WITH the price of Bitcoin down roughly a third compared to two months ago, and many other cryptocurrencies under similar pressure, Brits have been warned to be wary of buying a wider crypto dip, as experts say an across-the-board bounce-back is by no means guaranteed.
They say that while Bitcoin, the world’s leading cryptocurrency, may well claw its way back to the Olympian heights of $126k it hit in early October, experts have warned people against investing in the ‘vapourware’ of many peripheral meme coins.
Rohit Parmar-Mistry, Founder at Burton-on-Trent-based Pattrn Data, said: “We are watching a crypto-conveyor belt of engineered hype cycles. Many of these assets are often set up by the same shadowy insiders to enrich themselves while leaving retail investors holding the bag.
“The sharp crashes many suffer is often brushed off as a glitch, but in reality it’s a correction of vapourware.
“When cryptocurrencies dip, is this an immediate buying opportunity? Absolutely not. In many cases, you aren’t buying the dip, you are providing exit liquidity for the architects of a scam.
“When the primary value proposition is a famous name or a fun GIF rather than technical utility, gravity always wins.
“Bitcoin will survive until 2026, but a lot of the ‘tourist capital’ chasing celebrity names and meme coins won’t. Real wealth is built on utility, not viral moments.
“If you want to gamble on these projects, go to a casino, at least there they give you free drinks while you lose your money.”
Momentum and herd mentality
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, shared a similar sentiment.
He said: “Bet on crypto and be prepared to lose your money. It really is that simple. Unlike currencies or commodities, crypto isn’t driven by fundamentals or economics. It’s driven by momentum and herd mentality.
“This is a truly speculative asset class where no one knows whether it’s going up or down. It’s a true gamble that will leave half of investors worse off.”
Crypto investor Chris Barry, Director at London-based Thomas Legal, believes Bitcoin could fall further as it enters its “bear winter” — but he does believe it will bounce back.
He said: “We are seeing higher lows as more institutional adoption and regulatory bodies start to hold the asset on their balance sheet.
“Equally though the gains we saw in the bull market were lower than previous years, catching many off guard who weren’t quick enough to take profits. Those investors may now need to wait another two or three years to see Bitcoin break its next all-time-high.”
Volatility does not equal risk
But David Belle, Founder at Fink Money, was sanguine: “Crypto is doing as crypto does. The depth of the book is relatively thin, which means prices can move faster.
“The issue I have with so much analysis of crypto is pretty much every time someone has said it’s done, finished, finito, it’s ended up higher a year later.
“It’s an extremely volatile asset class, yes, but it’s one that has had the best risk-adjusted returns out of any asset over the past 15 years.
“The confusion with volatility and risk is the problem in so much analysis. Just because something is volatile doesn’t make it more risky.
“By year end, I expect Bitcoin to be hovering at around the $90-$100k mark since I am bullish on liquidity roaring back as fund managers wish to ‘window dress’ in the last few weeks of the year.
“Years ago I was on a call with FTX, the crypto exchange, and one of the key members said ‘yeah sometimes it goes up, and sometimes it goes down’, and that is the attitude to take with volatile assets — as long as you aren’t using leverage.”
Photo by Elizabeth Dunne on Unsplash
