Bitcoin Keeps Falling! What Should Crypto Investors Do?
Would you take the risk if you had a small chance of winning big and a high chance of losing everything? Bitcoin fell below $20,000 last weekend after the Federal Reserve confirmed it would continue to tighten policy in order to reduce inflation.
It’s not surprising that the policy affected volatile assets, increasing the risk of certain investments. Bitcoin has been trading between $19,000 and $24,000 in recent weeks. Several external factors, including the ongoing conflict in Ukraine, rising interest rates, a recession, and all-time high inflation, have influenced the volatility of the leading cryptocurrency price. The truth is that the stock market is following a similar pattern to Bitcoin’s market fluctuations, which are also influenced by external factors.
Bitcoin hasn’t reached $50,000 since last year, and it’s down 70% from its all-time high. Despite these setbacks, many cryptocurrency experts believe Bitcoin will eventually surpass $100,000. Although most cryptocurrency experts advise against making Bitcoin a major investment in your portfolio unless you’re in it for the long haul.
BigONE believes that investors should not let Bitcoin get in the way of other financial priorities, such as emergency funds. The key question is, how does the Bitcoin crash compare to previous ones, and what does it mean for investors?
The reality of the Bitcoin Market
Given Bitcoin’s volatility, investors who use a long-term strategy, such as the buy and hold strategy, can expect price swings from time to time. Many Crypto experts believe that you should keep Bitcoin to less than 5% of your portfolio to avoid being affected by market volatility. BigONE believes that your crypto investment should not interfere with your other financial goals, and that it is better to invest only what you can afford to lose. We believe it is also critical not to make rash decisions as a result of price swings and market volatility.
The best advice for investing in Bitcoin is to take a long-term perspective. Take a Bitcoin position and set it aside for a while to avoid being influenced by short-term volatility. BigONE also warns potential investors who want to buy the dip that they should be prepared for future market volatility. There is always the possibility that the Bitcoin price will fall even further.
BigONE provides Grid trading, a type of futures trading. Grid trading is easy to automate and requires little to no knowledge of market direction. Setting up your grid trading strategy will allow it to handle repetitive tasks without requiring you to monitor real-time market movements constantly. Even in trending markets, prices on shorter time frames typically consolidate. Here’s another chance to profit from minor price fluctuations. However, identifying a reasonable price range in any time frame is the key to ensuring your grid trading strategy is profitable. The images below depict the profits of some BigONE users over time. Grid Trading features are one way to profit in a bear market.
If the Bitcoin crash bothers you, it is most likely because you have all your eggs in one ‘big Crypto investment’. You should only invest what you are willing to lose, or you should reconsider your crypto allocations. We recommend that you do not change your strategy too quickly. Change your investment strategy, such as allocating less to cryptocurrency in the future or diversifying through crypto-related stocks and blockchain funds rather than purchasing cryptocurrency directly.
The cryptocurrency industry has been around for less than two decades, making it relatively new in terms of asset investments. Because the data set to support the investment cycle is limited in comparison to other assets, it doesn’t take much to cause huge price swings. According to Glassnode Insights, short-term investors who sell their Bitcoin as a result of the crash are also contributing to the cryptocurrency’s further decline.
Although market fluctuations are not new to the space, we must admit that the recent crash was unexpected, but we believe the market will continue to mature and we will see less volatility. BigONE believes that as the external factors that contributed to the crash improve, we may see a fast recovery.