Chirp founder and CEO Tim Kravchunovsky believes that even as traditional stock markets have taken a beating, cryptocurrencies are faring quite well (all things considered). Chirp is a decentralized telecommunications network.
While the week greeted crypto investors with one of this cycle’s most significant sell-offs, it’s not the sector’s fault, Kravchunovsky explained.
“This time, it’s not a crypto-specific issue; rather, macroeconomic factors are in the driving seat,” he began. “With the Bank of Japan unexpectedly raising rates and fears that the U.S. Federal Reserve made a mistake by keeping interest rates unchanged at its July meeting, all risk assets are on the chopping block. Cryptocurrency assets just went first because they trade 24/7.”
Compare the crypto sell-off to the traditional market activity and crypto looks better, Kravchunovsky observed.
“Japan’s Nikkei 225 index closed 12.4% lower in what marks the second worst single-day rout since Black Monday in 1987, while the S&P 500 opened 4.1% lower and the tech-heavy NASDAQ is down more than 5%. In traditional finance, these are huge numbers. So against this wider backdrop, crypto is holding up quite well in U.S. dollar terms.”
Kravchunovsky said early activity supports his assertions. Bitcoin quickly recovered from the low $49,000s. That could be the beginning of crypto decoupling from traditional stocks, similar to what happened in 2020.
“Back then, crypto staged a much faster and more pronounced recovery from the pandemic-driven collapse than traditional stock markets, and we may well see something similar this time,” Kravchunovsky suggested.
Kravchunovsky concluded that intelligent investors should make good use of recent activity.
“For crypto investors, this sell-off represents an opportunity to review their portfolios and solidify their convictions,” he said. “As the market recovers, it’s the projects with real-world utility that will likely deliver the most consistent returns. Examples include data storage, infrastructure, cybersecurity and decentralized physical infrastructure networks (DePINs). All of these bridge the gap between Web3 and the real world, which will help ensure their longevity.”
