Cryptocurrency prices have plummeted in recent weeks. Bitcoin prices have dropped by more than 30% since reaching a high of $69,000 on November 10, 2021. Although the price of Bitcoin fell again last weekend, it has still increased by approximately 55% in 2021. As we all know, the cryptocurrency market is as at least as volatile as the stock market, and it is because of this volatility that investors, particularly new cryptocurrency investors, become disillusioned. If you are experiencing panic as a result of the decline in the value of your cryptocurrency assets, try to remain calm. Don’t be swayed by panic and engage in irrational selling. To support you here’s some practical methods for dealing with the decline in crypto prices.
Maintain your long-term investments
Looking at the fortunes of the cryptocurrency market in 2021, you can see that there have been many significant price drops this year. Following each decline, the price of cryptocurrency eventually rises and continues to reach all-time highs. Therefore, BigONE does not recommend that investors pay too much attention to the daily 24-hour ups and downs. It would be more meaningful to view the price chart of the cryptocurrency you invest in since the listing date. Market volatility is a normal part of all market cycles, and market volatility for newer assets such as cryptocurrencies may be even more volatile. BigONE recommends that you wait patiently for the cryptocurrency price to fall and continue to pay attention to its price recovery, which may bring you significant profits. That’s all dependent on you investing funds according to what you can safely afford to cover any potential losses.
Avoid panic selling
When the price of the cryptocurrencies in which you invest falls, investor’s natural first response will be to reduce losses by selling. However, taking this approach usually means that you will sell your cryptocurrency at a lower price than when you bought it. In addition, you’ll miss out on any subsequent currency price rebound — selling is simply not worth the gain. Assume you spot that the price of Bitcoin has dropped by 20%, and you have sold the assets you own. What should you do if the price suddenly rises to its original level? You have lost 20% of your investment as a result, so you now will not be willing to repurchase it at the current price. The simple fact is that there is no way for an investor to predict how the price of cryptocurrencies will change in the short term. They could continue to fall, but they could also rise rapidly. As a result, BigONE’s advice to investors is to believe in the long-term value of the cryptocurrency in which you choose to invest, and to be confident that its price will recover after a fall, allowing you to reap significant benefits.
Consider buying at a low price
Investors frequently discuss how best to buy low and sell high, but it is nearly impossible to succeed in dealing profitably with cryptocurrency investment in this short-term manner. It is also one of the key reasons BigONE advocates for long-term investment strategies. Short-term price fluctuations will be of little consequence if you invest in a crypto asset that you believe will perform well in the next two to five years.
Although the short-term investment strategy of buying low and selling high is not recommended, when currency prices fall sharply, investors will have the opportunity to purchase cryptocurrencies at low prices. When you pay attention to some cryptocurrencies that you believe will perform well in the future, you can buy in large quantities when the currency’s price falls. Of course, the prerequisite for this type of purchasing is to avoid falling into the trap of panic buying but on the basis of a long-term strategy for growing your portfolio. In the words of crypto influencer @APompliano on Twitter: “Good rule in investing: Don’t FOMO in after large price increases and don’t panic sell after large price decreases.”
Look into the causes of the cryptocurrency price drop
Investigating the causes of currency price drops can help investors better understand the market. That is to say if you intend to invest in a cryptocurrency, you must have a sufficient and reasonable reason to back up your decision. This can only be accomplished by understanding the market rather than being deceived by various short term media hype. BigONE investigated the underlying causes of the recent market decline. One of the reasons is the widespread fear of new omicron COVID virus variants, which has led investors to avoid higher-risk investment markets. Another reason is the rumour that the US Federal Reserve will likely raise interest rates and that the US will implement stricter regulatory policies for cryptocurrencies. This is one advantage of looking into the causes of currency price declines. It can effectively help you avoid a lot of problems while also providing you with more opportunities to buy at low prices.
The recent steep drop in currency prices serves as a timely reminder that cryptocurrency investment is risky. Making money will be simple when the value of the currency rises. However, keep in mind that any type of investment requires time and effort, and the most important thing to remember is that currency prices, like stock prices, do not automatically rise. When investing in cryptocurrencies, you must be prepared to deal with falling cryptocurrency prices. If you are a new investor experiencing your first currency price decline, BigONE recommends ‘HODLing’ and waiting for the price to rise. Don’t make any hasty choices. It is vital to give yourself and the market more time before beginning to sell again.