I just watched the movie Don’t Look Up on Netflix (NASDAQ:NFLX) — but as a crypto investor, it felt more like “don’t look down” this whole week.
It was ugly. Bitcoin (CCC:BTC-USD) started the week north of $42,000. By late Friday, it had dropped below $37,000 — a 12% decline in just five short trading days.
And if I’m being honest, the chart on Bitcoin is so broken that it looks like prices could collapse to $30,000 in the near term. Support levels have been smashed. Relative Strength Index is weak. Moving average looks terrible. It’s not pretty…
But here’s the thing: Corrections like this are par for the course in crypto markets.
Any long-time crypto investor will tell you the same. In stocks, they say you should be prepared for a few 5% to 10% drops every year. In cryptos, you should be prepared for a few 20% drops every year.
Behind the Scenes
While cryptos dropped this week, the plunge was all about sentiment — not fundamentals. Here’s what was happening behind the scenes:
VC funding continues to soar.
Major crypto VC firm a16z recently announced intentions to a raise $3.5 billion for its latest crypto fund — a massive increase from the $2.2 billion it raised in June 2021. And interestingly enough, the fund’s chief information office said that he thinks “crypto is headed for a major correction.” It appears the smartest folks in the room — and, yes, a16z is worthy of that title — agree with us: There’s some near-term strife on the horizon for cryptos. But in that pain, there will be some amazing opportunities. Why else raise $3.5 billion?
The NFT/Metaverse craze won’t stop.
Everyone is piling into the metaverse and launching NFTs these days — and the craze is showing no signs of stopping. This week, Microsoft (NASDAQ:MSFT) announced its biggest acquisition ever with a $69 billion takeover of Activision (NASDAQ:ATVI) — a big bet on Microsoft being able to leverage Activision’s gaming assets and plunge into the metaverse. Meta also announced NFT offerings for Facebook and Instagram, and Walmart (NYSE:WMT) talked about creating its own cryptocurrency to buy NFTs. The metaverse and NFTs are inextricably linked with cryptos. The more folks adopt the former, the more they’ll adopt the latter.
Crypto payments are gaining traction.
A new Visa (NYSE:V) survey found that 25% of small and micro-size businesses plant to accept crypto payments this year. This comes as consumers are accelerating their usage of cashless payment mediums and are becoming more comfortable with the idea of digital wallets. We’ve maintained all along that the true driver of crypto prices in the long term will be adoption trends. Under that thinking, this is enormously bullish news for cryptos.
Overall, we think this is just another cycle for Bitcoin — rally; drop; consolidate; rally again.
We’re in the “dropping” part and moving toward the “consolidating.”
Historically, that’s been the best time to buy into the market.
That’s why — in our flagship crypto investment research product Crypto Investor Network — we just added a few new cryptos to our winning portfolio and are looking to add even more over the next few weeks.
From current price, we think many cryptos can soar 5X or greater.
Click here to find out which cryptos we like the best.