Crypto Crash: How to Play It Now

Nov 12, 2022

The cryptocurrency exchange FTX — a name that may sound familiar if you remember Tom Brady starring in its commercials — needs a reported emergency bailout of $8 billion.

That has led the overall market to panic and sent investors fleeing, with the price of Bitcoin (BTC) under $17,000 as of this writing and down nearly 20% in the past seven days.

Some sold their crypto stake completely, while others dashed to get their crypto out of FTX and onto a hardware wallet.

The exchange Coinbase Global Inc. (COIN) was also overwhelmed with sell orders and withdrawals.

Investors in Coinbase stock saw the withdrawal flow by Coinbase clients, and with the overnight implosion of rival FTX, went into “sell first, ask questions later” mode.

COIN is now down 20% in the last five days.

The LikeFolio Crypto Takeaway

  1. If you are a long-term holder of Bitcoin or other cryptocurrencies, we suggest moving your tokens from any exchanges into a cold storage wallet (also called a hardware wallet).
  2. Bitcoin bulls may consider adding (or establishing) a position via dollar-cost averaging (DCA) over the next few months.

    “Forced” liquidations, like what is occurring now due to the FTX implosion, are often buying opportunities for savvy investors looking to take advantage of market panic.

    But we see no urgency in buying Bitcoin.

  3. Coinbase stock could be a long-term steal below $50 per share.

    Coinbase, due to its public stock listing and proactive approach to regulatory issues, is probably one of the best-suited exchanges to survive a panic market.

    For example, the company has begun listing client cryptocurrency funds separately on its balance sheet.

    Additionally, as investors flee less-secure exchanges, Coinbase may end up being the biggest beneficiary of the near-term cryptocurrency distrust, as investors seek safer alternatives to transact with and hold their money.

LikeFolio will continue to monitor consumer/investor sentiment in the cryptocurrency market and its associated publicly-traded companies.

As always, LikeFolio members will be the first to know when we spot big opportunities for profit in the crypto space.

Enjoy your weekend,

Andy Swan

Andy Swan
Founder, LikeFolio