Key facts:
The economist highlights that bitcoin is resisting the runs showing strength.
He maintains his bullish view of the future, although he does not recommend investing in BTC in the short term.
With bitcoin (BTC) trading at $20,000 after a seven-month downtrend, it’s hard for investors to make a profit. Against this background, the Argentine economist and CEO of Cryptogranjas, Jose Sarasola, revealed to CriptoNoticias his perspective of the crypto market and what are the two investment strategies he recommends.
“We are seeing the film wrong. Everybody talks about cryptocrash and the fall of bitcoin, but it is not about how much it has fallen, but how much it has resisted. Because bitcoin is effectively navigating a “perfect storm” with admirable skill,” he maintained.
The economist indicates that bitcoin lost its floor of $30,000 falling to $20,000, but the news is not how much it fell, but “why the hell it fell so little«. He warns that the surprising thing is that no bank can withstand a run, not even the most solvent, but estimates that BTC is succeeding.
The bear market that BTC is experiencing reflects that people are selling their funds in the cryptocurrency, including large holders. However, the specialist points out that, in this run, where many investors and small savers are selling their bitcoins, the opposite is happening at the same time.
As a counterpart to sales, it stands out that there is another group of investors large and small that are taking advantage of this downturn to buy bitcoin. Above all, millennials who understand that this technology is the money of the future and, as they grow and gain purchasing power, they acquire more BTC.
«This group of people, who are more and more, know that bitcoin is here to stay. They don’t think in dollars, they think in bitcoins. That’s why they don’t care if the price of BTC goes down or up. They see your virtual wallet and only care how many bitcoins you have, not how many dollars those bitcoins are worth.«.
Jose Sarasola, economist and CEO of Cryptogranjas.
In addition, it alleges that in this context more and more companies adopt BTC as a means of payment, exchange and form of savings. Likewise, he comments that common people, who do not come from the world of investments, nor from the stock market, are transformed into “believers» of Bitcoin because they believe in its intrinsic concepts. That makes it “powerful,” he stresses.
Is it a good time to buy bitcoin or not? sarasola replies
The economist estimates that the future of bitcoin is a “shining sun” and many investors see this storm as the great opportunity to buy cheap. “Consider that just two years ago BTC was trading below $4,000. And today we are very far from that figure (at USD 20,000) because the community has grown », he says.
“But beware, we do not recommend that short-term investors acquire bitcoins,” he warns. The reason is that, although he maintains that his future is promising and his fundamentals are as strong as ever, it may take several months for the price of BTC to rebound.
For this reason, he emphasizes that those who invest in bitcoin at this time, have to be prepared to withstand this storm. Likewise, he points out that the biggest financial crisis in history lasted 25 months, while bitcoin’s downtrend began seven months ago.
«To everything bear market (bearish cycle) is followed by a bull market (bullish cycle). For this reason, when the numbers settle in the international context and the bull run, bitcoin will resume its upward path, “he mentions. Namely, projects that the price of BTC will rise as soon as the global macroeconomic and political context settles.
This is also the opinion of the renowned analyst of commodities Mike McGlone, who this week said that bitcoin will be one of the assets to benefit the most from this scenario. And he considers that the economic financial situation of 2022 resembles that of the crack of 1929 that is remembered as the most catastrophic stock market crash in history.
What should you invest in in the midst of the bitcoin bear market?
As a specialist in economics and cryptomining, Sarasola mentions that One way to minimize risk, for those who are not sure about entering right now, is to invest in mining. “Because the prices of mining machines have dropped considerably, and it is a way of participating in the digital economy by reducing risk,” he says.
He explains that if the price of bitcoin goes up, down or even remains stable, the machine generates income. As long as the cost of energy and general expenses are less than the profits that said machine generates.
“For this reason, in Argentina, where energy is cheap compared to the rest of the world, mining is a way to invest in bitcoin, reducing exposure to its volatility,” he says about mining.
Also, it considers that buy bitcoin to maintain in the long term is also a good strategy because it estimates that its price will grow in the future. Although it is imperative to note that his bullish projection is speculative, it is not guaranteed. Therefore, it is essential not to invest more than one can afford, anticipating the risk.
These are the reasons why bitcoin fell, according to Sarasola
Jose Sarasola explains that the fall of bitcoin is due to a confluence of factors. First, the global economic crisis, which has now been going on for seven months bear market and was deepened by the war with Ukraine, which generated political instability. Second, the rise in rates by the Fed, which for the first time in 20 years suffers an increase.
“In a world with political instability and rising rates, the big funds logically change risky investments for safe ones,” he maintains. To this, he indicates that he adds in the third place that many bitcoin holders were heavily leveraged, unable to withstand a drop.
The expectations of a continuous rise generated by the bull run during 2021 caused a large number of investors to borrow money to buy bitcoins. But this type of loan generates volatility, because as soon as the price drops to a certain level, investors have to sell their bitcoins to pay off the loan. That is, they do not sell them out of mistrust of the currency, but because they are financially obligated.
Jose Sarasola, economist and CEO of Cryptogranjas.
The businessman affirms that, in this context of political instability, rate hikes and strong leverageIn addition, two specific events occurred that affected the crypto world:
On the one hand, the collapse of LUNA, one of the top 10 cryptocurrencies, dragged down the rest, including bitcoin, which had nothing to do with it. And, on the other hand, the fact that some exchanges that could not withstand the bull run, because they did not grow solidly, and had to prevent their users from extracting funds. This was the case for Celsius and for a shorter time Binance.
To understand the implications of this, it is as if in Argentina, in a context of political instability and a soaring dollar, some banks implement a corralito like the one from 2001, to prevent their clients from withdrawing their savings. We all know what happened in 2001, it goes without saying. Chaos, panic, running, cacerolazos.
Jose Sarasola, economist and CEO of Cryptogranjas.
Thus, he concludes that the deluge began that caused panic in the world of cryptocurrencies leading to massive sales. However, he estimates that as soon as the international economic and political context settles in and the upward trend of the markets in general begins, the price of bitcoin will increase.