Bitcoin Panic-Sellers A Gift That Keeps Giving For Wealthy Traders

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Bitcoin panic sellers are practically ceding their cryptocurrencies to wealthy buyers who will use digital assets as a shield against inflation, this is becoming increasingly clear to me. Digital currencies fell sharply at the start of the month before gaining ground. The liquidation was triggered by a feeling of broader risk aversion which also impacted many areas of the global stock markets. many asset classes, including Bitcoin.

Wealthy crypto investors always buy the dips. This is because they know that digital, global, borderless and decentralized money is, clearly, the future.

Bitcoin has almost doubled in value since January 2021 – how many other investment classes can say that? But this year has not been without the volatility of trademarks in the crypto market. And volatility is still used as a buying opportunity by wealthy traders to supplement their portfolios.

Could this explain why so many of them send out ‘warnings’ on social media about selling crypto when things are a bit turbulent in the market? It seems very likely.

These bitcoin panic sellers are throwing low-cost cryptocurrencies to wealthy buyers who hoard, hoard, hoard.

This scenario seems particularly likely in the current situation because they fear more and more that their cash flow, and therefore their purchasing power, will be eroded by the surge in inflation. Central banks – including the US Federal Reserve – the de facto central bank of the world – are now being forced to act to fight inflation.

And this inflation saga is only getting worse. The U.S. Congress has approved raising the nation’s debt limit by another staggering $ 2.5 trillion to help avert a first U.S. default. Yes, the government of the most powerful country in the world, which has the world’s largest economy, is worried about its bills.

But printing money in this way devalues ​​the currency, market confidence is undermined and inflation becomes a headache.

Already high US inflation has now accelerated to 6.8% in November, the highest in 40 years. Indeed, everyone now seems to have abandoned the description of this inflation surge as “transitory”.

Bitcoin and other digital currencies are widely regarded as a shield against inflation, mainly due to the limited supply, which is not influenced by price.

In this time of inflation, Bitcoin has outperformed gold, which has been almost universally hailed as the ultimate inflation hedge – until now.

To support this argument, we can highlight the fact that the third largest Bitcoin holder added over $ 150 million worth of cryptocurrency to their holdings following the recent flash crash. Figures from BitInfoCharts show that investors have bought over 3,000 Bitcoins in the past few days.

The prices of Bitcoin and other cryptos can drop 10% or more in a matter of hours. Indeed, they often do. That’s why you need to have a properly diversified portfolio to mitigate risk.

However, history shows that Bitcoin’s gains have been huge for those who hold it. Long-term, wealthy crypto investors generally benefit from frightened panicked sellers by buying their digital currencies cheaply to improve their investment portfolios.

Doesn’t a drop in Bitcoin prices seem particularly beneficial for these investors in these times of worrying inflation?

(The author is the Founder and CEO of deVere Group. The opinions expressed are personal.)

(Edited by: Santosh Nair)

First published: December 16, 2021, 3:24 p.m. PMIST

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