Reasons Why You Should Not Be Scared of Bitcoin Crash
Over the past few weeks, cryptocurrencies have suffered losses, with several of the largest names in the industry falling. Since April, the price of Bitcoin has decreased by about 50%; that of Ethereum has decreased by almost 53%, and that of Dogecoin has decreased by almost 60% in the last six weeks.
Downturns in the stock market are always tense. However, even the most erratic stocks don’t typically collapse as quickly or severely as cryptocurrency.
Should you be concerned about the most recent Bitcoin crash if you’ve invested (or are considering investing) in the cryptocurrency market? What you should know is as follows.
Bitcoin crash: should we be afraid?
The good news is that this is nothing new for cryptocurrencies, despite the fact that the most recent drop can be frightening. On numerous occasions, Bitcoin has seen a value loss of more than 80%, yet it has always recovered. Even though Ethereum lost about 95% of its value in 2018, it was still able to regain it.
The most well-known cryptocurrency names, such as Bitcoin and Ethereum, have historically been able to resist volatility, despite the fact that previous performance cannot guarantee future results. Again, this is not a promise that they will always bounce back, but both of these cryptocurrencies have weathered worse and still managed to hang on.
If you firmly believe in cryptocurrencies’ long-term potential, that is the finest justification for investing in them. Regardless of whatever volatility they may encounter in the near future, you should be prepared to keep onto your investments for as long as possible if you believe they have a bright future.
Cryptocurrency will likely experience many more crashes over the years. As long as you stay focused on its long-term potential, it doesn’t necessarily matter how it’s performing right now.
What should we do during a crypto bear market
1. Stay calm
You must maintain composure whether you want to sell your cryptocurrencies or take advantage of a drop in price to buy more. Making impulsive decisions, particularly while trading, almost never turns out well. Therefore, you should think about why you are trading cryptocurrency before you panic and rush into the market.
- Do you invest because you think there will be a long-term profit opportunity?
- Or are you here to engage in short-term trading to earn a quick buck?
Your decision-making process can be aided by knowing the answers to these questions. You should operate in accordance with your own objectives in both scenarios. In other words, have a long-term perspective if you believe in the prospect. Think as though you are only here to make a fast exchange.
2. Consider the situation
Are Bitcoin and other cryptocurrencies’ trading prices influenced by news? It’s possible that fundamental news, rather than just price movement or rumors, is what has changed the market’s mood.
Actual events will lower prices in 2021. Since the country had already outlawed cryptocurrency exchanges in 2017 but had left open the possibility of people possessing cryptocurrencies, China’s decision to restrict financial institutions from offering services linked to cryptocurrencies was seen as an additional crackdown. The Federal Reserve then made the decision to decrease the amount of liquidity in the financial system late in 2021, and many cryptocurrencies experienced a major decline far into 2022.
Therefore, these actions have dealt the developing market—which had been benefiting from significant capital inflows—further serious blows.
3. Determine how to act
After you’ve calmed down and evaluated the issue and what it means going forward, you should think about what to do.
- Are the threats actually hidden opportunities? If you think about it that way, you might want to hang onto your position or use a drop in the price to make additional investments.
- Are there any chances that the hazards may linger or worsen? If so, you could want to cut your losses and stop playing going forward.
- Is everything too hazy? If it’s difficult to envision the future, you can think about splitting the difference and selling some of your investment today while maintaining the possibility of future gains.
So, what is the greatest bitcoin trading technique to help you survive the bear market? Click HERE to find out 5 tips to survive crypto bear market.
‘Only invest money you can afford to lose’ is an old but gold rule in the investment.
People with a higher risk tolerance are the best investors for cryptocurrency. When investing in cryptocurrencies, volatility is a given. But if you have faith in its potential and are prepared to stick onto your assets for many years, if not decades, it might eventually pay off. Follow Tokenize Blog for more updates and useful articles!
Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk.