Summary:
In the previous year, Bitcoin was already on a roller coaster ride, with values ranging from $30,000 to $70,000 for the most part. According to data from the previous 12 years, Bitcoin travels in uptrend and downturn cycles, but on a macro scale, its value is continually increasing. Bitcoin’s price will inevitably rise as its popularity among institutions and regular investors grow. Should we be proactive during this decline if we believe in blockchain and cryptocurrency fundamentals?
Details:
To optimise future gains, investors must overcome emotional bias and act logically during a slump. Bitcoin has done it once more! Its investors have been on a roller coaster trip in the last year, with prices for most sections ranging from $30,000 to $70,000. Despite widespread expectations of a great start to 2022, the cryptocurrency market is currently down significantly from its all-time highs in November. This is how erratic markets act. Naturally, investors are in a state of panic. Investing in a decline is tough emotionally, but what investors do today can position them for huge profits in the future.
Data from the previous 12 years indicate that Bitcoin swings in uptrend and downturn cycles, but on a macro scale, it is continually increasing in value. Increased acceptance among institutions and individual investors will undoubtedly boost Bitcoin’s price over time. Given that the whole crypto market follows Bitcoin fundamentally, we expect the market to gain strength over longer periods. As a result, the prices we see today may represent some of the finest possibilities to enter the market. Just as it is difficult to see Bitcoin at $5,000 now (a price last traded in March 2020), we can presume that Bitcoin will not return to $35,000 levels in a few years.
Unfriend Your Emotions
Many poor deals are made as a result of emotions. Investors would rather purchase Bitcoin for $65,000 in November 2021 than $35,000 in January 2022. Most crypto investors are seeing red in their portfolios today, which makes them question if they will ever be able to recover their funds. Short answer: sure, if they stay for a while. Unless investors sell in a panic, the amount of cryptocurrency they possess does not change.
Market prices will recover and multiply over time. The easiest method to psychologically prepare is to adopt an invest and forget technique, similar to how a family acquires a property but does not determine its price on a daily basis after the purchase. The family is aware that the house’s worth may increase in the future. Another strategy is to take advantage of this chance to decrease the cost base – for example, if an investor purchased Bitcoin at $50,000, he may reduce it to $45,000 on average by purchasing some at current prices.
Bearish markets
Consider how a wealthy investor might respond to today’s market. They will be overjoyed that Bitcoin prices have dropped by 20%. It provides them with enough fuel to store for the future. All investors, regardless of size, can accomplish the things listed above. As long as each investor has solely invested cash that is not immediately needed for daily living, they may continue to wait and watch or acquire new assets. “Bull markets offer you a fair return on investment, whereas bear markets make you rich,” according to a common investor adage.
Reduce over-exposure
Regardless of the foregoing, if investors are concerned about their portfolio on a daily basis, it is likely that they are over-exposed in terms of capital in cryptocurrencies. If this is the case, now is a good moment to prune your assets and ensure a healthy portfolio in the future.
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