These types of cryptocurrencies have dropped 40% in 14 days; is it time to purchase?September 30, 2021
New Delhi: The crypto mart has been facing a bumpy ride of late, as most of the top-notch digital tokens have lost as much as 40 per cent of their value in the past couple of weeks.
Barring the dollar-pegged stablecoins, top cryptocurrencies have declined as much as 40 per cent in just a couple of weeks. Ethereum has dropped the most, up to 39 per cent. It was followed by XRP and Solana, declining 36 per cent each.
Dogecoin, Cardano and Uniswap are some of the other tokens, which have given up one-third of their values in just two weeks. Avalanche, Binance Coin and Polkadot have shed up to 30 per cent each. Crypto leader Bitcoin has fallen 21 per cent.
Analysts attribute this fall to multiple factors, including a spillover of the weakness seen in global equity markets in the recent weeks.
“Panic in the market led to profit booking by large investors, leading to selling across the retail segment,” said Edul Patel, CEO & Co-founder of Mudrex
Prior to this, the crypto tokens witnessed a linear rally. However, markets are bound to go through such cycles.
Hitesh Malviya, founder, itsblockchain.com said there are mixed sentiments in the market. “A few analysts are looking at new lows and expecting another bearish cycle, whereas others are expecting another bounceback.”
“There are some coins that are fallen more relative to Bitcoin. They can recover whenever Bitcoin finds a bottom, and bounces back from support levels,” said Malviya.
While the cryptocurrency market is showing some signs of recovery, negative news flow from China and other countries is weighing on investor sentiment. Market watchers say these digital tokens should see a strong comeback when the dust settles.
Patel is hopeful also of swift and sharp recovery in the market, but said the timing can not be predicted. He advised investors to have a long-term view on the tokens they hold.
“Any investor with high risk appetite for cryptos should be satisfied with high single-digit returns per month,” Patel said. “This is more than 80 per cent annualised returns, which almost doubles your capital every year.”
Some analysts suggest long-term investors should look for averaging out positions, while short-term traders need to have a strict stop loss in place to avoid more losses if things go south.
Patel said larger cryptocurrencies are available at a decent discount. “Random purchases will spoil the party and lead to wealth destruction, ” he added.
He said investors should not try to catch falling knives and keep off the random altcoins, where euphoria is created and destroyed every other day.
Malviya expects ATOM to recover faster than others and finds the NFT space an attractive investment option. “NFTs have shown strength against the Bitcoin dump, and have already started recovering from lows,” he said.
The larger altcoins are at good prices currently. Some of the other top smart contract tokens can also be looked at, said Patel.