Crypto crash leaves investors in a tizzy. What should their next move be?

moneycontrol.com:

The year 2022 has not been a good one for crypto assets, as investors have seen sharp profit booking after a solid rise in 2021. Bitcoin, the cryptocurrency with the largest market capitalisation, closed at around Rs 17.55 lakh on 13 June, 2022 — its lowest level since December 2020 — on growing fears of the US slipping into a recession and in anticipation of rising interest rates.

“There is carnage in the crypto markets and the community is under severe distress. It’s havoc to be exact,” says Kunal Jagdale, founder & CEO, BitsAir Exchange. Bears are in a ruckus and crypto investors have no refuge now as Bitcoin has taken a bit hit, he adds.

“The entire market has fallen. One can just hold and sit tight,” says Rishi Anand, Partner, DSK Legal.

Let’s look at reasons for the price crash and investment strategies for existing and new crypto investors in the current market conditions.

Factors leading to price crash

Bitcoin, Ethereum and other cryptocurrencies declined on 13 June (see graphic) because data released on Friday showed US retail inflation unexpectedly climbing to a fresh four-decade high, reviving fears of prolonged Federal Reserve rate hikes that could stall economic growth.

Global policymakers are making efforts to combat rising inflation. Rising interest rates and a correction in the S&P, Dow and NASDAQ, tech stocks in the US and commodities (gold and silver) have nudged crypto investors to shift. “Adding to investors’ pain, Terra’s LUNA debacle and heavy institutional selling were the other key reasons for the crypto selloff,” says Jagdale.

“Cryptocurrencies, because of their higher volatility and smaller market size, fall steeply. But there is likely to be firm support at around $18,000 for bitcoin,” says Sidharth