The crypto market has been in the doldrums for a few weeks now, after China clamped down on cryptocurrencies and Elon Musk’s comments brought more jitters to the markets.
But any value investor knows that it’s good to buy when investments are cheap. So as cryptocurrencies generally are cheaper than they’ve been for months, is now the right time to go back in or should we wait a while?
And what about other Decentralised Finance products (De-Fi) like Non-Fungible Tokens (NFTs) and the like? Are those worth a look?
I’ve been in touch with some crypto experts to see what they think of the market and what they themselves are investing in.
By the way, if you would like to know more about how to invest in cryptocurrencies, take my course on cryptocurrency investing for beginners which is happening later this year. Join up here.
Jonny fry, CEO Team Blockchain
Jonny has a background in finance and now runs Team Blockchain. He sends out a weekly newsletter all about blockchain, De-Fi and cryptocurrencies which you can sign up to for free
You can see him in action in our crypto and blockchain Q&A here.
Jonny says “how many times people have asked the question, “Is now the time to buy or sell?” The answer is no one honestly knows. Therefore, given the very volatile nature of crypto currencies, there is considerable logic in drip feeding money into this asset class. As opposed to trying to guess and suddenly find that the price of the cryptos you have acquired have suddenly fallen like a stone.
Effect of saving $50 per month for three years
“Putting money away on a regular basis is sometimes called ‘pound cost averaging’ and works on the principle that when the price of an asset is low i.e., it has fallen you buy more and when it is high you buy less each month. This strategy helps to smooth out the volatility so is ideal for investors that make regular savings. Had you done this and invested $50 per month over the last three years you would have saved $1,800. Assuming no costs and invested in the US stock market (Dow Jones Index) your money would be worth $2,272, compared to putting your $50 per month into Bitcoin which would now be worth $8,488.
“The other golden rule of investing is diversification eg not having all your ‘eggs in one basket’ which is why many investors will have exposure to different investments such as equities, property, bonds, commodities.
Therefore, one digital asset that did catch my eye was from Damien Hirst, and he has enrolled no less than the ex-Governor of the Bank of England Mark Carney to help promote his latest Non-Fungible Token (NFT) collection. Hirst has created 10,000 physical unique works on A4 sheets of paper called “The Currency” and each will be available to be brought as a NFTs and went on sale on 14th July for $2,000 each. Therefore, if Hirst sells all 10,000 he will raise a $20million on top of the $22million he made from selling 7,481 prints earlier this year
There is a twist though with Hirst’s latest NFTs: “Two months after the NFTs are allocated, collectors will be presented with a choice: to keep the NFT or exchange it for the physical artwork. They will have one year, until 3pm BST on 27th July 2022 to decide to keep either the digital NFT or the physical artwork. If they have not exchanged their NFT in that period, the physical artwork will be destroyed. Similarly, if they have exchanged it in that period, the NFT will be destroyed.”
Aditya Negarsheth, long-term crypto investor
Aditya has been investing in cryptocurrencies and De-Fi products for a few years and is constantly scouring the market for new and exciting opportunities.
He says, :”We know China has firmly banned crypto, global regulators are going after Binance, and the crypto exchange volumes have fallen by 50%, but we have more poor countries wanting to adopt Bitcoin and so are institutions, Ethereum is capping its supply this year which makes it more attractive and new use cases are emerging like Art and collectibles through NFTs which are worth watching.
“The market has slowed down a lot but this is not necessarily a bad thing. There could be opportunities for serious investors.”
gary nuttall, crypto and de-fi consultant
You can see Gary in action in our crypto and blockchain Q&A here.
He tells me “crypto adoption continues to grow with a survey by UK FCA suggesting over 2.3 million people in UK now hold cryptocurrencies
Meanwhile the recent announcement by FCA about Binance seems to have been misunderstood as it just says they shouldn’t undertake regulated activities (and crypto isn’t regulated). However this hasn’t stopped the mainstream press from saying that the exchange has been banned. This has been compounded by several mainstream banks (such as Barclays and Santander UK) announcing that to “protect customers money” they were preventing people from making transfers to Binance. This has led to fury in social media with crypto buyers switching to more enlightened banking services.
On the Global scene, El Salvador has announced that Bitcoin is now legal tender and there are talks about several other Central American countries doing the same.
NFTs continue to gain popularity with the latest survey by nonfungible.com showing 2021 Q2 with 177,048 wallets, up from the previous quarter’s 127,652. Whilst the report doesn’t include all NFT’s (NBA Top Shots for example isn’t part of it) it does at least show direction of movement with $754,385,647 traded in Q2 compared to $508,923,333 in Q1 2021.
Bitcoin is having a rough ride currently as it hasn’t yet recovered from the sudden drop in early May from around $56k and is now down to $31.6k with some pundits saying it will continue on this trend down to $28k. This is not however financial advice!
Ripple (and it’s cryptocurrency XRP) is worth watching the news for too as the court case proceeds and it has been agreed that a key SEC character must appear in court.
Paypal has upped the limit on how much crypto you can buy 5 times, with Barclays and other. sulking, Paypal can be an alternative way of funding crypto accounts.
Finally the DeFi market appears to be shrinking although not as dramatically as some are suggesting. Checking out https://defipulse.com/ shows that Total Value Locked (TVL), which represents how much ETH is tied up in smart contracts o the Ethereum Blockchain dropped to around 8.5m ETH towards the end of June but has since grown to 9.3m ETH. Problem is that when ETH is expressed in USD then this looks like a big drop in USD terms. However this market remains immature and there are many exciting projects underway.
Bobby ong, co-founder of Coingecko
On Twitter, Bobby Ong, co-founder of CoinGecko explains how Q2 (the second financial quarter of this year) has fared for the crypto market:
“Q2 was a tough one in terms of price with the market correcting significantly. BTC was down 40% QoQ dragging the entire market with it. ETH did well to end the quarter up 19%. The biggest gainer though was DOGE, ending the quarter up 366%, mainly pumped by Elon Musk.