Why Today’s Selloff Is the Biggest Bargain of 2022

A diagonal string made of zeros and ones. Cryptocurrency and mining.

Written by Amy Leggett Wolff at The Motley Fool Canada

Cryptocurrency shares continue to fall in today’s market. Investors from all over the world wanted to get into the next big thing, and they got it with cryptocurrency stocks. However, with soaring inflation, continuing epidemics, and rising interest rates, many have become willing to get out.

This has led to a decline in cryptocurrency companies and stocks across the board. Bitcoin (CRYPTO: BTC) is down 13%, and Ethereum (CRYPTO: ETH) It is down 23% in the last month alone. This is after both of them reached all-time highs in 2021.

This year certainly isn’t a great start. But it also means that crypto stocks could offer the biggest bargain of 2022 – one that won’t last long.

Unbelievable drop in recovery

While the cryptocurrency may go down, definitely don’t count it. Jim Stop It became the latest target for crypto hunters after announcing that it would expand into the realm of non-fungible tokens (NFT). This sent shares up 14% for the meme stock, however those gains were almost immediately lost.

It’s important to realize first that 2021 was a strange year, to say the least. Young people entered the market in droves, with cryptocurrencies taking the lead, technology stocks and other topics also rising. Everyone wanted the gains they saw in 2020, but those gains came after a major crash, and it’s not something future investors should count on.

So, it seems that in 2022, there is already a shift towards normalcy. Cryptocurrencies such as Bitcoin and Ethereum have started to decline, causing many to reap their returns. And that’s all right! But now may be the time when long-term investors want to come back.

What do you expect in 2022

The excitement of 2021 is unlikely to turn into 2022. Well, at the start of the year it may not be as exciting as it will be. Shares continued to fall across sectors that saw big gains last year. But when the smoke clears, normalcy prevails.

What this normal life could look like in 2022 is, of course, anyone’s guess. But analysts have an idea. They think that investors should keep their expectations in check. A normal market means that there are ups and downs. And this will still be true for cryptocurrencies. This is why long-term investors need to be patient. While over the next year you may not see significant gains, as we did in 2021, in the long run, the cryptocurrency is likely to continue its upward pace.

What investors should do now

If you are looking for cryptocurrencies, this is great. But Bitcoin and Ethereum are still volatile areas of the market. Even exchange-traded funds (ETFs) that offer at least some diversity are unlikely to be immune to a volatile market.

However, I recommend next year to take a closer look at your portfolio. Are there stocks that have brought you incredible gains? Sell ​​it and reinvest in some of the safest companies. Do you have a lot of risks? Again, consider putting the stock elsewhere, be it ETFs or banks – wherever it is.

Then set aside maybe 10% of your wallet for something fun and a little bit dangerous like cryptocurrency. This way, if things go sideways, you can be patient to wait for a rebound.

With all this in mind, the cryptocurrency now offers a great opportunity for long-term investors to get in during the market downturn. When it finally stabilizes, there may already be dips, but it is unlikely that there will be a dip in the near future as we have seen. So now is your chance to buy low and hold on for decades.

Beyond Cryptocurrency: Why Today’s Sale Is the Biggest Deal of 2022 First appeared on The Motley Fool Canada.

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Deceptive contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum.

2022