When you invest in cryptocurrencies, it’s more important to buy when the price goes down than to make money when the price goes up. On the other hand, when markets go down, investors can make a lot of money. On the other hand, a bull market does nothing but make a lot of noise.
In a bear market, on the other hand, the lows of the pool are both higher and lower
Let’s go back to the end of 2021 when one Bitcoin (BTC) cost around $47,000. This price was 32% less than the highest price ever reached. At that time, the Nasdaq stock market index, which was focused on technology, was trading at 15,650 points, which was only 3% below its all-time high.
In the end, these “macroeconomic pressures and crises” did happen, and Bitcoin’s price dropped another 57% to $20,250. Since the Nasdaq has lost 24.4% since September 2, this shouldn’t be too much of a surprise.
The index has been 40% more volatile in the last 120 days than it was a year ago. On the other hand, Bitcoin has been more than 80% more volatile over the same period, with an annualized volatility of 72%. This is something important for investors to consider.
By raising interest rates and getting rid of programs that keep debt assets stable, the economy will feel like it’s in a recession. No smart investor would put money into credit-exposed or growth industries while the cost of capital goes up and consumption goes down, regardless of whether there will be a soft landing. Check out the cryptocurrency trading platform for bitcoin and blockchain understanding if you’re just getting started with trading and investing in cryptocurrencies.
Bitcoin can destroy tech stocks even when the market is doing well
Most of the time, volatility is seen as bad in the financial markets because prices can change quickly and in either direction.
Under these conditions, the price of Bitcoin would reach $32,425, which is 53% less than its all-time high in November 2021. If you bought Bitcoin on September 2 for $20,250, you would have made a profit of 60%.
On the other hand, if this neutral market scenario happened, the Nasdaq would make up for its past losses, add 40%, and end up at 19,563 points, for a total gain of 64.4%. To be clear, it would mean setting a new record 21.6% higher than the old one.
During a bull market, the price of a stock could reach its highest point
Apple, Microsoft, Amazon, Tesla, Google, Meta, and Nvidia are the seven most valuable companies on the Nasdaq. Everyone is a well-known expert in his or her field. Regarding the stock market, the essential thing that gives investors confidence is information about earnings. This means that more money can be put back into the business, given back to shareholders, or used to buy back shares.
The problem is that when companies make more money, they have many reasons to sell more stock, which is also called “follow-on offerings.” This is where the trouble starts. So, bull markets have their problems since prices reach highs that can’t be kept up, and buybacks stop making sense.
Bitcoin was made so that no one group or the government could control it
Nvidia, a large company that makes computer chips and graphics cards, hit a 68-week low on September 2 after U.S. officials made it harder for the company to send AI chips to China and Russia without getting a new license. This made the company’s stock fall to its lowest in 68 weeks. Around the middle of 2021, China started to stop mining in the area. This made Bitcoin’s hash rate half as fast in just two months.