Whose fault is it? Cryptocurrencies.

May 25, 2022
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           Now that we are in a great financial and global crisis, from which cryptocurrency investments do not escape, it turns out that all the voices that were predicting or wanting to predict the end of cryptocurrencies are proud of their forecasts and blame the frightened investors on cryptos that did not represent, according to them, any value. It's kind of like: I told you they were coming, but you wouldn't listen to me until it came along and you can't do anything else.

Is that so, and were these trader prognosticators right in what they were saying, and is this the end of cryptocurrencies? Several things to keep in mind to know where we are and where we could be; we are not weather forecasters and we do not know the future, but we can give market indications of where we will move to in the long term, I repeat, long term, because the current situation is not yet about to end in any link of tangible assets, digital or other commodities.

To begin with, let's consider whether the title is right and for that we have to start with the fact that the United States has an inflation rate of over 8% (the highest in 40 years), something that the Treasury Department has been warning about, a rise in interest rates (which would stop the flow of money circulating to alleviate the crisis), which in turn would bring recession in the short term as it would impose a slowdown of money in order to lower the economic temperature. Considering that the United States is the largest consumer in the world, it would bring a tailwind in the markets and the countries that would be affected in their level of exports to the North American giant. In addition, the stock markets have been affected and the values of the different tangible and intangible assets have also fallen, so cryptocurrencies have not escaped this downturn.

Let us remember that although we can consider cryptocurrencies as a refuge, those who ultimately manipulate the market are people and it is sentiment that drives assets down or up, and at this moment that sentiment is one of fear, which is why the indicators in all commodities are in the red.

To all this, let us add the factor of the current war in Eastern Europe, which represents having Russia and Ukraine in conflict when more than 30% of the world depends on them for products such as sunflower oil, wheat and barley, corn, according to data from The Economist. This means that a food crisis is looming that will inevitably hit the markets and the world.

What do we do then?

          Do we cry and run away in the face of such a scenario? Did cryptos let us down and are they to blame for this crisis? We have shown that they are not. It is a whole cocktail of situations that dragged us to the point where we are today and will continue to be for a while longer. Now, we must analyze and consider several factors to take into account in order to have the courage and confidence that we will come out of this stronger and better prepared for the future.

Consider the following: By March 2020 Bitcoin was oscillating at $3,000; today, just two years later, at its worst, it is at the $30,0000 resistance. It is the fastest-growing asset and by 2024 it is expected not to go below double digits in thousands of dollars. It is at this time when it is necessary to keep a cool head and better analyze future projects; this situation alerts us to know which projects to invest in and that have solidity in the future. If something good comes out of this crisis is that many, wrongly called unsustainable projects will disappear and the ecosystem will be cleaned for the future.

Prepare yourself, study, analyze and then invest. Do not get carried away by a friend or relative and less influencer who is paid in many cases to advertise a system which then disappears and takes their profits without caring about their audience.

Only those projects supported and with a future are the ones that have resisted, will resist and they are the ones we should look at head-on, with our eyes up high, and they will be the ones that will reward us with high dividends once we overcome this global conflict. Remember, the market moves on sentiment, don't do it yourself. Do it because you prepared and believed in what you invested in.

Irving Arrieta