Anyone who has bet on the cryptocurrency market in recent years knows that they will have to wait to recoup the losses of the last few months. Renato Siqueira, 43, a communications professional, started investing in this type of application during the Covid-19 pandemic. With the money he would spend on travel, he decided to buy riskier assets with a higher return potential than fixed income.
Siqueira made small contributions over a little more than a year until reaching a total of R$23,000 invested in bitcoin and ethereum cryptocurrencies and other less popular cryptoassets. Noticing a downward trend at the end of last year, he decided to withdraw R$ 3 thousand to travel and pay bills, leaving the rest invested.
After a significant drop in the cryptocurrency market, the amount invested by Siqueira is currently just over R$10,000.
Watching the move, it then decided to convert much of its cryptocurrency to US dollar-linked assets to reinvest when the market bottoms out and seeks a recovery.
“I don’t feel like I lost the money. At least not now. I’m waiting for the best time to reinvest. My thinking about cryptocurrency is that the more it drops, the better, because I can expect it to appreciate. I see it as an opportunity to make more money than at Tesouro Direto, but I don’t have all my assets in cryptocurrencies”, he says. “I believe that the cryptocurrency market can go up and that I have more money in the future.”
higher interest
The catalyst for the current cryptocurrency shock was the recent release of the US Consumer Price Index (CPI), which jumped 8.6% year-on-year in May to its highest since December 1981.
The rise in prices in the United States buried investors’ hopes that rising inflation in the country might have peaked and renewed the risks of stagflation – a period of sluggish economic growth combined with rising inflation.
Even more important for investors, the high inflation scenario caused a rearrangement of expectations for the Federal Reserve’s plans (Fed, the US central bank).
The monetary authority was forced to abandon a commitment to raise rates by half a percentage point at each policy meeting and last week raised 0.75 points, the biggest increase at a policy meeting since 1994.
With this, the financial market already estimates that the US base interest rate will peak above 4% per year in 2023, more than double the current range between 1.50% and 1.75%.
Caution for the investor
In an environment like this, entering a market as risky as cryptocurrencies requires even more knowledge and care, according to Luiz Pedro Andrade, crypto asset analyst at Nord Research, who recommends investing with an eye on the long term.
Andrade believes that cryptocurrencies can give investors a return within up to four years. However, care must be taken when investing, limiting investment in cryptocurrencies to a low percentage of the portfolio.
“We are in a bear market (market in crisis) different from previous ones in the cryptocurrency market because of the increase in interest rates in the stronger economies”, he says. “Aside from that, with the extended two-year bull cycle in the market, people have more capital allocated that they can sell.”
The analyst recommends investing in better-known cryptocurrencies, such as bitcoin, and allocating a very small portion of the portfolio to these assets: “It is not worth having more than 5% of the portfolio in cryptocurrencies, and beginners should only have 2%”, he says. Andrade.
The information is from the newspaper. The State of São Paulo.
Source: CNN Brasil
