How to Take Advantage of Market Crashes with Bitcoin
The currency has seen an incredible rise in value, not at all unlike that of a stock. It’s up tenfold in the last year alone, and it doesn’t seem like there’s any slowing down any time soon. The only problem is that this meteoric rise has been met with a similar fall when it comes to its value, and it’s not a pretty sight. Whether you’re a bitcoin fanatic or an investor that wants to get in on the action, there is much to think about so as to not get caught up in the hype and risk losing all your hard-earned money.
Since bitcoin rose in value so quickly, it caused many people to diversify their investments. However, if any of these people had a little bit of understanding of the cryptocurrency ecosystem, they wouldn’t have bought into it because of the fall. Most recently, the market has crashed, and many investors feel like there’s more to go down. There are key points you need to remember as the cryptocurrency market is experiencing a very tight downward spiral. You need to understand that there are different kinds of bitcoin.
There are miners, and there are holders. Miners sell the bitcoin for cash and use the fiat in Barter, as well as trade it for other digital currencies. Normally this kind of activity causes a downward price spiral because of its value for money factor, as well as volatility in nature. Holders don’t open transactions and hold them in their own wallets, which is why they don’t have a price trend yet. Bitcoin profit simplifies the process of buying and selling cryptocurrencies by providing a simple interface where beginners can choose from various payment methods.
Things to do when cryptocurrencies plummet:
- Stay calm:
First and foremost, if you’re a new investor, the best thing you can do at this point is to stay calm. This is the time to hold your breath because it’s too late for a panic move. If a person is trying to sell their Bitcoin after the price has dropped, it means ten times as much as you bought it at. You don’t want to be the one who doesn’t get out of something that’s in free fall.
- Assess the situation:
You need to assess the situation and look at the fundamentals behind your investment. Bitcoin has an underlying value of a blockchain technology which is definitely a good investment in itself. Only after you realize this fact should you be planning your next move. You need to understand whether or not the value of bitcoin will come back up, if not, when it is going to do so, and how you’re going to make a profit out of it.
- Remember that volatility is the name of the game:
If you look at the history of the prices of bitcoin, you will notice that there are a lot of ups and downs. The only thing that is certain is the fact that it dropped heavily in 2017, and it will most likely be high in future. However, if you’re planning to get into this cryptocurrency market for long-term profit, then you need to understand that this is how it works. You’ll be in profit only when the price goes up after a period down.
What are the advantages of market crashes for Bitcoin investors?
- Completely avoid investment mistakes:
If you were planning to buy something and were thinking about the bitcoin market, there are chances that you would have made an investment mistake otherwise. If you were thinking about buying at the top of the cycle, then a drop will prevent you from doing so. It’s better to miss out on something everyone else is buying as opposed to overpaying for it. So people who are thinking of investing in bitcoin may need to do a lot of research as well as try out smaller amounts first.
- Be prepared for the next boom cycle:
If you’re an investor and you haven’t bought any bitcoins yet, then this is a good time to do it. The price will still be below, which means you’ll be able to invest in a lot of coins at a very affordable price. As the cryptocurrency market rises, so will your investments. It’s not the perfect time, but it’s better than never doing so at all.
- If you’re a miner:
If you’re thinking about being a miner and spending all your money to buy specialized hardware, then this might not be the best time for it. Mining is an expensive process, and if the price of bitcoin goes down, there is no way to get your money back from these investments. It’s better to wait until the market is stable once again, and then you can try it out.
- If you’re a holder:
If you buy bitcoin and leave them in your wallet, the value is going to go up and down no matter what. In the case of a market crash, if you’ve been holding on to your bitcoin, then you will be able to take advantage of it. The price will go up again, and when it does, you’ll be able to sell them for higher than what you bought them for.
If you’re investing in bitcoin or any other cryptocurrency for that matter, then you need to understand that it’s a market like any other. The price will go up and down as there is no regulation over it. You can either be an investor who takes advantage of market crashes or someone who is going to get hurt by the ups and downs of the market. It’s up to you which one you are going to be.