After the Luna fiasco, is it the right to enter cryptos?

The total m-cap of crypto markets dropped to $1.25 trillion recently from the $3 trillion level, thanks to concerns like war crisis, interest rate, inflationary tensions and Terra’s Luna fiasco.

However, despite the sharp fall, the volumes of the crypto tokens have remained healthy, signalling that investors’ hopes have not waned much. The new prodigy of investors is looking for opportunities to enter the market.

Market experts said that the crypto market is comparatively nascent and volatile. But mid to long-term investment strategy can help investors avoid volatility induced risk and reap significant gains.

Avinash Shekhar, CEO, ZebPay, said that investors who buy the dips make the most from the markets.

“However this requires significant risk-taking abilities,” cautioned.

‘Buying the dip’ is an attempt to time the market and this is a risky approach to investing. On the other hand, Rupee cost averaging is more advisable as it allows investors to hedge risk by averaging out the cost of acquisition, suggests Shekhar.

Tokens such as Bitcoin, Ethereum, BNB and Cardano dropped about 60-65 per cent from their peak. Other Altcoins, including Solana, XRP, Dogecoin and Avalanche, tumbled up to 80 per cent from their peaks.

Market experts suggested that investors should not speculate and focus on building a long term portfolio to reap the maximum benefits.

Manit Ankhad – Vice President & Head of Crypto Research at 1 Finance, said that there are two main reasons for the decline in crypto – higher interest rates and Terra debacle- and makers have to digest all the negative events.

Ankhad feels, that it is a good time to enter the cryptos, but one should check his risk appetite while investing. Though he suggested that investors avoid leverage and entering into junk coins. “Stick to quality and allocate in tranches,” he said.

On the other hand, a few experts believe that it is not an opportune time to enter the crypto space as the overall sentiments remain negative and there is little room for strong upside in the near future.

Gaurav Dahake, co-founder and CEO, Bitbns, said that the Federal Reserve liquidity tightening is still in progress, denting the markets further. “There might be a short term relief, but the overall outlook on crypto is still bearish.”

Dahake, who has suggested investors to wait till June quarter to end, said that investors should look to diversify their investment in prime assets such as Bitcoin and Ethereum in SIP format.

Analysts believe that investors should adopt a SIP way to enter the market in a staggered manner and bring their average cost lower as the best bet to yield better returns as the market gets back on track.

“The most attractive crypto pockets have been Bitcoin and Ethereum,” said Dahake. “Investors can look to invest in the top 20 cryptos as most are down by 70-80% right now.”

Others are bullish on the new emerging themes like Decentralized Finance (DeFi), Web 3 and metaverse, which are grabbing the majority of shares among the new projects.

Ankhad sees DeFi and Web 3.0 are the most interesting pockets with immense potential yet to be unlocked. “These two projects could be major disruptors to some of the traditional systems in existence.”

Supporting him, Shekhar from Zebpay is also bullish on DeFi, Web 3.0 and metaverse as a theme. “These will play a big role in changing how we interact with technology and each other in the digital realm,” he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)