The rise of cryptocurrencies to all-time highs over the past year has incited an incredible amount of interest among many non-investors of late, with crypto-mania taking over much of the discussion in financial circles due to the rapid increase of these digital coins relative to other asset classes which have performed well, but certainly not to the impressive standard of many of these instruments.
In recent trading days, the price of key cryptocurrencies such as Bitcoin have continued to decline from all-time highs, dipping toward the currency's 2018 low and providing fodder for short sellers who believe the incredible ride in crypto may have come to an end.
Stock markets around the globe have tumbled in recent trading days, and the hope for many in the cryptocurrency space has been that cryptocurrencies act as a proxy to gold, bonds, or other "save haven" asset classes in times of distress.
Unfortunately, what appears to have taken hold is a market which has seemed intent on selling off risk, with cryptocurrencies representing significant risk, and therefore being sold off at perhaps a greater rate in recent days (Friday's selloff amounted to an intra-day decline of more than 10% at one point during the day).
The bottom line is the volatility levels at which cryptocurrencies trade, combined with an extremely high risk profile and opaque market for buyers/sellers makes this sector one which I would not touch with a 10-foot pole.
These near-term declines do not represent buying opportunities, in my opinion, but rather are indicative of what I believe to be a risk selloff which could take a significant amount of time to fully materialize.
Invest wisely, my friends.
