Cryptocurrency economies around the world peaked in the post-Covid-19 era and hit a record high in 2021. However, many cryptocurrencies, including Bitcoin, have faced particularly cruel price declines since mid-2022. Many have seen the seemingly crediblestable coinTerraUSD jump into the spiral of death with its underlying crypto LUNA. Even Bitcoin, which reached a record high of $ 69,000 in November 2021, fell below $ 30,000 in early June 2022.
For new investors, the current state of the crypto market can be terrifying. But when you’re here to play a long game, it’s essential to stay calm. Here is a list of seven basic things to do as an investor when the crypto market collapses to help you change your direction in a changing market.
PATIENCE IS IMPORTANT
You can decide to sell cryptocurrencies once the market starts to fall. Or you can think of the decline as an opportunity to buy more crypto. Whatever you do, you must first act calmly so that you can make rational decisions. Making decisions based solely on emotions can result in extreme losses, especially if the market is volatile. You may want to remember your trading goals and strategies and make decisions based on them, rather than rushing to the market to get out of the panic.
ESTIMATE MARKET SITUATION
When the market collapses, apart from trader sentiment and false rumors that pervade the Internet, there may be other factors driving change. For example, China banned domestic crypto exchanges in 2017, and in 2021 China again banned financial institutions from promoting crypto services. These two events have led to a significant drop in crypto prices around the world.
Recently,TerraUSD also crashed. As mentioned earlier, many investors were afraid that the peg to the dollar would not be supported by the required amount of LUNA. Unfortunately, this sentiment spread rapidly to wider markets before price declines were curbed.
MARKET ARE VOLATILE BY NATURE
Cryptocurrencies do not generate cash flow, so traders rely on changes in market sentiment to move prices in the first place. This volatility is actually the biggest factor that attracts most traders to cryptocurrencies, so don’t panic about prices. Another obvious thing is that you need to have solid emergency funding before you can invest. This allows you to stay calm and make informed decisions when your investment is at stake.
POTENTIAL FUTURE DEVELOPMENT
Most cryptocurrencies are used as a storage place for value, not as a substitute for fiat currency. However, some countries like El Salvador have created fiat currencies, and countries like the United States are looking at the best way to regulate their crypto markets. However, some countries, such as China, have completely banned or are considering doing so. Therefore, when you are struggling to invest, it is important to consider the future of crypto and reassess your risk tolerance.
COURSE OF ACTION DETERMINATION
After a calm assessment of the overall situation, you can decide to use the decline as an opportunity to invest more in your assets, or to withdraw from the market to avoid further risk. If you want to spend a little more time, you can try selling some of your positions without changing the rest of your investment.This is one of the basics of investing in cryptocurrencies. This is a fairly risky asset class, so invest only the money you can afford to lose. That way, any loss will only be disappointing and you can wait for the price to recover.
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CONCLUSION
The drop in the cryptocurrency market can shake you. Use it as a wake-up call to re-evaluate why you entered the market in the first place. What opportunities and risks does it have? Bitcoin, for its part, has recovered strongly from previous major declines, but there is no guarantee it will do so again, especially if it faces serious survival questions. important when countries ban its use and even potentially possess it. And that’s the real kind of risk that an investment could be destroyed or profited from, if the reality is less severe than expected.
