Will Cryptos ever pick up the pace again?
Major cryptocurrencies, including behemoths like Bitcoin and Ethereum, lost up to a fifth of their value as profit booking and concerns triggered nearly a billion dollars' worth of cryptocurrency selling.
The abrupt sell-off in bitcoin and other cryptocurrencies follows some significant stock market declines in the United States, according to Raj A Kapoor, Founder, India Blockchain Alliance.
"There has been considerable speculation that the widely anticipated Federal Reserve 'tapering' will puncture the bitcoin and cryptocurrency bubbles. Tapering, he added, is the gradual slowing of the Fed's large-scale asset purchases.
However, the digital token pack has made a strong comeback in the last few hours, with many tokens recouping the majority of their losses and a few posting modest gains from their lows.
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Market experts suggest that now is a good time for domestic investors to purchase digital tokens, but investors should focus on quality and long-term investments.
According to Coinmarketcap data, Bitcoin hit a low of $42,874.62 on Saturday before hovering around $49,000 at 10.30 IST on Sunday. Similarly, Ethereum tested the $3,500 level before breaking through to the $4,100 level once more.
According to Hitesh Malviya, Founder of itsblockchain.com, the covid-related news had a significant market impact on a risk-on asset like bitcoin, which controls the entire market via high correlation.
"The fact that markets recovered more quickly than the previous correction cannot be ignored," he added. When the pandemic struck, it took six months to recover, and less than two months after the second wave."
Bitcoin and, in particular, smaller cryptocurrencies continue to be extremely volatile in comparison to traditional markets, with Ethereum, Binance's BNB, Solana, Cardano, and Ripple's XRP oUen all bouncing double-digit percentages in a matter of hours.
Terra, Helium, Decentraland, and Unus Sed Leo all gained between 9 and 22% in the last 24 hours. Tether and USD Coin, which are dollar-denominated, both posted marginal gains, providing some relief to investors.
Investors with a longer horizon should view it as an excellent opportunity to begin accumulating in small increments, according to Kapoor, who advises investors to allocate 5% of their portfolio to cryptocurrencies.
"For those investing in cryptocurrencies over the long term with a buy-and-hold strategy, such swings are to be expected," he explained.
Kapoor recommends SAND and MANA as good investments in the metaverse, while Energy Web Token and Powerledger are his picks in the energy sector. He has chosen Ethereum, Avalanche, Solana, Uniswap, and Terra from the DApps and Defi space.
On the other hand, EOS, Theta, Internet Computer, Dash, Waves, Nexo, Filecoin, Harmony, Qtum, and 1inch Network all lost up to 15% on Sunday. Each of these tokens had a cut in the double digits.
Despite the selloff, investors swooped in to acquire cryptocurrencies at discounted prices. Despite a 4% decline in the market capitalization of digital tokens, the traded volume of cryptocurrencies increased by about 45% and surpassed the $200 billion mark.
Malviya, who is bullish on Bitcoin, Ethereum, Polygon, and Terra, cautioned that if Omicron variant cases increase in countries such as India and the United States, the Bitcoin and cryptocurrency markets may correct further.
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