Cryptocurrency remains a controversial investment. There are just too many narratives fighting out to be the dominant voice. As the digital currency is at its early stages of worldwide adoption, with currently 106million people in the world using it as a mode of payment, or roughly 1.39% of the population of the world. Bullish investors are speculating that the adoption rate is set at complete adoption in 10 years, overtaking traditional investments. Bearish sentiments from Famous Investors such as Warren Buffet have condemned the use of cryptocurrency calling it a scam.
What’s happening to the Crypto Markets Right Now
As the current stock market turned bearish. Many well-known crypto stablecoins, hedge funds, and investment platforms have collapsed. Most notably the one that started this Domino chain event happens to be the Terra Luna crash which happened back on 20 May. The so-called stablecoin, which portrays an investment return of 20% per annum couldn’t take the bearish sentiment of the market, crashing over 99.99%.
This effect bankrupted the well-known Hedge Fund 3 Arrow. Just recently in April, the company had over $3 billion worth of cryptocurrencies under management. The fund that bet big on everything from Bitcoin to the ill-fated Luna tokens is becoming the latest casualty of a $2 trillion digital-asset market wipeout that left it with huge unpaid debt on its borrowings.
Crypto investment platforms such as Voyager and Celsius have collapsed as a result of investing in Luna and 3 Arrow Capital. The bankruptcy of Singaporean cryptocurrency hedge fund Three Arrows Capital, to which Voyager had lent more than $650 million in cryptocurrencies. Served as the primary reason for Voyager’s demise.
With fewer debt-heavy cryptocurrency platforms and the cryptocurrency falling. There are some who speculate that cryptocurrency will bounce back to an all-time high really soon. While others believe that a crypto winter will last over 3 years similar to the previous cycle. Therefore, it is paramount to learn how should we view this new and upcoming investment asset.
How Singapore Plans to manage Cryptocurrency Investment
Singapore has plans to integrate cryptocurrency. However, the stance is that cryptocurrency needs to be centralized rather than decentralized. Deputy Prime Minister Heng Swee Keat has called upon the merits of blockchain technology while the Monetary Authority of Singapore (MAS) has repeatedly warned that cryptocurrencies aren’t suitable investments for retail investors. Instead, the central banks should be the ones to create cryptocurrencies just like fiat money. It’s important that cryptocurrency be properly controlled as privately held cryptocurrencies are not trustworthy, and are volatile.
Although the original cryptocurrency investor has always been against centralized investing. The collapse of all the cryptocurrencies, hedge funds, and investment platforms should serve as a reminder that there may be a need for a centralized crypto platform.
Why Cryptocurrency may have an amazing end of the year
Although all the news media headlines relating to cryptocurrency may be bad. Here is why cryptocurrency may have an amazing end of the year.
End of Mid-Term Election
With an average return of 16.3%, the S&P 500 has historically outperformed the market in the twelve months following a midterm election. Without knowing which political party will hold majorities in Congress, it’s unclear which social and economic policies will take priority. When the midterm elections are over, this uncertainty ends. The mid-term election will end on 8th November, so we will see what happens to the stock market until then.
Santa-Rally
This is the name given to the phenomenon of a stock rally, which typically occurs in the final week of December and the first two days of January. Between 1950 and 2019, the Santa Claus Rally took place 76 percent of the time. The 2019 Stock Trader’s Almanac estimates that the market has increased by an average of 1.3 percent over that time. However, the stock market only experienced an average Santa Claus Rally of 0.38% over the previous ten years.
FED lowering the Interest rate
The current interest rate in the US is 1.75% and the FED is expected the rate of interest rate to be higher to curb raising inflation. This creates a short squeeze in the market as less liquidity is in the market right now. However, many analysts are predicting that the FED could cut interest rates by 2023 as the raising interest rate may affect unemployment significantly.
Best Cryptocurrency to Own
Nope, I won’t be one of those Crypto YouTubers or influencers out there recommending cryptocurrency you have not heard of. My crypto portfolio allocation mainly comprises Bitcoin and Ethereum. Both of which are only less than 5% of my total net worth. For me, a comfortable allocation is 5 percent, which allows me to dabble in the cryptocurrency market without becoming overly invested. As we are gaining more worldwide adoption of cryptocurrency. Volatility will be a major factor affecting the value of the currency.
