans – nearly 17% of the adult population – own the original cryptocurrency bitcoin, according to a survey by New York Digital Investment Group. One such investor is teaching consumers around the world about cryptocurrency right here in Cobb County.

Ben Armstrong, a self-proclaimed crypto millionaire who runs the HIT Network, a collection of content creators with a studio in Kennesaw, will be the first to admit he’s lost it all in the crypto market more than once.

“I actually lost it all twice in crypto before I finally figured it out,” he said. “It took me nine years from the first time I bought bitcoin to become a crypto millionaire.”

After first investing in bitcoin in 2012 to buy software for one of his many companies, Armstrong now runs a YouTube channel and TikTok account under the moniker BitBoy Crypto, teaching viewers how to invest in bitcoin. the market. His industry videos have captured millions of eyes, with around 1.45 million subscribers on his YouTube channel alone.

For those who don’t know what bitcoin is, Armstrong described it as similar to how consumers can either receive payment or send money through PayPal.

“But the difference would be that there’s no middleman, you’re literally sending value with every transaction,” he said. “Like with PayPal, for example, you always send dollars through PayPal, but with bitcoin, we call it a value network, whereas most other online portals are information networks, so they send information , money comes on the back end, whereas bitcoin directly sends money, sends value.”

Armstrong said he sees skeptics from two camps: from a technology perspective and from a price perspective. He said those who doubt the technology are like the detractors of the internet when it was in its infancy. Much like the internet in its early days, the crypto market faces scams, busts and bubble bursts, he said, but recalls the Time article when a merchant claimed that “nobody would ever buy online”.

“But overall, if you look at the continued progress of crypto and when you look far into the future, you have to understand that we’re not using paper dollars and chunks of metal in 100 years,” he said. he declared. “Everything is going to be digital. And blockchain is the evolution of that.”

While some may see the current downtrend in bitcoin and other cryptocurrencies as a sign that the concept of digital currency has failed, Armstrong said it’s a known pattern of the asset. volatility that experts know well as “the halving”.

“Every four years, bitcoin declines on average by 85% (in value),” he said. “And right now, with the price going down, it’s moving in that direction.”

Investors and economists will attribute everything from the war in Ukraine to inflation to the decline in the crypto market, Armstrong said, but in reality crypto pundits have always predicted that 2022 will see a dramatic market decline. .

“That’s the cycle that bitcoin goes through every four years…and when that event happens, each time we’ve seen the price of bitcoin rise dramatically, fall dramatically, and then slowly rise for about a year and a half,” he said. said.

Under the halving model, Armstrong said he expects cryptocurrencies and bitcoin to continue hemorrhaging well into the holiday season. To succeed in the market, he said investors cannot be afraid of risk and be in crypto, although he admits he is not a financial adviser and does not claim to be. .

“The vast majority of people who make a lot of money in this market, it’s over a long period of time. You know, people look at me and they look at my story, they always assume that I got rich because I had a lot of bitcoin at first, but I sold it all (the first time),” he said. “It’s a long process and people have to understand that, but you had to be able to withstand those extreme market swings.”

William Lako, senior director and managing director of Henssler Financial and a columnist for the Cobb Business Journal, said his office has received a good share of questions from clients about crypto, although they tend to be younger; most older clients are skeptical about investing in an asset they don’t understand.

When asked why bitcoin had lost such significant value in less than a year, Lako said a few forces were at work to cause the selloff.

“At the core, you have decades-long high inflation fueling expectations for monetary policy tightening, as we’ve seen with the Federal Reserve (and many other central banks around the world) embarking on a cycle rate hikes not seen in many years,” he said. “This tighter monetary policy means pressure on risky assets, from cryptocurrencies to equities, especially once-high-flying growth names. Add to that the recent failure of the “stablecoin” known as TerraUSD and of sister token Luna and two crypto platforms that filed for bankruptcy after suspending account withdrawals, this has certainly heightened concerns about new issues to come for these digital assets.”

Lako, who advises clients to avoid assets such as cryptocurrencies while they are in their infancy, said there was a “struggle to find an appropriate metric to value them.”

“Our investment philosophy has always been rooted in investing in high-quality investments that provide predictable cash flows to investors, because it is these cash flows that we can use to estimate what we believe to be the real value,” he said. “But some investors have a higher appetite for risk than others. However, don’t let FOMO be what drives your decision to invest. If someone is convinced about the future of these assets, don’t invest only the amount you are comfortable losing – as in , comfortable with the fact that it could reach $0.”

Although some equate crypto to “fairy dust” and believe that everything will go to zero, another camp argues that the current state of the market is the washout that many experienced with tech stocks during the outbreak. Dot-Com bubble, Lako said. Although Lako did not say that he expects all cryptos to reach zero, the market is expected to continue to decline in value while big players such as bitcoin and ethereum are likely to survive.

“We expect there will be a lot of smaller, lesser-known coin projects that won’t be,” he said.

Entering the crypto market has been easier than ever with emerging cryptocurrency exchanges — Coinbase, PayPal, and Robinhood being among the most popular options, Lako said. But being sure is another story; Lako said the word “safe” means different things to different people.

“For some, that means you have reasonable certainty about long-term returns,” he said. “For others, safe means their money is guaranteed not to lose value. Cryptocurrency prices move very quickly and in large amounts, as we have seen, both up and down. I don’t believe cryptocurrencies meet either of these definitions of security, so I would say no, crypto isn’t secure, and there’s a high degree of speculation involved.”

Lako predicts that some investors who have been burned in the market as prices fall may begin to lose confidence. But a group of believers like Armstrong who embrace the idea of ​​cryptocurrency will likely continue to hold on to their assets.

“There will also be that crowd that may still believe in the long-term idea; however, it is often difficult to take your emotions out of the picture when you see the value of your cryptos dropping. This obliges even those who still believe out at the moment,” he said.

For those in it for the long haul, Armstrong said investing in crypto slowly on a timed schedule can shield them from some of the market volatility, but volatility is why they invest to begin with. .

“But people are right. It’s a volatile market, but it’s volatility we like because downside volatility makes us stronger and gives you patience,” he said. “With volatility on the rise, that’s how you’ve seen so many people start from nothing – normal people become millionaires. Not necessarily overnight, but in a short period of time, compared to many other ways of earn money.” – Marietta Daily Journal, Ga./Tribune News Service

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