A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services but uses an online ledger with strong cryptography to secure online transactions. Much of the interest in these unregulated currencies is to trade for profit, with speculators at times driving prices skyward.
The most popular cryptocurrency, bitcoin, has had volatile price moves this year, reaching nearly $65,000 in April before losing nearly half its value in May. By fall, the price had risen rapidly again: it hit an all-time high above $66,000 before falling back.
Earlier this year, there was a movement allowing people to do real estate investing, pay property taxes or city fees with cryptocurrency. Shortly after, a Miami penthouse sold to an anonymous buyer for $28 million — paid entirely in cryptocurrency, “making it the most expensive known residential crypto real estate transaction in the U.S. to date.”
In the Philippines, it is estimated that over 4.3 million people, 4.0% of the Philippines’ total population, currently own cryptocurrency. Bitcoin peer-to-peer trading activity in the Philippines reached record highs in 2020, with volumes exceeding USD 1 million and consistently holding above $500,000 since early May. According to a new report in 2021, The Philippines is one of the world’s fastest adopters of cryptocurrency. It is shown that The Philippines has the third-highest uptake of crypto globally.
There was a high level of awareness of crypto in the Philippines (74%). 53% of Filipinos expressed interest in investing in cryptocurrencies in the future while 39% of Filipino crypto owners said that they would use these assets as a means of payment for online purchases.
While there is a great potential for gains when investing in crypto, there’s also a great potential for losses. Each day is bound to get sharp increases and losses due to the nature of crypto.
Bad news such as the proposed capital gains tax hike in the United States, can lead to a market downturn in just a day.
Another example was seen in the aftermath of Tesla CEO, Elon Musk’s, announcement in May that Bitcoin will no longer be accepted as a mode of payment due to environmental concerns. What followed was a dramatic fall in price, with as much as USD 365 Billion worth being wiped out in the cryptocurrency market within the same week.
So why do Crypto Coins Dip?
Extreme Volatility
As cryptos become more secure and decentralized, it becomes hard for regulating bodies like government agencies to monitor and determine the value. The crash can be triggered by heavy selling in the cryptocurrency market as investors look to offload their holdings and minimize losses amid the ongoing uncertainty. At the same time, some people have expressed a desire to “buy the dip”, hoping for a rebound soon.
Most analysts have said that it is not a good time to invest in cryptocurrencies, considering the high volatility that has battered valuations at the moment. However, some analysts think it may not be a bad idea to buy the dip.
The dramatic pullback in bitcoin and other cryptocurrencies comes as a flurry of negative headlines and catalysts, from Tesla CEO Elon Musk to a new round of regulations by the Chinese government, which have hit an asset sector that has been characterized by extreme volatility since it was created.
Institutional support retreats
Part of the reason for Crypto Coins' weakness seems to be at least a temporary reversal in the theory of broader acceptance for cryptocurrency.
Earlier this year, Musk announced he was buying more than $1 billion of it for his automaker’s balance sheet. Several payments firms announced they were upgrading their capabilities for more crypto actions, and major Wall Street banks began working on crypto trading teams for their clients. Coinbase, a cryptocurrency exchange company, went public through a direct listing in mid-April.
A risk-off trade?
The weakness is not isolated in crypto, suggesting that the moves could be part of a larger rotation by investors away from more speculative trades.
Tech and growth stocks, many of which outperformed the broader market dramatically during the coronavirus pandemic. The declines have also coincided with the delayed deadline for tax payments, which could have caused selling pressure as investors looked for cash to pay off capital gains tax liabilities.
Regulatory concerns
Bitcoin and related assets have also come under increased scrutiny from regulators around the world as they have grown into a bigger part of the financial markets.
“We believe government crackdown on cryptocurrencies can trigger another ‘crypto winter’ and reduced trading activity. Harsher crackdown on crypto is possible in many developing countries which may view crypto as a threat to their fiat currencies and monetary system,” Bernstein’s Harshita Rawat said in a note.
China, which is developing its government-run cryptocurrency, reasserted its rules against other digital currencies, banning financial companies from providing services for crypto trading.
In the U.S., newly appointed Securities and Exchange Commission Chair Gary Gensler said earlier this month that he thought regulators should be “technology-neutral” but more consumer protection is needed in crypto markets. The rise of Dogecoin, which was started purely as a joke before gaining wider popularity with the help of Musk, could also have hurt the overall credibility of the crypto market. Some of the moves in the smaller, less-developed coins suggest that the crypto bull market was tied to the rise of speculative day trading in stocks instead of the increased institutional interest.
Scams
Since crypto is decentralized, scam coins can easily pop out of nowhere. And there are no regulatory bodies that can detect it. Developers can create a coin on their own and start a Ponzi scheme. This is true for thousands of altcoins out there.
Crypto Adoption
Crypto’s value is determined by how much of the world adopts it as a legitimate form of currency. According to Statista, when it comes to adoption, the majority of the leaders come from developing nations with Nigeria, Vietnam, and the Philippines among the top countries where people are most likely to own at least some form of cryptocurrency as of 2020.
Visa, one of the largest multinational financial services, has announced that it would be piloting transaction settlements using crypto, specifically the U.S. Dollar Coin (USDC), a cryptocurrency pegged to the U.S. dollar in a 1:1 ratio, from its global crypto wallet partner Crypto.com over the Ethereum blockchain. This is in part in response to the announcement of Mastercard on February 10 wherein select cryptocurrencies will be facilitated in their network.
If you are thinking of moving in to a new condominium, check out Vista Residences!
Vista Residences is the condominium arm of the country’s largest homebuilder, Vista Land & Lifescapes, Inc. that offers ready for occupancy and pre-selling condominium projects in Manila, Makati, Mandaluyong, Quezon City, Ortigas, Baguio, Cebu, and CDO that are strategically located within major cities, in close proximity to premium universities, transit oriented locations and developed business districts.
At Vista Residences, unit owners can take advantage of the property’s centrality. The properties of Vista Residences are strategically located near the country’s premium universities and CBDs, making them an attractive investment for both local and foreign investors.
Living in Vista Residences enables you to enjoy convenience, where everything is pretty much within walking distance or a few minutes away from the property; comfort because the project features and amenities are designed to deliver comfort at all times, which makes condo living a worthy investment; security that is 24/7 and CCTV monitoring, which makes the residents safe and secure within the property.
In line with Vista Residences’ thrust to offer convenience among its residents, it also features an AllDay Convenience Store and Coffee Project in all its projects.
For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and YouTube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.
