Australian cryptocurrency investors ‘buying the dip’ amid bloodbath

Some have lost their life savings, but others see the opportunity for deep discounts on bitcoin and ethereum as they hit fresh lows.

The price of bitcoin plunged about 30 per cent in the past week, below $US20,000 for the first time since 2020, raising concerns about further declines. Picture: AFP

There’s a saying among diehard crypto investors – buy the dip and sell higher – and that’s true for many Australian cryptocurrency holders, who say they are taking the opportunity to pour money into bitcoin and ‘buy the dip’ despite ongoing market carnage.

Former Northern Territory attorney-general John Elferink has used a small fraction of his superannuation and other money to invest in crypto. He first purchased bitcoin during its last major crash in 2018, and now has his own virtual law firm in Decentraland, an ethereum blockchain-powered virtual world.

Mr Elferink is holding for now, but says the current crash in valuations has not dented his ultimate belief in the nascent technologies. The price of bitcoin plunged about 30 per cent in the past week, below $US20,000 for the first time since 2020, raising concerns about further declines.

“Following my own rules of risk I remain in front, but needless to say recent times have seen a contraction of my portfolios,” Mr Elferink said.

“I think these technologies have good firm grounding for the future. In terms of picking a winner, well good luck with that, but I have two young daughters who play video games, and there is clearly a growing group of people who now accept that digital property is very real property, whether it’s in the form of currency, or in the form of an NFT.”

Mr Elferink said his one mantra is to never invest more than you’re prepared to lose when it comes to cryptocurrency.

Former NT attorney-general John Elferink.

“It was a risky move,” he said of pulling money from his self-managed superannuation fund and investing it into crypto. “My financial advisor had to be dragged kicking and screaming, and he is a very sensible and sober human being and I wish that I had more of those people in my life.

“But I entered the market when it was a very low dip. So even this year where it’s dropped down to what is it currently, about $US20,000 for a bitcoin, I’m way ahead and it would have to drop a lot further before my exposure went in to red ink.

“My expectation is that because of the underlying application of these technologies moving forward, they will form the basis of a reliable form of currency basically.

“I do subscribe to the world view that something like bitcoin with its absolute hard cap of 21 million coins will ultimately become a form of digital gold.”

Caroline Bowler, chief executive of crypto exchange BTC Markets, said she’s seeing Aussies buying the dip in both bitcoin and ethereum.

BTC Markets CEO Caroline Bowler.

“Trading has been relatively brisk, not at the same highs as last year but at pace nonetheless,” she said. “This indicates some traders are seeing value in current prices over the longer term. Others are engaging in day trading or arbitrage trades.

“We see a relatively equal amount of buy to sell activity in both bitcoin and ethereum – albeit bitcoin remains the most popular.”

A recent survey from the Bank of America found that of 1000 existing and potential users of cryptocurrency and digital asset exchanges, 91 per cent of respondents plan to buy crypto in the next six months. Selling expectations are steady, with 30 per cent saying they don’t plan to sell any of their crypto holdings in the near future.

Adrian Przelozny, CEO of Independent Reserve, said trading activity has increased exponentially in recent days as many investors are looking to buy major cryptocurrencies such as bitcoin and ethereum at a discount.

Independent Reserve chief executive Adrian Przelozny.

“Institutional and high net-worth customers are making very large purchases on our Over-The-Counter (OTC) trading desk,” he said.

Crypto holder Judy Sahay said she’s holding on to all of the ‘main’ cryptocurrencies – bitcoin, ethereum and solana in particular – as she believes they will recover in coming months, given most crypto projects are built on those platforms.

“I’m selling out on the other cryptos that I believe won’t come back up, which is about 20 per cent of my portfolio,” she said.

Judy Sahay is the CEO of Crowd Media Group. Picture: Aaron Francis

“I‘ll be testing and measuring over the next four to six weeks and see how the market fares. And I’ll be looking for other economic factors as well, things like interest rates, unemployment, and the housing market. They are all relative.”

Adam Saville Brown, self-described crypto expert and regional head at Koinly Australia said crypto is “more than a get-rich-quick scheme”.

“It is an evolution of banking and investors need to sit tight and ride out the current crash,” he said.

“The crash isn’t unexpected and it is essential for regulation, for the industry to take notice and to path a sustainable way to the future of technology.

“Investors need to bear in mind that crypto is moving from the fringes and into the mainstream as an asset class, it would be naive to assume that there will not be turbulence, and the best thing that investors can do now is to sit tight, analyse, and seek advice from a specialist on how to recover losses and reduce further damage.”