The crypto market’s recent volatility has caused shock waves in the digital currencies investment space. However, some experts are urging investors to think of the bigger picture.
The market, which had peaked at nearly $2.6 trillion in April, plunged more than 50 percent in total over 11 days, but some volatility was to be expected given its equally sharp rise, said Brock Pierce the child actor turned crypto billionaire. Pierce is the co-founder of one of the first blockchain venture funds and part of the team behind the first initial coin offering.
“Cryptocurrency prices have gone up tenfold over the course of the last year so anything that can rise that far, that quick, clearly can also fall by 30 or 40 percent in a short period of time: This is not the first time nor, will it be the last,” said Pierce.
“If you’re investing in cryptocurrencies, this is something to be expected. It’s not a concern unless you’ve just bought in recently but then this is part of the learning process,” he added.
Pierce said the Chinese government’s aggressive stance against cryptocurrency transactions had a “chilling effect on the market”.
But it was Elon Musk’s questioning of cryptocurrencies’ energy efficiency on May 13 – through a tweet announcing that his electric car company Tesla will no longer be accepting Bitcoin as payment due to environmental concerns about its heavy energy usage – that created the most concern.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
“This was an unusual response coming from an energy expert. Cars also have emissions but the solution isn’t for us to go back to a horse and carriage. It’s a matter of what do we do to build a better world and how we try to build a more sustainable network,” explained Pierce.
For new investors still concerned about market volatility, Pierce advised: “You have to ask yourself, are you invested in this long term? Do you believe in the fundamental prospects of what’s happening here? If the answer is yes then the price volatility or down swings shouldn’t really bother you.”
Pierce was in Dubai in during the third week of May to speak at the AIBC UAE, a summit which focuses on emerging tech including blockchain and Quantum Tech.
“This is my first trip in over a year leaving the United States and I’m glad it was to Dubai, because it’s happening here. Dubai is where the action is,” said Pierce.
“The government has recognised that innovation and the future is something to embrace, and as a result of that, a lot of the best and the brightest entrepreneurs and investors in the world are moving to Dubai, and setting up shop here,” he continued.
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