On June 14, Coinbase (NASDAQ:COIN) CEO Brian Armstrong opined that “We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period."
However, as far back as February, Ethereum CEO Vitalik Buterin suggested that a so-called “crypto winter” might actually be good for the industry. Changpeng Zhao, or CZ, CEO of Binance, seemingly agrees, stating recently that “Now the markets are more balanced, so top talents are available, and we want to hire them.”
To be clear, a lot of people have lost a great deal of money in the last few weeks (and months); others are losing even more than that. But the old saying “buy low, sell high” is every bit as relevant to the crypto markets as it is to traditional stocks.
With that in mind, let’s dissect what the recent drop in cryptocurrencies ultimately means.
1. Barriers to entry are suddenly lower. Bitcoin, for example, is currently trading around its lowest price in two years, so if you missed last year’s rally… well, there’s probably going to be another. As CZ added in the same article referenced above, “It’s not the first time we’ve gone through a crypto winter. If we are in a crypto winter, it would be my third and Binance's second.”
Bridge$, the native token of Bridges, is currently trading 75% lower than it was on June 15. So last month, every $1 USD would have gotten you approximately 7 Bridge$, but today, that same $1 USD gets you about 33.
2. Market downswings bring in new holders. At Bridges, its mission is to make the future of finance work for everyone, but especially those who have historically lacked equal access to traditional finance products. With cryptocurrencies suddenly more affordable, it’s easier for underrepresented groups to get in. (And in its view, that’s awesome.)
3. Darwin’s Law still applies. In recent years, the number of cryptocurrencies has increased exponentially. In fact, it’s so easy to create one that Pancakeswap reminds holders that they may be swapping with an outright scam. The best tokens, however, are still tied to legitimate projects with some sort of business goal. In the current downswing, we’ll hopefully see the demise of more illegitimate tokens whose only “purpose” was to scam honest holders.
If checking the price of your favorite cryptocurrencies is the first thing you do each morning, then the last few weeks have surely been depressing. But if you’ve lived through a few downturns (as the writer of this article has), then two lessons likely ring true:
1. Downturns are often shorter than many predict.
2. Fortunes are made by buying at the bottom.
The advice of this author is to keep your eye on what looks like (and feels like) the bottom. There’s a lot of opportunity to turn today’s lemons into tomorrow’s lemonade.
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