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Intelligent Investing During A Crisis

By Amos Nadler, PhD | Chief Economist Bayesian Labs

The Greek philosopher Heraclitus once said, “No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.” The same can be said about people and financial crises.

Digital asset prices have crashed as a result of the COVID-19 pandemic despite the belief that it was a ‘safe-haven asset.’ The cause for the crash, in short, is a combination of human and technical factors. People sold and the price drop triggered further selling due to margin calls, the same way it happens in every other actively traded market.

COVID-19 has quickly spread across the world and derailed daily and economic life along with entire asset classes. We don’t know the extent of the damage it will cause for some time but amidst the uncertainty, ambiguity, and chaos, we can look at behavioural finance to help digital asset investors make intelligent investing decisions during this difficult time.

Amidst the uncertainty, ambiguity, and chaos, we can look at behavioural finance to help digital asset investors make intelligent investing decisions during this difficult time. A (notably brief) history of financial crises

Financial crises date back to the first century when in 33 A.D. when unsecured loans initiated a financial chain reaction in the Roman empire, and since then crises have continued until today in various forms and magnitudes. The most recent financial crisis in 2008 had many wondering if it was a repeat of the 1929 crash and ensuing Great Depression. As Mark Twain wrote, “history doesn’t repeat itself, but it often rhymes”, as a banking crisis sent shockwaves through the economy yet the economy at large remained intact, partly because the world had changed dramatically since the Great Depression and evolved, such as instating regulation requiring increasing margin requirements for stock ownership and the formation of federal entities such as the Federal Deposit Insu...

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