“During high-volatility or turbulent periods, investors have the opportunity to reevaluate their portfolio as a whole, and revisit the research they allocated to certain assets and positions,” they say. “When it comes to crypto, this may be an opportunity to zoom out and say ‘Is the size of risk here appropriate for my stomach for volatility and what am I trying to achieve?'”
Crypto investing has become more attractive to younger investors, who are more comfortable navigating the technical requirements for exposure to the asset class. Furthermore, younger investors are also more comfortable with volatility and have longer time horizons; Those who believe in the longevity of crypto are more apt to wait for a bear market that could last two, five or even 10 years, as long as it remains within the range that they are financially want to achieve.
For investors with a lower time preference, Mosoff says turbulent times are more likely to reduce their risk. They could decide that they were having too much leverage in the asset class, and policy and regulation about how these assets would exist within the appropriate framework, whatever jurisdiction may deter them.
“Within the crypto investment slice, investors can also have the opportunity to zoom in on which specific assets they have chosen to hold,” he adds. “Within crypto, you will see blue chips in bitcoin and ether, and then there are highly speculative tokens, DeFi and flavour-of-the-week NFTs. So they can take a breath and consider that they are still crypto exposure. but they want to play it differently and more appropriately for a long time.”
For Mosoff’s money, bitcoin and ether are most likely to remain at the top of the board as blue chips for the next two to 10 years. As for bitcoin, he points to the development of the Lightning Network, which promises to reduce bitcoin transaction times by an order of magnitude. This, along with other events and recent geopolitical developments, has led some investors to declare that bitcoin’s thesis is stronger than ever.