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Latest Crypto News: Bill Gates Slams Crypto and NFTs, Crypto Hedge Fund Three Arrows

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It’s been a tumultuous year for investors, but it’s been even more so for those with a stake in crypto.

Bitcoin’s price has dropped by nearly 70% from its all-time high of $68,000 at the start of the week — to its lowest level in 18 months. Ethereum followed bitcoin’s lead and so did just about every other cryptocurrency.

The crypto market, which has been tracking with the stock markets lately, has been a casualty of the broader market selloff of risky assets as investors wrestle with high inflation, the war in Ukraine, and shifts in U.S. monetary policy. Although not usually correlated to stocks, the crypto and stock markets are rising and falling in similar patterns.

Crypto lender Celsius’ announcement Monday that it’s freezing its withdrawals due to “extreme market conditions” made matters even worse for the fragile crypto market. Crypto hedge fund Three Arrows Capital may also be in trouble amid swirling rumors that the company is insolvent following the market collapse.

And some experts are warning the worst may be yet to come — and bitcoin’s price, as well as other cryptocurrencies, could drop even further.

“Sometimes bear markets can last up to several months,” Charlene Fadirepo, a crypto expert and founder of Guidefi, recently told NextAdvisor during an Instagram Live. “Some people track the 20-week average for bitcoin, and according to that, that gets us in the $20,000 to $30,000 range. I don’t know where it’s going to go, but based on past trends, we’ve been in that range.”

The big crypto market crash is just the latest reminder for investors that crypto assets come with extra risk and volatility, especially in times of economic and political uncertainty like we’re in now. Either way, experts advise not to make financial decisions based on news-related panic or hype. Here’s what investors should make of the latest crypto news:

  • Bill Gates, one of the richest people in the world and a well-known critic of crypto, has once again slammed the industry, saying crypto and NFTs are “100% based on greater fool theory.” During a TechCrunch talk on climate change Tuesday, the billionaire Microsoft implied that crypto and NFTs are overvalued assets and sarcastically joked that “expensive digital images of monkeys” would “improve the world immensely.” During the talk, Gates said he’s “not involved in that” and “not long or short any of those things,” referring to crypto and NFTs. The comments come amid a tumultuous week for crypto, with bitcoin dipping below $21,000 and ethereum falling below $1,100 Wednesday.
  • Rumors began to swirl Tuesday that a major crypto hedge fund could become insolvent following the crypto market crash this week. Dubai-based crypto fund Three Arrows Capital, popularly known as 3AC, is allegedly attempting to figure out how to repay lenders and other counter-parties after it was liquidated by crypto lending firms in the space, according to a BlockFi report. Co-founder Su Zhu took to Twitter Tuesday evening to address the rumors but didn’t give specifics, stating the firm is “in the process of communicating with relevant parties and fully committed to working this out.” This comes shortly after crypto lender Celsius announced it is pausing its withdrawals, spurring concerns of potentially another crash in the crypto market.
  • Coinbase, the largest crypto exchange in the U.S., announced it is laying off 18% of its workforce amid a collapse in the crypto market. Coinbase CEO Brian Armstrong said managing the company’s expenses right now is critical to “operate in this highly uncertain period in the world,” referring to the possibility of a recession and a “crypto winter,” according to a post published on Coinbase. Crypto winter is when prices fall and remain low for an extended period, such as they did between early 2018 and mid-2020. But Coinbase isn’t the only crypto firm that has announced job cuts and experts are warning that it’s just the beginning, according to a TIME report. Crypto lender BlockFi on Monday said it was reducing its headcount by about 20%, and Crypto.com announced last week that it’s laying off around 260 workers, or around 5% of its workforce.
  • Celsius, a major crypto lender, announced at the start of the week that it’s pausing withdrawals “due to extreme market conditions,” according to a company memo. As of May, Celsius has lent out more than $8 billion to customers and has almost $12 billion in assets. The announcement comes amid a meltdown in the crypto and stock markets, fueling concerns about Celsius’ solvency. The crypto firm has not yet said when it will resume withdrawals.

Bitcoin is the largest cryptocurrency by market cap, and a good indicator of the crypto market in general, since other coins like Ethereum (and smaller altcoins) tend to follow its trends. Even though Bitcoin recently set another new all-time high, it was a pretty normal uptick for the crypto, which is notorious for its volatility. That’s not to say investors should take swings in either direction lightly, and this is also why investing experts recommend not making any major investment changes based on these normal fluctuations.

Cryptocurrency is still very new, and everything from innovation to regulation can have an outsize impact for investors. Here’s how you can invest smartly, regardless of what’s making news or Bitcoin’s price swings.

