Some of my followers and readers might remember that I used to have a controversial position about blockchain and cryptocurrency in and around 2018. I was relatively early adopter of crypto, when the industry was still called a space and corporations had not joined in yet. I can safely say that I have seen it all: the good, the bad, and the ugly. I have been part of the crypto world when virtually everyone I talked to thought it was just a scam. And I have also seen crypto booming and blooming into normality, when getting some Bitcoins was seen as a part of any – although risky – trading strategy. With all the ups and down, I would say that given the moment of international geopolitical tension, crypto proved to have purpose.
As a business column writer, it is far from me to mingle into any political commentary. That is not my area of expertise. In fact, what I notice, is merely a financial pattern. In the immediate aftermath of the tension escalation in any conflict from the Vietnam war onwards, the markets rebounded sharply. Last week was no exception. In this specific case, my guess on why cryptos are seen as a safe haven for some investors, is that the ramifications and the repercussions of the sanctions announced by various countries in the past few days might have affected some grey areas, defeating the purpose of hitting a specific target.
What is certain is that the crypto community has reacted sharply after an initial sell off. As always, some traders see a catastrophe in the dip, while others cannot miss the opportunity. Warren Buffet was once asked how he felt about “having lost money” during a downturn. He candidly answered that he did not sell, therefor he did not lose anything. Losses are generated only when traders accept to close a position at a lower price than they bought. For those who hold (or hodl in crypto language) there are no losses, but only hope that the market will react.
And indeed the market reacted after the first initial shock. Bitcoin, the leading cryptocurrency in terms of market capitalisation, went from $39k down to $34.7k in just a few hours, but roared back to $39.8k in the next day. Similarly, Ethereum, the second crypto in market cap at $336Bn, outperformed the dip from $2.7k, down to $2.3k before springing back to slightly above $2.8k just 24 hours later. On the same trajectory Solana, the 7th crypto in market cap, went from $92, down to $77, and back to $94 within the 48 hours rollercoaster. The 11th crypto in market cap, Polkadot, collapse from $17.42, down to $14.27, and went up again to $17.95 in the early hours of Saturday.
Overall, the index of Smart Contract Platforms, ended exactly at the same point in a 7 days period, with 24h peaks close to 10 per cent, and a 0 per cent balance. Once again, this pattern highlights the volatility of the crypto markets overall. One of the losers, however, was Cardano, the 8th largest cryptocurrency by market capitalisation, which despite the attempt to climb back on Friday, with a +7.4 per cent growth, still recorded a 7 days loss of -7.3 per cent.
All cryptocurrencies are speculative products. Anyone investing in it should seek financial advice.
