- Cecilia Baria
- BBC News World
The cryptocurrency market has collapsed, with the price of Bitcoin dropping 67% from its all-time high in November of last year.
On Wall Street, they have been dumping riskier investments, such as cryptocurrencies, at a time when the shadow of a possible recession in the US has moved large capitals to seek refuge in more stable assets.
With rampant inflation sweeping the world, a rise in interest rates and global economic slowdown Fueled by the war in Ukraine, the market is going through the so-called “crypto winter”, that is, a long period of low prices for digital currencies.
To add fuel to the fire, sector regulation projects are being discussed in the US – something that affects expectations for the price of cryptocurrencies – as they emerge with more and more Often fraud and opaque business that went bankrupt.
One of the cases that made the biggest impact in recent months was the collapse of the Luna digital currency that left hundreds of people on the streets betting their money in search of a big win, and finally watched helplessly how it fizzled out before. his eyes.
By Edward Moya, Market Analyst first From the consulting firm Oanda, the massive increase in inflation played a major role in the decline in prices.
“Cryptocurrencies fell after persistent inflation triggered a wave of aggressive adjustments by central banks that sent risky assets down sharply,” he told BBC Mundo.
The desperate response of large institutional investors moving large sums of capital also played a role.
“Panic Selling Accelerated Recession of Cryptocurrencies After all the institutional money that entered the crypto space in 2021 saw their investments,” Moya argues.
With all the wind against it, there are “crypto-lovers” or “crypto evangelists” who are convinced that the current crash – especially bitcoin – is part of one of the ups and downs that has been in place since the digital currency came to prominence. market in 2009.
“We do not sell”
His main argument is that in the long run, a single bitcoin will be worth hundreds of thousands of dollars, which is why this downward cycle is just one part of the big rally.
Let the current price of bitcoin be less than a third Than it was just a few months ago is not a sign of the bubble bursting, they say.
They are the ones who say to anyone who wants to listen:We do not sell (“We do not sell“)Like a war cry.
As a fraternity that wants to encourage its members to resist, when asked what to do with bitcoin, they answer with a resounding voice: “HODL” (which in cryptonian language is a way of saying “Hold”, i.e. to keep.
The term “HODL”, often used in social networks, appears to have its origins in the Bitcointalk forum, when one user wrote “I’m complicated”And the with a misspellingwhich led to the emergence of one of the most famous expressions in the world of cryptography.
This is exactly what some “shrimp investors” and some “whale investors” do: resist the temptation to sell, i.e. HODLING.
Shrimp and whale
Continuing in the world of kryptonian terms, not everyone who is part of this universe is in the same category.
Shrimp are those who have less than bitcoin (which these days is worth about $23,000 USD).
Pisces are those who have more than one bitcoin in their wallet Of the investments and miners responsible for creating bitcoins using powerful computer networks powered by blockchain technology (or a chain of blocks), cryptocurrency analysis center Glassnode explained.
James Cheek, chief analyst at Glassnode and a crypto-hungry advocate, says that despite the volatility of the market, there are shrimp and whale investors who will continue to buy bitcoin into 2022.
Especially shrimp, which is a retail investor.
In an interview with BBC Mundo, he argues: “Bitcoin is a unique asset in that a large portion of those who have a strong belief in this smart money are retailers.”
He adds that this is largely due to the fact that since the creation of Bitcoin and during the time when it began to grow, it was shrimp that bought the digital currency, that is, Ordinary individuals, not millionaires or institutional funds.
There are other reasons related to the fact that education about the currency has increased and that, in their view, there is transparent data on the market.
“The small investor is ready to withstand any collapse.DraWhile the whale is more likely to abandon ship, if it believes that there is a prolonged period of downward pressure in the cryptocurrency market,” Moya argues.
“The crypto winter may end in these months or early 2023, but so far, both small investors and whales seem determined to hold their crypto,” the economist says.
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