The current market volatility has a lot to do with the American government signaling that it is going to increase interest rates likely in 2022, the expectation is that it will happen by end of March. When the Fed raises rates it makes money more costly making the high rates ripple into lending and credit markets. Growth stocks who depend on debt to fund their growth suddenly see reduced margins. This kind of explains why growth stocks have highly sold off. As a result when money isn’t cheap, riskier assets tend to sell off.
This also explains why cryptocurrencies have gotten a hit in the market, because most investors see these as risk assets. It is however clear that the market is overacting to the story of higher rates, and losing sight of the long term growth of High growth tech stocks and cryptocurrencies. We are currently in the exponential age and turning point where a whole new economy is rising through Digital assets, Web 3, Robotics, electrification, autonomous driving and so on.
These industries will grow exponentially in the next decade! A drop in the market should not scare serious investors looking into the future, who are investing in the right industries that will govern our future digitalised economy.
The last two years have been good for investors. Due to inflation stock prices knew only one direction..up!. Smart investors have been taking profit on the way up, or always have a 30% cash stash to take advantage of these market corrections. Whats happening here is an attempt from the Fed to cool off the markets, before they have to print again . Its simply a rinse and repeat process..and will have to go up at some point. So sit tight, get some cash, do your research and when the dust settles, maybe you’ll be ready to shop!
Venture capitalists in crypto are definitely not keeping out!
Some Venture capitalists are currently using this opportunity to invest in the cryptocurrency industry.
some examples:
- FTX is launching a new venture unit and investing upto 2 Billion,
- Pantera is increasing cryptocurrency investment to 1 Billion,
- KRH firm raising upto 900 million for crypto investing,
- Andreesen Horowitz is gearing up to raise 4.5 Billion to invest in the crypto industry,
- VC Blosson capital is targeting crypto tokens and has announced a 432 million fund.
Its clear that there’s no slow down of capital entering into this space.