Yes. Markets will crash. Ups and downs are part of any market cycle. What goes up, comes down, and what goes down, comes up (at least more often than not). Every asset class (stocks, property, gold, silver) does that.
Here’s a look at gold (traditionally considered a safe-haven asset). This is the price movement of gold over a 100-year period (Source). What do you see? A down, an up, a down, up, down, up, down, up. This is just how markets or any asset class moves.
Let’s look at stocks. We’ll the Dow Jones Industrial Average (which is a benchmark to track US stocks). Again a 100 year history
Again. Ups, down, ups downs, ups, downs……..and it goes on. What else do you notice in these 2 charts. Have a look. There’s something there. Do you see when Gold is up, stocks are down. When gold is down, stocks are up. Why so, stocks are considered risky and gold safe. We’ll talk about more of this some other time. In fact currently both seem on an uptrend. Is that telling of something? One falls and the other rises? We’ll see.
And now, here’s the chart for Bitcoin, (I’m using Bitcoin as a reference for the overall cryptocurrencies market)
A relatively short history or just over 10 years. Just like the previous charts of gold and stocks, there’s ups and downs. Currently, there’s an exaggerated up move, and anyone who tells you “Bitcoin is not going to fall. It’s only going one way. To the move. A million dollars is coming”, is either lying or doesn’t know what they are talking about. It will fall. I’m not debating here if it reaches a million or not, but there are going to be ups and downs along the way.
Just because a relatively new asset class falls, that does not make it as a scam. Yes, there are projects within cryptocurrencies which may be scams. But that doesn’t mean the entire space is a scam. New technology or innovation is bound to face criticism. People generally don’t like change and take time coming around it. The initial days are bound to see critics challenge technology. But if you go beyond, take the time to understand the technology here – especially blockchain – and its use cases, you can see there’s work being done here. Work that can revolutionize the next decades. It’s early here.
Again invest an amount which does not mean all of your savings. An amount which does not steal your sleep at nights. Start off slow. Instead of a lump sum, buy a bit (of bitcoin) every month. I’ll show you in a post what that can do. Even a $100 investment a month works up to a $1200 a year. Who knows where that goes.
Just remember, every asset class moves up and down. The current up move you see will be followed by a down move. That doesn’t mean an asset class is a scam.