In a cryptocurrency market that's been awash in red, even the "diamond hands" are having a difficult time holding on in the shaky environment. Despite the recent sell-offs, Bitcoin hasn't been the worst performer among digital currencies.
While the leading cryptocurrency is essentially the tide that lifts all boats. It appears the boats have been rocked far more than the tide when looking at the top 10 coins based on market capitalization.
The second largest crypto Ethereum has fallen close to 50% year-to-date after reaching its all-time high back in November of last year. Compare that to Bitcoin's drop, which is closer to 40% year-to-date.
Solana has fallen over 70% so far this year and Cardano has fallen about 65% so far in 2022. Needless to say, there's a lot of pain to go around. Bitcoin investors may be using less aspirin versus other cryptocurrency investors targeting these specific coins.
It's all a sign of the times where digital assets have been correlating with the stock market indexes as inflation fears continue to rack many markets irrespective of asset type. Even safe haven bonds haven't been immune to the volatility.
"Investors are fleeing from cryptocurrencies at a time when stock markets have plunged from the highs of the coronavirus pandemic on fears over soaring prices and a deteriorating economic outlook," CNBC reports. "U.S. inflation data out Wednesday showed prices for goods and services jumping 8.3% in April, higher than expected by analysts and close to the highest level in 40 years."
Even certain stablecoins that are essentially designed to mimic the stability of fiat currencies have been anything, but stable. Take TerraUSD for example, which collapsed amid the volatility.
"The meltdown in TerraUSD, one of the world's largest stablecoins, sent shockwaves through cryptocurrency markets on Thursday, pushing another major stablecoin Tether below its dollar peg and sending bitcoin to 16-month lows," Reuters reports.
Bitcoin Price data by YCharts
Buying the Dip
Investors who haven't been shaken to the core can use the current opportunity to buy the dip. It's difficult to assess when the market pain will be over, but with Bitcoin falling to below 50% of it's all-time high back last year, the opportunity is also difficult to pass up.
One way to buy the dip without buying into the cryptocurrency itself is via ETFs like the ProShares Bitcoin ETF (BITO). The fund allows investors to get Bitcoin exposure in the safety of a traditional market exchange without having to add a layer of safety by transferring Bitcoin to a digital wallet.
Either way, the last thing investors should do is act out of emotion.
"I wouldn't recommend to start selling out of fear and panic. This isn't happening for the first time! Remember a long term investor always wins," says Sumit Gupta, Co-founder and CEO of CoinDCX.
For more news, information, and strategy, visit the Crypto Channel.
Read more on ETFtrends.com.The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
