Current Crypto Market Volatility Could Benefit Long-Term Investors – Grayscale

As Russia’s invasion of Ukraine continues to affect global financial markets, including the crypto market, crypto analysts at Grayscale Investments have shared their opinion on the long-term effects of this war for crypto investors. Grayscale (a crypto asset management firm) tweeted the lengthy blog post to benefit their huge Twitter followers.


Why Did The Panic Sell-Offs Happen?

According to the firm’s analysts, the uptrend on all digital assets disappeared following the news of a likely Russian invasion of Ukraine. Before that, the crypto market, the S&P 500, and the PCT indices have been following a similar trend since the beginning of this year. The Grayscale analysis claimed that many crypto investors sold their assets in a panic because they presume that as the Russia-Ukraine war goes on, there will be a decline in the prices of digital assets.

The firm’s analysts further opined that apart from the war news, the panic sell-offs were also a reaction to the Fed’s possible increase in interest rate. Thus, causing many crypto investors to re-evaluate their crypto-asset portfolio. However, the analysts claimed that the uncertainties in the geopolitical climate would prompt the Fed not to increase interest rates right now. The analysis report further stated that if the Fed doesn’t raise interest rates as previously planned, it would be highly beneficial to the crypto market. 

Past Performance As An Indicator Of Future Performance

Grayscale further noted that there were similar panic sell-offs during the early stage of the pandemic two years ago. While the bears keep selling in anticipation of a worsening geopolitical situation, the bulls expect a loss in the selling intensity as the sellers gradually become exhausted, which will cause a market turnaround that will favor them. 

Grayscale believes that the bulls’ expectations are more realistic than the bear’s anticipation. The analysts further remarked that it is a historical fact that risky assets usually bottom out at the start of wars. 

Market Bottom Outs At The Start Of Wars. Source: Grayscale.

They also reiterated that a rally in the financial markets (including the crypto market) would likely happen because it is highly likely that Russia and the US will not fight against each other. The analysis further noted that the current volatility in the crypto market presents a huge entry opportunity for long-term crypto investors, especially those intending to own bitcoin.

The BTC Vs. Gold Investment Debate Continues

Grayscale stated that bitcoin would continue to perform better than gold because it has fundamental factors that can cause its price to rise over the long term. A top-level executive with a top crypto trading platform (Genesis Global), Rosen Patel, supported the Grayscale analysis saying, “today provides a great entry opportunity for anyone who believes in the positive long-term performance of BTC over the gold market.” Despite many crypto investors moving their assets to stable investments such as Gold, BTC continues to outperform gold as a viable investment alternative.

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