Investors are no strangers to extreme situations — history’s Great Depression is one of the best examples of this. However, the COVID-19 pandemic presents a new type of extreme situation. And the question racing through nearly every investor’s mind is: Can this pandemic offer opportunities despite all the difficulties it presents?
As an investor, I believe the answer is a resounding yes. Extreme situations always provide incredible opportunities for investors. In fact, I’d go so far as to say that it doesn’t matter what type of assets you’re looking to invest in — the greatest opportunities always come when times are hard — that is, if you have to have the ability to stay focused. You cannot fall into the fear trap that leads most people to poor money decisions.
A lesson from Bitcoin
Let’s take a look at cryptocurrency as an example. Prior to the pandemic in mid-2019, the price of Bitcoin (BTC) had surged past $13,800. By March 2020, however, the cryptocurrency had plummeted down to around $3,850.
But Bitcoin has seen these types of tumbles and recoveries before. Back in December 2017, Bitcoin was valued at around $20,000. Only one year later, it had crashed to just over $3,100. People who took advantage of the drop and bought Bitcoin at that low enjoyed watching their investment not double or even triple — but quadruple.
Today, we are already seeing Bitcoin recover from its crash to the $3,000s. This is because the drop was based only on paranoia. It is this same paranoia that sent countless other investments crashing. As people get control of their fear, they start trusting Bitcoin again, and we’ve been seeing the currency rally lately.
This idea of getting into investments when prices have plummeted — what advisors and seasoned investors call “contrarian investing” — isn’t new. Renowned investor Nathan Rothschild snapped up opportunities after the battle of Waterloo when everybody else was panicking, famously saying that “the time to buy is when there’s blood in the streets.” He’s not alone. Many other successful people from the past understood how amazing opportunities can be found even within an environment as extreme as COVID-19.
For more contemporary examples, just look to Warren Buffet, Kevin O’Leary and Ray Dalio — they’re just some of the famous business leaders who insist on keeping control over fears when markets experience panic, whether it’s due to a global illness or a different kind of crisis. Their consistent recommendation is to play the long game and resist the urge to sell-off. And, if you pick investments to purchase in a down market that have overall upward trends over years or decades, you can make some serious gains.
Given what former and current investors have done when times are tough, opportunities like Bitcoin can be found throughout the COVID-19 crisis, and they’re very appealing. This sentiment applies to all potential investments, not just cryptocurrencies. The innovations that companies have been developing in response to the crisis are likely to put them on an even stronger footing for the future. And your selection doesn’t have to be limited to well-known companies or assets, either. Many startups are finding ways to fill gaps, and they’re reimagining the usual ways of operating, too. Consider getting in on the ground floor to support new companies and entrepreneurs who can address inefficiencies or needs COVID-19 has exposed. As always, the more diverse your investments, the better.
Digital options might win over traditional investments — but be patient
When you adopt a long-term outlook, you’ll see that your common, typical banking products can be incredibly volatile — they’re fear-based currencies whose values get influenced easily by what people feel in the moment. So, with a crisis like COVID-19, we’ll probably see a sharp decline on those options as well as a devaluation of the dollar, the euro and other major fiat currencies.
To be fair, digital investments like cryptocurrencies aren’t totally immune from emotional reactions, either. But as COVID-19 continues, people might not want to allocate their wealth to the standard banking products, which are so paranoia-driven — this could mean a major uptick for investments in digital assets and cryptocurrencies.
Therefore, in my opinion, these times have the potential to be amazing for investors. If you are trying to break into the cryptocurrency market, then, yes, Bitcoin has already recovered from its lowest. But there are still great opportunities ahead, and there’s time to jump into smart choices. If you decide to look into cryptocurrency or digital options like Ether (ETH), remember to be patient and hold onto the currency, because they’ll all eventually recover. In fact, the opportunity for these assets might be bigger than we’ve ever seen before.
You can be a successful investor even now — see beyond the pandemic, do your homework and always use your head.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Michael Gastauer is an entrepreneur, venture capitalist and philanthropist. He is an advocate of the fintech revolution and is globally ranked among the 100 most Influential People in fintech. The Gastauer Family Office he manages is one of the largest single-family offices in Europe. He is also the founder and CEO of Black Banx Group, a fintech ranked among the fastest-growing companies, reaching a $9.8 billion valuation in less than four years.