Bitcoin Is Crashing. Here's 4 Best Thing You Can Do
Startled by the drop or thrilled at the prospect of buying in cheaper? Either way, here are four things you can do after the Bitcoin crash.
Ever since China banned financial institutions and payments companies from providing crypto-related services and Elon Musk’s statement on Bitcoin’s environmental impact, the digital currency has slipped down to $30,000 level by the end of May, followed by a drastic fall in altcoins like Ethereum, Litecoin.
The mathematical pattern is predicting that Bitcoin is at risk of a correction before resuming the uptrend but this isn’t stopping the market from entering another round of panic selling.
It’s crucial to watch where the market is going for the next couple of weeks before making your decision to buy in or get out. Either way, here are four things you can do right now.
1) Assess The Situation
It is expected for any crypto investor to analyse the market sentiment which includes understanding if the market is going through a bull or bear run. If there is a repeating pattern, how long will it take? Are the risks likely to become worse or are they just opportunities in disguise?
Whatever it is, remember the rule of thumb is ‘never invest more than you can afford to lose.’ Take proper evaluation of the profit and risk before making any decisions.
2) Diversify To Reduce Risk
The market may have slightly recovered in the past few days, but new investors who entered the market late are probably still sitting on a sea of red right now. Therefore, it is understandable if you are selling some of your positions to minimise losses.
With a price correction undergoing for weeks, be prepared for continuous price leaps. Read carefully into the chart and you may find multiple exit and entry strategies or maybe even diversify your assets to reduce risk. Remember, a bleak situation today may be a potential upside tomorrow.
3) HODL All The Way
Then again, there is no reason for an investor to sell, especially if you are a long-term trader. The market has previously proved to be able to recover before reaching an all-time high, even though it does not immediately.
Arjun Mittal, former deputy CEO of Bank J Safra Sarasin’s Dubai office, said he believes crypto will have value in the long-term.
“Many big buyers and Bitcoin whales believe in crypto and believe in the longer term of it,” he said.
Cryptocurrency has always been volatile, investors are advised to avoid emotional trading and hold on to the crypto stocks while remembering the age-old saying “buy low, sell high”.
“It’s about trying to take the emotion out of it and trying to ignore the fear and the doubt that’s put out there by media and try and let it run its course,” Arjun said.
4) Now It’s Time To Invest
Another thing you can do right now is investing in cryptocurrency at its bargain price. According to Kraken’s note, after a broad-based correction, the market may be starting to notice the emergence of a bullish uptrend.
“From the one-day chart provided above, since plunging below the 200-day SMA ($40,500) and falling as low as $30,000 on WHICH DATE, bitcoin has made a valiant attempt at regaining lost ground. Over the past several weeks, we've seen the Bitcoin attempt to close back above this critical moving average," the note said.
From the graph, it seems that the market may eventually repeat a bullish chart pattern. While you can consider getting into the market when the right timing comes, note that it’s best to buy in when it's low instead of getting persistent with the idea of buying the dip as you will almost never buy the absolute bottom.
Choose Your Crypto Carefully
The hit in the crypto market may have caused a lot of chatter on social media and left investors feeling rattled, but this may also be a wake-up call for you to reevaluate why you’re involved in the market to begin with and whether your strategy is the best for crypto.
While cryptocurrency has become slightly more affordable, it doesn’t necessarily mean it’s a smart investment. So be sure to do your research before you invest.
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Disclaimer: Opinions expressed in Altimates are not intended to be a forecast of future events, a guarantee of future results, and investment advice. All investing is subject to risk, including the possible loss of the money you invest.