Bitcoin and other crypto bargain-hunting is harder than it seems

Bitcoin and fellow cryptocurrencies halved in value from their April highs, before rebounding slightly. But are they a bargain?

Bitcoin’s boom and bust this year is causing potential buyers to question whether it and other major cryptocurrencies should be grabbed now at a discount or are a financial trap.

The world’s most talked-about asset plunged almost 50 per cent between mid-April and early-June, and many other cryptos sunk further, but few financial specialists discuss bargain buying.

Financial planners can’t recommend cryptocurrencies because their indemnity insurance won’t cover it, and say it’s a bet rather than an investment, while crypto exchanges don’t provide financial advice and recommend speaking with “a trusted advisor”.

Most analysis comes from online and overseas and contains confusing crypto-speak.

Midsec Financial Advisors managing director Nick Loxton said clients were asking about crypto “every day of the week”.

“I have been saying I think the idea of a cryptocurrency is a wonderful concept,” he said, but questioned how today’s thousands of cryptocurrencies could work with central banks.

“What’s their store of value? With property you have bricks and mortar and a rental income, and with shares you have future profits.”

“Just because something has fallen from a previous market peak doesn’t necessarily mean it’s a bargain.”

BTC Markets CEO Caroline Bowler said while the three-month numbers “aren’t great”, cryptocurrencies were climbing again.

“The market is up over 20 per cent on a seven-day average,” she said.

BTC Markets CEO Caroline Bowler says crypto has been recovering from May’s crash.

Ms Bowler said the latest rebound showed a more stable price appreciation rather than a “meme-filled gallop”, which drove the rapid rises of early 2021 as billionaire Elon Musk praised meme crypto dogecoin.

While bitcoin and number two crypto ethereum have jumped in the past week, dogecoin is still down 55 per cent from its peak.

MHC Digital Asset Fund co-founder Sergei Sergienko said people should only go into crypto with money they were prepared to lose and should “stay away from joke coins, animal coins and coins with inappropriate names”.

“At the moment there are a number of bargains that have emerged off the back of the recent correction,” he said.

Binance Coin and Uniswap – which both sit among the dozen biggest cryptocurrencies – were worth some attention, said Mr Sergienko, who also likes PancakeSwap and 1INCH.

“It’s important for investors to do their own due diligence before dipping their toes into new cryptocurrencies,” he said.

One of the world’s largest crypto exchanges, Binance, has online resources explaining crypto analysis, which it says cannot be “assessed through the same lens as traditional businesses”.

Binance Australia chief operating officer Sam Teoh said people should do their research and understand the risks.

“Making smart crypto choices isn’t as simple as looking out for bargains,” he said.

“Selecting a strategy, understanding the vast world of trading, and mastering technical and fundamental analysis are practices that come with a learning curve.”

Crytpo platform Gemini’s Asia-Pacific managing director, Jeremy Ng, said people should work to understand the technology behind a crypto and use resources including Gemini’s Cryptopedia.

“Ask some very hard questions such as how and why was the coin created? Who is the owner or the founder of the project? What is its supposed utility?” he said.

Originally published as Bitcoin and other crypto bargain-hunting is harder than it seems