Written by: George Prior
Heightened market volatility until the end of the year will be used by cryptocurrency investors to bolster Bitcoin and Ether holdings, says the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.
deVere Group’s Nigel Green’s comments come as central banks around the world plan further interest rate hikes before the close of 2022.
He notes: “Markets are now predicting that policymakers at major central banks, including the U.S. Federal Reserve and Bank of England, are likely to remain resolute in pumping up interest rates in their battle to beat down unexpectedly stubborn inflation.
“Five powerful officials of the world’s most influential central bank, the Fed, in comments made on Thursday, maintained a hawkish theme that inflation remains far too high and they won’t be put off raising rates.
“We expect a 75 basis-point hike when they gather November 1-2.
“Meanwhile, members of the Bank of England’s Monetary Policy Committee have been delivering pretty clear hints that they will push through a big increase in rates when the MPC next meets on November 3.”
Typically, higher interest rates mean stock markets decline in value because companies will borrow less money. The result is their earnings will grow at a slower rate than investors previously expected. This has a ripple effect across most sectors of the stock market with some notable exceptions, such as financials.
“Given Bitcoin and Ether’s current correlation with stock markets, we anticipate further, perhaps heightened, volatility in the crypto market before the end of 2022,” says the deVere CEO.
“However, for serious investors this will not necessarily be seen as a bad thing.”
He continues: “The major investors, including institutional ones, will treat it in the same way as turbulence in any other market.
“Some of the world’s best investors consistently use market volatility as major buying opportunities in traditional financial markets – and the cryptocurrency market is now no different.”
“When used effectively and efficiently, volatility can be an extremely powerful investment strategy.”
History shows that Bitcoin gains have been enormous for those who hold during market turbulence, he goes on to add.
“Bitcoin remains the best-performing asset class in the world, and has consistently ranked amongst the best for both traditional and crypto investment sectors over the last few years.”
Compared to other top tech names over the last five years, we see Bitcoin has 355.22% higher returns than Amazon, 321.97% more than Google, while the asset out-performed Microsoft with returns of 182.65% and overshadowed Apple by 166.76%.
Nigel Green concludes: “Savvy, long-term crypto investors will be looking to benefit from panic-sellers by buying their digital currencies ‘on the cheap’ to enhance their investment portfolios.
“Serious investors will not be spooked by further volatility. This isn’t their first rodeo.”