How Investors Should Deal With Volatility

Cryptocurrency volatility is nothing new, and you should be comfortable with this if you decide to invest. 

Volatility can be attributed to an “immature market,” says Ollie Leech, learn editor at Coindesk, a cryptocurrency news outlet. Anything from a celebrity tweet to new federal regulation can send prices spiraling. 

“If Elon Musk puts hashtag bitcoin in his Twitter bio, it sends Bitcoin up 10%,” says Leech. 

This unpredictability is part of the reason why investing experts warn against investing huge amounts of your portfolio into a risky asset like crypto. Many recommend keeping your crypto holdings to less than 5% of your total portfolio

For new investors, day-to-day swings can seem frightening. But if you’ve invested with a buy-and-hold strategy, dips are nothing to panic about, says Humphrey Yang the personal finance expert behind Humphrey Talks. Yang recommends a simple solution: don’t look at your investment. 

“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” says Yang.

This is the traditional “set it and forget it” advice that many traditional long-term investors follow. If you can’t get on board, and the extreme dips continue to cause you worry, then you might have too much riding on your cryptocurrency investments

“The most important thing any investor can do, whether they are investing in bitcoin or stocks, is not just to have a plan in place, but to also have a plan they can stick with,” says Douglas Boneparth, a CFP and the president of Bone Fide Wealth. “While buying the dip might be attractive, especially with an asset that you really like, it might not always be the best idea at the moment.”

Top Crypto News From Recent Months

President Joe Biden signs crypto executive order

President Joe Biden signed an executive order on cryptocurrency, marking the first concrete steps by the White House to regulate digital currency. The executive order outlines what government agencies, including the Treasury Department, need to do to develop policies and regulations on cryptocurrencies. It also calls on U.S. agencies to make sure the country’s cryptocurrency laws align with those of U.S. allies, and tasks the Financial Stability Oversight Council to investigate any illicit financial concerns. Additionally, the order puts new urgency on the possibility of a new government-issued central bank digital currency.

Cryptocurrency stars in Super Bowl ads

Cryptocurrency made a splash at the Super Bowl this year, with multiple cryptocurrency exchanges airing ads. The crypto ads captured America’s attention, but not everyone loved them. Senate Banking Chairman Sherrod Brown blasted them during a senate committee hearing last week, saying the ads lacked transparency and “left a few things out.” The hearing was another government meeting on stablecoins, where U.S. lawmakers echoed similar past sentiments about how more regulation is needed.

New York Stock Exchange wants to get in on NFTs

The New York Stock Exchange, the world’s largest stock exchange by market capitalization, wants to be the marketplace for NFTs just like with stocks. The exchange filed an application with the U.S. Patent and Trademark Office to provide an online marketplace for digital goods including NFTs, cryptocurrencies, digital media, and artwork. If the exchange’s plan comes to fruition, it would compete with other popular NFT marketplaces like OpenSea and Rarible.

Colorado will accept crypto for tax payments

Colorado Governor Jared Polis announced that the state will begin accepting crypto payments for taxes and other state-related transactions by the end of summer. Polis said during an interview with CoinDesk that Colorado will partner with crypto companies to effectively accept and convert Bitcoin into U.S. dollars. “We don’t want to take the speculative risk of holding crypto, so we will have a transactional layer there and it will be entered in our system as dollars,” he says. “For consumer convenience, we want to accept payment in a wide variety of cryptocurrencies, just as we do with credit cards.”

Proposed legislation weighs in on stablecoins

New Jersey Rep. Josh Gottheimer unveiled an early draft of legislation that would place clear definitions around U.S. dollar-backed stablecoins. The proposed legislation would designate certain stablecoins as “qualified,” making them redeemable on a one-to-one basis for U.S. dollars, and institute traditional deposit insurance on stablecoin holdings. The bill also states that qualified stablecoins would only be issued by banks or non-bank institutions that satisfy certain regulations.

JP Morgan enters the metaverse

JP Morgan has officially entered the metaverse, opening a lounge in Decentraland, a virtual world based on blockchain technology. The “Onyx lounge” was unveiled along with a report from the bank outlining “limitless” opportunities for businesses in the metaverse and why there is “explosive interest.” JP Morgan is the largest bank in the U.S. and the first to participate in the metaverse.

Coinbase partners with Mexico for withdrawals

Coinbase announced it’s…

Read More: Latest Crypto News: Bill Gates Slams Crypto and NFTs, Crypto Hedge Fund Three Arrows

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