Investors should prepare for crypto to continue cratering after a market rout wiped more than $400bn from the market last week, a top investment chief warned today.
The crypto world has been left reeling by a frenzied sell-off which saw Luna, one of the top 10 most valuable digital currencies, shed almost its entire value last week, while Bitcoin fell to its lowest value since July last year.
But chief investment officer at UBS Global Wealth Managers urged investors to brace for further falls to come.
“As the monetary regime that fueled the crypto rally unwinds, we think investors should avoid trying to call a bottom on these highly speculative assets,” Mark Haefele, Chief Investment Officer, UBS Global Wealth Management said.
“At present, we see more attractive options for portfolio hedges, such as via healthcare and commodity exposure, and also other ways to take on portfolio risk, such as by tilting equity allocations toward value and the energy sector, or via alternative assets.”
Investors have fled crypto in recent weeks as spiralling global inflation and looming recessions sparked a scramble for steadier ground.
Stablecoins, seen as a safer option for investors due to the fact they are supposedly pegged to the value of real world assets, have similarly haemorrhaged investors in the market sell-off.
Investors have withdrawn savings in the stablecoin Tether worth $7.6bn (£6.2bn) since the cryptocurrency crisis began last week, almost twice its total cash holdings.
The concept of stablecoins was rocked last week as Terra broke its peg to the dollar amid the sell-off.