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Bitcoin (CRYPTO: BTC) is down 25% since its peak just over a month ago.
The sell-off appears to be driven by fears that it is turning from an inflation-resistant safe haven to a risky asset linked to the stock market.
And with volatile commodities like cryptocurrencies, once a few people start selling, others follow, trying to stop further losses.
“The recent sell-off resulted from a broader risk-off sentiment that also affected several global equity markets,” said DeVere Group President Nigel Green.
“It happened as inflation soared and, in turn, encouraged central banks to tighten monetary policies, putting at risk the liquidity that has benefited many asset classes, including Bitcoin.”
Stop giving away bitcoins
Green warned investors to stop using their bitcoins, as it makes the already rich even richer.
“Long-term wealthy crypto investors usually take advantage of panic sellers by buying their cryptocurrency cheaply to boost their investment portfolios,” he said.
“Doesn’t the bitcoin price drop seem particularly beneficial to these investors during these times of worrisome high inflation?”
He added that crypto investors with deep pockets always buy dips.
“This is because they know that digital, global and decentralized, borderless money is, clearly, the future,” Green said.
“Bitcoin has nearly doubled in value since January 2021. How many other investments can you say?”
Green pointed to the fact that the third largest bitcoin holder bought over $150 million during the current correction.
Yes, 2021 has been as volatile as any other for the bearer of the cryptocurrency flag. But this upper and lower nature is being exploited by those who are charging their wallets.
Could this explain why so many of them are sending “warning shots” about selling cryptocurrencies when things are a bit choppy on social media? “It seems very likely,” Green said.
“Panic bitcoin sellers are practically giving up their cryptocurrency to wealthy buyers who are piling up, piling up, piling up.”
Bitcoin will return as a safe haven
Although its behavior has changed in recent weeks, Green believes that in the long run Bitcoin will return to its role as a safe haven against inflation.
This is because Bitcoin is forever limited to a maximum of 21 million coins in circulation.
“In this inflationary period, Bitcoin has outperformed gold, which has been hailed almost universally as the ultimate inflation hedge — until now.”
Green advised investors to stick to Bitcoin from a long-term perspective.
“The price of Bitcoin and other cryptocurrencies can drop by 10% or more in a matter of hours. In fact, they often do. This is why you need a properly diversified portfolio to mitigate risk.
“History shows that the gains of bitcoin have been enormous for those who own it.”