Crypto Gloom: New Investors Using Dips for Gains

Even as major cryptocurrencies are reeling under immense selling pressure over the last few weeks, new entrants in the markets are hopeful of recovery to offset losses and are making fresh investments on dips for long-term gains.

After a relentless battering over the weekend, the top two coins, Bitcoin BTC/USD and Ethereum ETH/USD, have pared some of their losses and are trading above $20,000 and $1,000 respectively.

After making a low of $17,772 on Sunday, BTC has recovered around 9% and is currently trading at $20,650.

ETH made nose dived to $898 yesterday, is up by over 13% today, and is currently trading at $1,120.

The total market capitalization of cryptocurrencies currently stands at 902.1 billion, a far cry from an all-time high of $3.1 trillion in November 2021.

Invested in products with utilities

Aliasgar Merchant, an investor based in Mumbai, says while he believes that the bearish phase shall pass soon, he has only invested in projects he thinks are absolutely worth it and will survive the test of bear markets.

“I have totally refrained from buying shitcoins and worthless tokens that have low potential. Quick money is a big scam. That said, there are a few things that are concerning me as well. The recent fall of Terra is an indicator that even ‘good-looking’ projects may not survive the bear market,” he says.

He added that he will continue “Hodling” his existing portfolio and also take the opportunity to buy new cryptos at a discounted rate. “However, I’m prepared that my crypto portfolio will look red for the next 2 years,” he says.

Taking comfort in historical data

Noel Saldanha, an after-sales professional at a leading Original Equipment Manufacturer, says the recent decline in prices of most crypto tokens is unnerving and he is taking comfort in historical data, that states that cryptos have bounced back smartly in the past.

“This time, the decline seems to stem from something rather more fundamental in nature. Only time will tell how the crypto space digests the crash of once highly regarded crypto tokens like Terra and whether we have bottomed out in terms of prices. On the personal front, there seems to be no other option but to hold all crypto holdings while being cautious about further capital infusion,” Saldanha says.

Invested on friends' recommendations

Insiyah Kojawala a network quality analyst at an advertising company, says during the 2021 bull market, she saw a lot of her friends and colleagues getting attracted to cryptocurrencies and like other first-time investors, she too sought guidance from friends and online experts on which cryptos to invest in.

“Seeing the recent downturn of the market is very difficult for me. Especially when almost my entire portfolio has fallen by 80%. The bear market obviously worries me a lot, but I’m following the strategy of holding my assets while the bear markets last,” she says.

“One of the reasons I am able to do so is because I have invested only 30% of my investment portfolio in cryptos. I do not need to liquidate any of my assets for any immediate short-term needs. However, if the trend continues and the crypto projects I have invested in cease to exist, there will be a huge blow to my financial health,” Kojawala adds.

Seeks regulations

Kutbuddin Dahiwala, an advocate and a tax consultant, says while tokens like BTC, ETH, Solana SOL/USD, Ripple XRP/USD, and ATOM ATOM/USD are at attractive prices for investments with a five-year horizon, clarity from governments on regulations is needed for new investors to make quality returns.

"What we need is clarity from governments, at least on long-term investments. It is risky to invest in cryptos, however great an opportunity this may be in the long run, if governments are not supportive,” he says.

Very risky

Adil Mapari, a retailer dealing in consumer products, says cryptocurrencies more than halving in value from their all-time highs only reinforces his stand that investments in the digital assets are “very risky” and not to be done unless one has funds they are willing to lose.

“While I have parked 10% of my investments in cryptos, my portfolio is down almost 99%. While this may not have a huge bearing on my financial health, I would have been at much more peace if I had done my research thoroughly. There are dozens of experts we find online who advise on crypto investments. I too invested in taking the advice of the online gurus,” Mapari says.

He adds that the dip has been an eye-opener for him and that research has to be done by the investor, without relying on external factors.

“I have used the dips to the fullest this time and am very confident that since my research is in place, I do not have to worry about losing money over the next 2 years at least,” Mapari says.