Crypto Markets Are Volatile, But That’s OK — Here’s Why

  1. Bear markets can and should be viewed as a sale on future growth. When prices are low, it presents an opportunity to buy into projects with a long-term vision at a discount.
Image Source: Pixabay

DeFi offers us many opportunities as investors such as lending and borrowing platforms to stablecoins, tokenized coins, and sustainable passive income projects. The DeFi ecosystem has launched an expansive network of integrated protocols and financial instruments.
At its core, DeFi is about access — removing barriers to entry and increasing opportunities for participation in the global financial system. DeFi protocols offer a host of benefits compared to traditional finance — including greater security, transparency, and interoperability.

However, as with any emerging technology, there are also risks involved with using DeFi protocols. One such risk is market volatility.

Cryptocurrencies are notoriously volatile, and the prices of assets can swing wildly in a matter of hours. This volatility can be magnified in the DeFi space, where assets are often traded on leverage. DeFi users should be aware that the value of their assets can fluctuate rapidly in response to changes in market conditions.
For example, the total value locked in DeFi protocols fell from a peak of $12.4 billion in June 2019 to $8.8 billion in December as the price of ETH declined by over 60%.

Image Source: Pixabay

Bear markets can and should be viewed as a sale on future growth. When prices are low, it presents an opportunity to buy into projects with a long-term vision at a discount.

Decentralized finance protocols and cryptocurrency assets are good examples of this. Despite the recent market correction, the underlying infrastructure for decentralized finance is still being built out and integrated. This presents a chance to buy into projects with a lot of upside potential at a lower price.
The same can be said for cryptocurrency assets. Although the bear market has caused prices to drop, the technology continues to develop and advance. This provides an opportunity to buy into promising projects at a discount. In both cases, the bear market presents an opportunity to buy low and hold for future growth.

The explosive growth of DeFi protocols has been driven by a combination of factors, including:

  • The launch of new protocols and products that offer compelling economic incentives for users to adopt and participate in decentralized ecosystems.
  • An increase in demand for yield-bearing assets as interest rates around the world has declined to historically low levels.

Decentralized Finance presents an exciting opportunity for long-term investors even during market downturns. Although the industry is still in its early stages, those who enter the space today can position themselves for tremendous growth in the future.

We are currently in a bear market, and prices have been swinging wildly over the past few months. If you’re thinking of getting involved in DeFi, make sure you’re prepared for the market volatility

If you’re not prepared to weather some stormy markets, then DeFi (and cryptocurrencies more generally) may not be for you.

As a result of this volatility, it’s important to only put as much money into DeFi as you’re comfortable losing and to always monitor your positions closely.

Do your research, set realistic expectations and only invest what you can afford to lose.

Please read some of my other articles regarding Cybersecurity and DeFi projects:

Why a VPN is Essential for Crypto Transactions

Internet Security Awareness — Humans are the Weakest Link

Internet Security Awareness — How to Spot a Phishing Attempt

Ooze Finance — The Future of DeFi

Do Audits and Doxing Give a False Sense of Security in DeFi?

Disclosure: There are some affiliate links in this article and I may receive commissions for purchases made through those links. These are products I highly recommend. I will not promote a product I do not trust and/or have personally used.

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