Panic seems to be gripping the cryptoverse at the moment.
Do you want my advice? If you’re serious about building your wealth through future-forward investments, it’s time to cut out the noise and focus on the fundamentals.
The latest headlines rocking the market are about Grayscale, the asset manager running the world’s largest Bitcoin fund. In a statement last Friday, it confirmed that it won’t be sharing its proof of reserves with customers.
“Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic proof-of-reserve, or other advanced cryptographic accounting procedure,” Grayscale wrote in a statement.
This caused a tsunami of jitters throughout the crypto world.
However, a few days later, following a weekend of high drama on social media, on Monday, Coinbase confirmed that it holds 635,000 Bitcoin on behalf of Grayscale Bitcoin Trust – and that they are secure.
This suggests the furore was hysteria and hype.
The Grayscale saga was heightened, we assume, due to the FTX fiasco a couple of weeks ago when Binance stepped away from its plans to acquire FTX, leaving Sam Bankman-Fried’s crypto empire on the verge of collapse.
The reversal of plans came one day after Binance CEO Changpeng Zhao, known as CZ, announced his firm had reached a non-binding deal to buy FTX for an undisclosed amount, saving the company from a liquidity crisis.
To my mind, all these headlines are a distraction and are likely to be primarily driven by those with vested interests in attacking digital currencies, such as ‘legacy’ financial institutions, many of which spend huge amounts of money with certain traditional media outlets.
I would argue that investors should certainly do their due diligence, as I set out here in CityAM, about choosing the sensible cryptocurrencies and the right exchange.
However, they should avoid panic-selling and, instead, focus on the fundamentals.
Digital is the inevitable future of money.
This is why more and more institutional investors, household name investors, Wall Street giants and multinational corporations are all, sensibly, increasing their exposure to crypto and bringing with them capital, reputational clout and expertise.
They understand and value the key characteristics of Bitcoin and cryptocurrencies are designed for this century and, therefore, are growing in appeal.
These include that they’re borderless, making them perfectly suited to a globalised world of commerce, trade, and people; that they are digital, making them an ideal match to the increasing digitalisation of our world; and that demographics are on the side of cryptocurrencies as younger people are more likely to embrace them than older generations.
As such, by focusing on the sensationalist headlines, panic-sellers are likely going to be the ‘whales’ in the weeks to come. So-called whales are individuals or entities that hold enough cryptocurrency to have the potential to move currency valuations.
My hunch is that they will be shrugging off concerns about price dips, using them as buying opportunities, and focus on long-term trends.