A few days ago, the cryptocurrency market entered the so-called bear marketor crypto winter, name used to define a period of general fall in prices of a certain asset class – and this time it is digital currencies.
Survey carried out by QR Asset Management, at the request of the CNN Brasil Business , pointed out that between May 1 and last Wednesday (11), the luna cryptocurrency was the one that most depreciated in the period, with a drop of 98.51%. Soon after, is the avalanche, with a retreat of 42.21%.
The backdrop for the general fall in cryptocurrencies is the macro scenario, pointed out Theodoro Fleury, manager at QR Asset Management, with the deterioration of inflation expectations in the US and the correlation between the crypto market and traditional risk assets.
However, luna specifically crashed because of a flaw in its algorithm used to maintain the UST stablecoin’s parity with the dollar.
On the other hand, avalanche, solana and polkadot – which are alternative blockchains to ethereum – tend to be more volatile, explained Fleury, so “it is normal” to show a sharper drop in a month that bitcoin and ether tumbled about 18% each.
What to do?
Despite investors watching their portfolios melt over the past week, experts told CNN Brasil Business that this is not the best time to sell cryptocurrencies, but to hold on to them and buy more.
Ney Pimenta, founder and CEO of BitPreço, explains that this generalized downward movement is a common cycle that happens after a cryptocurrency burning process that halving the amount available on the market, called halving.
“[O inverno cripto é] a very strong correction of prices, which usually takes a few months, until prices are able to update”. Therefore, he believes that this is not the time to dismantle the wallets because “people will regret it when the values return. [a subir]”.
João Marco Cunha, portfolio manager at hashdex, also comments that, historically, crypto assets have generously rewarded investors who were resilient enough to withstand the most turbulent moments.
And he also points out that the main foundations of investment theses in cryptoassets remain firm despite the current market circumstance. “There would therefore be no reason to sell.”
But Caio Villa, co-founder and CIO of Uniera, remembers that, although the idea is always to buy low and sell high, the investor must be willing to lose that amount that is being invested. “This is the basic principle of crypto assets.”
“And it is also important to invest in assets that have a foundation, not in memecoins or other classes that work only with market speculation.”
In this way, the CEO of BitPreço recommends only buying ethereum and bitcoin.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
