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This article is more than 1 month old.

Bitcoin panic-sellers a gift that keeps giving for wealthy traders

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Bitcoin panic-sellers are giving away their cryptocurrency holdings to wealthy buyers. They, who benefit from spooked crypto investors, will now use these digital assets as an inflation shield and enhance their investment portfolios. This scenario seems particularly likely as they are worried their cash is being eroded by soaring inflation.  

Bitcoin panic-sellers a gift that keeps giving for wealthy traders
Bitcoin panic-sellers are practically giving away their cryptocurrencies to wealthy buyers who will use the digital assets as an inflation shield, it is becoming increasingly clear to me. Digital currencies fell sharply earlier this month before regaining some ground. The sell-off was triggered by a wider risk-off sentiment that also impacted many areas of global stock markets.
It occurred as inflation is running hot and, therefore, encouraging central banks to tighten monetary policies, putting at risk the liquidity that has benefitted many asset classes, including Bitcoin.
Wealthy crypto investors always buy the dips. This is because they know digital, global, borderless, decentralised money is, clearly, the future.
Bitcoin has almost doubled in value since January 2021—how many other investment classes can say that? But this year was not without the crypto market’s trademark volatility. And the volatility is always used as buying opportunity by rich traders to top up their portfolios.


Could this explain why so many of them send out ‘advice warnings’ on social media about selling crypto when things are a bit turbulent in the market? It seems very probable.
Those Bitcoin panic-sellers are throwing cryptocurrencies cheaply to wealthy buyers who accumulate, accumulate, accumulate.
This scenario seems particularly likely in the current situation as they are increasingly worried their cash, and therefore spending power, is being eroded by soaring inflation.
Central banks – including the US Federal Reserve – the world’s de facto central bank – are now being forced to act to combat inflation.
And this inflation saga is only set to get worse. The US Congress approved raising the country’s debt limit by another staggering $2.5 trillion to help avert a first-time default by the US. Yes, the government of the world’s most powerful country—which has the world’s largest economy—is worried about its bills.
But printing cash in this way devalues the currency, market confidence is undermined, and inflation becomes a real headache.
Already hot US inflation has now accelerated to 6.8 percent in November – the highest in 40 years. Indeed, everyone now seems to have dropped the description of this bout of inflation as ‘transitory’.
Bitcoin and other digital currencies are widely regarded as a shield against inflation mainly because of limited supply, which is not influenced by price.
In this inflationary period, Bitcoin has outperformed gold, which has been almost universally hailed as the ultimate inflation hedge – until now.


To support this argument, we can point to the fact that the third-largest holder of Bitcoin added over $150 million of the cryptocurrency to their holdings following the recent flash crash. Figures from BitInfoCharts show investors purchased more than 3,000 Bitcoins over the last few days.
Prices of Bitcoin and other cryptos can drop by 10 percent or more in a matter of hours. Indeed, they often do. This is why you need to have a properly diversified portfolio to mitigate risks.
However, history shows Bitcoin gains have been enormous for those who hold. Wealthy, long-term crypto investors typically benefit from spooked panic-sellers by buying their digital currencies on the cheap to enhance their investment portfolios.
Doesn’t a Bitcoin price dip seem especially beneficial to those such investors during these times of worryingly high inflation?
(The author is the founder and CEO of deVere Group. Views expressed are personal.)
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