Feb 2, 2022 | OPINION
How to handle yourself when crypto price drops: Part II
Learn how cryptocurrency investors are handling dropping prices.
The global cryptocurrency market cap has plunged from about $3 trillion to $1.86 trillion at the time of publication, according to crypto price-tracking website CoinGecko.
Being in a rough ride as crypto crashes happen may cause frustrations. So, this article continues the discussion about how cryptocurrency investors are handling dropping prices.
Seeing volatility as normal
A famous crypto TikToker Wendy O, moniker as CryptoWendyO, commented in an interview with TIME. “This level of volatility is simply par for the crypto course,” she said. “Crypto is very volatile.”
O pointed out that thinking only for having massive gains all the time is not the way things work. “Because we have volatile massive gains, we’re also going to have volatile massive downturns,” she added.
The reality is both the stock market and the crypto market would always have downswings. S&P 500 dropped over 9%, and Nasdaq tumbled almost 15%. The recent market data became the dreadful week since March 2020.
Cryptocurrency involves high-risk investments. So, it is necessary to make sure that a high level of risk represents a small portion of your portfolio. Several financial experts always express, “Only invest money you can afford to lose.”
Making a game plan
Perhaps, you are experiencing a lot of sleepless nights and loss of appetite due to price crashes in the crypto market. You are thinking that bitcoin and other digital currencies are not good for a long-term bet.
Then, you are thinking of ways how to exit in the crypto space, considering that you lost your confidence in bitcoin. The question is: How should you deal with this scenario? Will you sell all your coins while the price is dropping? Or, will you apply the buy-and-hold investment strategy?
“When the market is green and doing really well, you should have specific profit-taking scenarios for when you’re entering,” TIME quoted O’s statement. “Vice versa, you should have the same for when the market is in a downturn to figure out how much you’re willing to lose.”
“If you have these set criteria for yourself, when the market does turn, you can just go ahead and execute based on the assessments you made,” she added. It means that risk management involves how to plan during stressful situations.
Several may tell you, “It is usually best not to sell coins while prices are at the lowest in six months.” They pointed out, “it is better to wait for digital currencies to recover, if prices are okay then sell.”
Without a doubt, blockchain technology would continually transform the current network. Still, you have to decide what matters most to you.
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