Make no mistake about it, recent developments that have plunged the crypto market into a downturn are significant, BUT several factors have contributed to this decline that may be distracting to those who are not fully aware how crypto works.
For instance, a looming $3 billion sell-off threat by FTX is said to have played a part in the recent crash, as well as upcoming macroeconomic impacts related to the Consumer Price Index (CPI) data.
On the face of it the FTX sell-off looks scary, but in reality it is part of a larger $10 billion sell-off, so should have less impact. And the CPI news could well see inflation coming down, which is also better news for the economy and the markets, which might start to go up.
Purchasing power should then return for everyone, which will see good days for stocks market and crypto market as a result!
So, as we say, sometimes things can look more fearful than they really are to some analysts, investors and the investing public (not that we’re ever scared here at Investment Mastery!)
For us, this crash is more significant in another way – because it is yet another indicator that there always can be bigger threats ahead when it comes to cryptocurrencies which is often due to external events and macroeconomic factors, not just events in its own sphere.
Consider the events of August 17. The crypto market saw a major downturn following news about Elon Musk’s SpaceX writing off its Bitcoin holdings. Lo and behold, this coincided with losses in the global stock market. Therefore, highlighting the inescapable fact that traditional and digital assets are interlinked.
That’s why it has always been imperative to have strategies to help you navigate the volatility of crypto. A volatility that has always been high. You always need to be ready for rapid price fluctuations and take appropriate precautions.
Strategies like Crypto Cost Averaging (CCA) can help mitigate risks. CCA involves regularly buying strategic amounts of a cryptocurrency, which will help to smooth out the impact of market volatility over time.
In other news, ARK Invest, led by Cathie Wood, is collaborating with 21Shares to pioneer the first Spot Ether ETF in the U.S. Spot Ether ETF is an exchange-traded fund that directly invests in Ether, the native currency of the Ethereum platform, and reflects its current (or spot) market price.
This is further evidence of crypto being accepted and integrated into mainstream financial products. It’s along the lines of the introduction of the first Bitcoin ETF in 2021. This led to a notable surge in Bitcoin’s price and increased institutional interest.
This is an important development for investors to take note of, because it’s highly likely that crypto-based ETFs will start trending in the coming months and years which should provide greater investment opportunities.
We bounce back now to another example of the topsy-turvy world of crypto to reveal that Ethereum’s co-founder Vitalik Buterin fell prey to a massive X (Twitter) phishing scandal.
Yep, even the seemingly invincible can be caught with their tokens exposed!
The hacking incident resulted in the loss of nearly $700,000 worth of digital assets across many accounts.
Once again, this highlights how integration of crypto and digital assets can affect daily life with severe consequences. As the integration will no doubt increase, it is important for investors to be even more vigilant during their online activity and time spent online in the investment fields to avoid such suffering and upset.
It should also act as a wake-up call to the crypto community and tech platforms about the importance of enhanced cybersecurity.
Users have to take responsibility. They should always verify links and offers, especially those related to financial transactions, and utilize two-factor authentication whenever possible.
Plus, make sure you use our Price Cost Averaging calculator to help you determine the right amount to invest and the best frequency to do so. This will help keep you safe online as well as ensure you stay on track to reach your financial goals.
Check out our latest Trades of the Week episode to find out why we are so excited again about XRP since their recent victory over the SEC.