May 18, 2022 | Read Online

Is it time to buy the dip?

First and foremost... This is not financial advice. Please do your own research before jumping into anything mentioned in this article folks (or even anything not mentioned in this article, for that matter).

The de-pegging of UST and the crash of LUNA have shaken the entire crypto ecosystem. Bitcoin is now under $30,000 - more than 50% below its previous all-time high. ETH is touching $2000 and is down 35% since the start of the year and pretty much everything else has followed this downward trend.

Is now a good time to buy in?

The rings of FOMO

Previous bull runs (a distant memory I know) started with bitcoin going on an absolute tear. When bitcoin was going higher and higher, other altcoins and smaller projects were not actually moving that much, to begin with.

The next stage is other blue chip cryptoassets like Ethereum taking off. This is the second ring of FOMO. After people felt like they had missed out on the run-up in bitcoin, they moved to other blue chips to try and find some gains.

Then finally, we move to the outer ring of FOMO, and this is when we see the run-up in altcoins. When we move to this ring, a lot of the smaller, riskier projects in the crypto space start to take off.

So instead of investing in that new coin which offers 10 million % APY, you might find that it is well-established cryptoassets that lead us out of this bear market. But next time, it might not be Bitcoin leading the charge.

The ETH as bonds theory

.. and why it might be time to buy ETH.

Right now, in traditional bond markets, investors are earning a 3-5% return, but they are losing around 9% because of inflation. In real terms, they are losing money.

Once "the merge" goes live, Ethereum will move to a Proof of Stake blockchain and one will be able to earn a return by staking Ethereum. The returns on offer will be 9-12%. On top of that, under the new system, every time gas fees go above a certain threshold, the Ethereum network will be burning more ETH than it is producing. That would make Ethereum a deflationary asset.

So instead of losing money in real terms, investors could be earning 9% on an asset that increases in value. The current market cap of ETH is $245 billion. The current value of the bond market is around $120 trillion. If ETH becomes considered as an alternative to investing in bonds, even if only a small proportion of bond investors think like this, there could be huge upside ahead for ETH.

Other Blue Chips

And maybe later down the line, it might be time to look at other tokens and blue chip crypto assets. For example, the UNI token is the governance token for Uniswap. Uniswap is the biggest automated market maker (AMM). It has over a million users, the platform has clear utility/ a clear use-case and it's not going anywhere anytime soon. But the UNI token is down at around $5. Its all-time high in May 2021 was $43!

Wen Altcoin Season?

One thing is for sure, it probably isn't time to buy obscure altcoins or random NFTs and chase those 1000x returns. In traditional markets, investors move their money to "safe haven assets" like gold and government bonds in times of crisis. Although crypto is a risky space in general, it certainly has its safER havens, which are BTC, ETH and other blue chip crypto projects. For the foreseeable future at least, it might be best to stick to these.

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Market Mix - Is it time to buy the dip?

Is it time to buy the dip?

The rings of FOMO

The ETH as bonds theory

Other Blue Chips

Wen Altcoin Season?

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