April 25, 2024

What should an investor do in a falling cryptocurrency market?

What should an investor do in a falling cryptocurrency market?

Digital currencies and blockchain technology have already stood the test of time.their technology was considered a bubble, now many companies and investors are betting on them.

The oldest, mainest, and most popular cryptocurrency, Bitcoin (BTC), hasAt the beginning of January 2019, the bitcoin rate was $3,400, and on June 26, it rose to $12,637.

Bitcoin volatility attracts manyinvestors who mainly operate on the basis of the latest news and the slightest signs indicating an increase and decrease in prices. At first glance, it may seem that there is no risk in speculation with bitcoin, and this allows you to make a profit. However, there are three things that should not be done when the price of bitcoin falls:

Do not try to predict the "exact bottom"

When people see the price of cryptocurrency, inwhich they invested falls, they either cash out their funds or wait for a further reduction in the price of the asset and invest in it. You always need to have investment capital ready to operate in order to earn money in a falling market. If you have prepared investment money for the moment when the price of bitcoin falls, then do not try to predict the minimum price to which it can drop.

Predicting the bottom is almost impossible. If it were quite simple, influential market participants could lower the market price of bitcoin by selling large volumes, and then buying back at a decrease. You need to remember that bitcoin has a fixed supply, and controlling the market is not as easy as it seems at first glance.

Speculation is supported by investors whoconstantly follow the latest news about bitcoin. Technical analysts cannot make an accurate prediction of when Bitcoin will fall: they can only operate with approximate assumptions based on the historical behavior of the asset.

The constant search for the bottom is also fraught with omissionthe benefits of a downward price movement - after all, bitcoin is still volatile, and it can grow. When you see a downward trend, buy bitcoin at some point while it is decreasing. This is better than regretting it later, at a higher price.

Do not exchange your coins for those that are growing

It often happens that a trader buys cryptocurrency and somewhere at the bottom exchanges it for another “growing” cryptocurrency; and then bitterly discovers that the price of the previous coin soared.

So, if you see that somecryptocurrency has grown, do not rush to exchange existing coins for it. This is what FOMO is called - the “loss of profit syndrome" that leads to many bad decisions in the world of crypto trading and should be avoided. It must be remembered that good things take time.

Let's say you bought cryptocurrency Xat a price of $ 0.1, however, it fell to $ 0.05. In the meantime, you see that your friend bought cryptocurrency Y at a price of 0.02 and almost immediately got a profit by selling it for $ 0.2. Then Y grows to $ 0.3, and your coin X reaches only $ 0.08. You can not stand it and exchange X for Y. However, after a couple of days you find that your former coin X made a jump to $ 1.08, and you regret that exchanging X for Y, you went for cheap pleasure, while the parabolic growth of Y has almost stopped.

Do not follow the schedules day and night

If you do not have a strategy and plan, then yourtrade is just a game of chance. The markets never guarantee growth to anyone, and making a profit is just the result of applying your mind / ability to study the market and identify possible trends in a specific period of time.

Constantly monitoring charts doesn’t need youwill lead. But the strategy and action plan drawn up by you on the basis of your own market analysis can give a result. And in that case, probably, you can only trust your instincts.

Watch the charts day and nightuseless, especially after you have already bought bitcoins. Make a schedule when you check the schedules and do other things. Do not waste time looking for gold that is not there.

So what to do when bitcoin falls?

Investing in cryptocurrencies is not justpurchase and expectation of profit. This is the process of determining the right time for investment after a thorough study of the market - no matter how much and in which direction the market can move right after your investment. It must be remembered that the world of cryptocurrencies is unstable, and their prices will inevitably rise and fall.

However, the general rule of action in the markets, includingcryptocurrency, it remains unchanged - "buy cheaper, and sell more expensive." Buying bitcoins is a serious long-term investment decision, and it is impossible for your steps to be determined only by insignificant banal events or FOMO.