Rebound And Reset: Making The Most Of The Current Crypto Bear Market
Many would-be investors think investing in cryptocurrency is complicated. The truth, however, is that the process can be simple and easy.
Among savvy investors, whether traditional or digital, the prevailing wisdom is to "invest when the market is bearish, not when it's bullish." After all, when down, there is no way to go but up.
As a consequence of the macroeconomic situation, rising inflation, and sky-high interest rates, the cryptocurrency market is undergoing a correction alongside global equities markets.
Cyclicality is a fundamental component of all markets, and the expected rebound within crypto specifically should allow projects with strong use-cases and robust fundamentals to rebound, thereby providing investors that have entered at the right time a good opportunity to benefit from the upswing.
Despite the market being bearish, crypto adoption is increasing, and more merchants are planning to accept crypto as a form of payment. In a study made by Deloitte, 75% of retail merchants intend to accept cryptocurrencies as a form of payment within the next two years. Over 50% of the respondents to this survey were large retailers, and 93% of them have already accepted crypto as a form of payment, and, as a result, also witnessed a positive impact on their business revenue. Meanwhile, a survey done by Checkout.com showed that 54% of consumers in the UAE and KSA want to use crypto as a form of payment and not just as an investment, while another survey showed that one-third of the UAE population have already invested in cryptocurrencies.
What all of this means is that the market has great potential to grow and expand, notwithstanding cyclical periods of ups and downs, and therefore, presents an opportunity as well. Of course, any investment carries its own risks, and there can be no guarantee of success, but as we have seen from previous cycles, adoption is likely to increase as we enter the projected future run-up. But many would-be investors think investing in cryptocurrency is complicated. The truth, however, is that the process can be simple and easy- but first, here are a few of the misconceptions surrounding cryptocurrencies that are fueling some people's fears or hesitance to become investors in the same:
MYTH #1: Cryptocurrencies are anonymous and untraceable Hardly- Bitcoin, the primus inter pares of cryptocurrencies, can be traced all the way from when it was first created.
MYTH #2: Cryptocurrencies are unregulated While there is no internationally coordinated regulation of cryptocurrencies, there are a growing number of territorial regulations being formulated to protect investors and users. According to the World Economic Forum's Global Future Council on Cryptocurrencies study, a growing number of countries and territories such as the European Union and the UAE are setting up regulatory bodies and legislations to deal with the industry in a comprehensive manner. In fact, Abu Dhabi Global Market (ADGM) was the first to release a comprehensive virtual asset regulatory framework in 2018.
MYTH #3: Cryptocurrency is only used for illicit activities Some of the world's leading brands and government have already authorized or are exploring cryptocurrency payments. My company, MidChains, recently partnered with Network International and Visa to explore collaboration on this front.
MYTH #4: In crypto, size matters It is often assumed that large platforms/exchanges are regulated, and that assets are safely stored in them, but this is not often the case. It is also important to note that a license does not mean regulated. Having a regulated financial service provider matters, because regulations provide investors protection and rights that ensure your assets and money are safe. Without regulations, you will not have any legal protection or rights as seen recently in many instances in the crypto space. Look closer at disclaimers, client agreements, and frequently asked questions to understand what your rights are before you invest.
Now that these common myths around crypto have been dunked, the question becomes: how does one actually explore the crypto space for themselves?
Getting started can be straightforward. The first thing to do is to choose a reputable and regulated exchange. In the MENA region, there are only a few regulated exchanges and brokers. Among these select few, take some time to find out more about its management team, as well as its backers and supporters, to find out whether the exchange has good and credible leadership.
Choose an exchange or broker that has managed to establish a solid reputation for transparency, and has the full backing of regulatory authorities. Find out how you are being charged for services as zero commissions does not mean you are trading for free, but likely that you may be paying a higher price for the asset. Consider the price of the asset plus commissions when comparing the total cost of an investment between different platforms.
Upon completing this step, set up an account where you may need to go through a compliance process to gain access and start investing or trading. While it looks simple, remember that the bigger part of your work will be involved in research, as well as in understanding the risks and creating an investment strategy that works within your capacity.
At the end of the day, remember that you get out what you put in- and that stands true for the crypto domain as much as any other business sector. Good luck!