By now, it’s clear that cryptocurrencies have gone mainstream.
There used to be a time when Wall Street types would completely ignore Bitcoin, saying that it was a fad, or the prices were too volatile to take seriously. But the bullish trend that lasted the entire 2017 has led to investors flocking to the cryptocurrency market, hoping to experience for themselves what it’s like to ride the wild swings in prices.
The Danger of Volatility
In November and December 2017, the prices of digital assets increased exponentially. Bitcoin reached almost $20,000 before closing the year at $13,000. Right now, the price has plummeted by about 50 percent. This only shows how extreme the volatility is in the crypto space. Prices can go down just as quickly as they go up. Even though this volatility presents a huge money-making opportunity for investors, it also comes with a lot of risks. As the adage goes, the higher the risk, the higher the reward.
It’s worth noting, however, that it is this volatility that has placed cryptocurrencies on the map. It’s the necessary evil of crypto, but one that should be at the center of attention to fuel a crypto-driven future. Prices going down doesn’t necessarily mean it’s time to withdraw your coins and place them in traditional investment channels. This could even be a signal to buy more coins and take advantage of lower prices.
When the charts display a sea of red, investors understandably look at other assets in which to park their wealth. But taking out your investment from the cryptocurrency market doesn’t help in painting a brighter future for crypto in general. One way to reduce volatility is to hold on to your coins. You can consider price dips to increase your holdings, too. In fact, many investors make considerable profits through this with the help of trading programs such as Bitcoin Code which use big data and special algorithms to make accurate trading decisions.
Weathering the Storm
It pays to remember that in October 2017, people were happy to see Bitcoin reaching the $6,000 milestone. Only five months into 2018, though, people fear that Bitcoin would hit the $6,000 mark again or even go lower. Expecting a steady increase in the price of Bitcoin through eternity is simply unrealistic. Try finding other investment vehicles that have the potential of increasing in value as quickly as a cryptocurrency. Chances are you won’t find any.
There’s simply no reason to panic when the market dips if the digital assets are being adopted more and more widely. While many investors turn to safe havens such as gold and bonds when BTC price decreases, you may want to consider weathering the storm and patiently waiting for the market to be in green once more.
Another reason why you wouldn’t want to be a prisoner of the moment is that removing your assets from the cryptocurrency market means having a difficult time re-entering once the trend turns bullish. You might end up buying your coins back at an overvalued price, which means you’d lose more money in the end.