Crypto chaos breeds opportunity

That’s not to say crypto prices might not drop even further, but buying when prices are low is a time-honoured path to creating wealth.
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In a remarkable week for cryptos, the crypto market was shaken up by the collapse of the Terra networks – namely its stablecoin TerraUSD (UST), and its blockchain’s native cryptocurrency Luna.

UST, the Terra stablecoin – not to be confused with USDT (Tether) – was designed to be algorithmically stabilised and pegged to US$1 through a minting and burning process. Unlike USDT or USDC, UST was not fully collateralised and thus became the subject of an attack on its US dollar peg. The attack succeeded in depegging the UST stablecoin, causing a sharp sell-off in the crypto market.

“I think the words of Warren Buffett ring ever true here – ‘Be fearful when others are greedy [and] be greedy when others are fearful’,” says Brett Hope Robertson, head of investments at crypto platform Revix.

“We saw a market get too used to easy returns (greed) without understanding the risks involved and now we see a market in peak fear. Yes, fear is scary, but times of uncertainty breed opportunity. The Terra collapse has undoubtedly brought about some interesting opportunities in the market.”

How much fear is in the market?

According to the Bitcoin Fear & Greed index – an index that gauges investor sentiment towards the market – the crypto market is at the second most fearful it has been in history.

But what does this all mean for you?

While Bitcoin is down 23% over the last month and 55% since peaking above $67 000 in November 2021, many alternative coins, known as altcoins, have suffered even sharper pullbacks.

“You know, Baron Rothschild once said – buy when there’s blood in the streets, even if the blood is your own,” says Hope Robertson. “History has shown us that the same is true in the crypto markets and that when the Fear & Greed index is below 10 [it] has been historically a good buy.”

Zoom out and look at the bigger picture

The following heatmap shows that BTC historically finds support at the 200-week moving average. The colour-coded heatmap is based on the percentage increase in that 200-week moving average. Periods where the price dots are blue and close to the 200-week moving average have historically been good times to buy.

“Human psychology is a funny thing – when the time comes to buy, you won’t want to – and we’re in that kind of market now. That’s not to say that BTC does not go lower from these levels, but all indicators suggest we are getting close to generational buying opportunities.”

Hope Robertson says there are a few other reasons to consider accumulating Bitcoin at these levels:

  • A Bitcoin Fear & Greed index below 10 is a rare event and has historically proved to be a good buy level. The index at this level has historically been a good time to buy. The index is based on several metrics, including volatility, market momentum, social media interaction, straw poll data and BTC’s dominance of the total crypto market.
  • US consumer inflation has hit a three-decade record of 8.3%, prompting the Federal Reserve to start hiking interest rates – which in turn has prompted a flight from risk. This, in part, explains BTC’s recent pullback and its increasingly tight correlation to tech stocks. Yet, we are entering a period of financial history in the making, where interest rates are being hiked to reduce the risk of a deep recession and help create a ‘soft landing’; the Federal Reserve might have to decide to reduce the amount of interest rate hikes previously expected. This would allow for a sizeable upside relief in crypto.

How to safely invest in volatility

Dollar-cost averaging is a validated method of successfully investing in Bitcoin. This involves investing a regular amount, usually monthly, regardless of price.

The graph above shows the results of investing a regular $10 a month for the last three years, compared to a similar investment in the Dow Jones Industrial index. BTC achieved a percentage change of 182% against 17.5% for the Dow Jones.

“Not only is dollar-cost averaging a great strategy but we have seen that if you dollar-cost average into Bitcoin at any Fear & Greed index print below 15 you seriously outperform the Bitcoin buy-and-hold strategy (by over 70%). That shows you just how powerful contrarian investing is,” says Hope Robertson.

Invest in Bitcoin, fee free

Revix, a Cape Town-based crypto investment platform, is running a promotion designed to kickstart your crypto investment journey. Now you can invest fee free in the original and crown cryptocurrency — Bitcoin. Between May 22 and June 21 2022, Revix users get zero buy-in fees on Bitcoin.

This is your opportunity to add your name to the Bitcoin story. And if the plot so far is anything to go by, it’s one you really want to be part of.

Revix brings simplicity, trust and excellent customer service to investing in cryptocurrencies. Its easy-to-use online platform enables you to securely own the world’s top cryptocurrencies in just a few clicks. Revix guides new clients through the sign-up process to their first deposit and first investment. Once set up, most customers manage their own portfolio but can access support from the Revix team at any time.

Remember, cryptocurrencies are high-risk investments. You should not invest more than you can afford to lose, and before investing, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

This article is intended for informational purposes only. The views expressed are opinions, not facts, and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any cryptocurrency.

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