What Crypto Investors Need Once again, the cryptocurrency market is demonstrating that investors in virtual currencies like Bitcoin. Ether, or others must be prepared to endure steep price declines.
Coin prices for Bitcoin were hovering around $33,000 on Monday morning. That’s half off its November peak of $68,000 and the lowest it’s been in six months.
With a record high of $4,800 in November, Ether—the second most valuable cryptocurrency—is now trading near $2,200. A lot of other tokens and coins have had a bad start to 2022, with prices falling drastically in the past few days.
While it may not come as a surprise that the cryptocurrency market is highly unpredictable, it certainly can be intimidating for those who are unfamiliar with the investment landscape (and even for those with experience).
Three things should be kept in mind.
1. Investment values aren’t solely declining in the cryptocurrency market.
Coincident with a more general market downturn, cryptocurrency prices have plummeted. Particularly struggling so far this year are meme stocks and tech stocks. In 2022, the price of popular meme stock GameStop has already fallen by over 35% from its start, while the tech-heavy Nasdaq Composite has fallen by almost 15% from its record finish in November.
As a general indicator of the state of the market, the S&P 500 had its worst week since March 2020 last week.
In light of the Federal Reserve’s remarks suggesting it may hike interest rates sooner than previously expected, Wall Street is reacting, and cryptocurrency isn’t the only sector feeling the effects.
2 The cryptocurrency market is likely to see volatility.
Even with such precipitous declines, Bitcoin, Ether, and other cryptocurrencies are accustomed to volatility. Between April and July of last year. Bitcoin’s value dropped by half before it reached an all-time high of $68,000 in November of 2021.
As we saw when Elon Musk.CEO of Tesla, sent Dogecoin and Bitcoin surging in response to his tweets, even apparently insignificant factors can affect crypto prices.
“Bitcoin investors should expect this kind of volatility,” told Money via email Adam Grealish. Head of investing at the financial technology startup Altruist. “Not only are 50% drawdowns not unusual in the asset, What Crypto Investors Need, but so are 70% and 80% drawdowns.”
Read More: Crypto Madness: Are Platform Tokens a Wise Investment?
He continues by saying that Bitcoin’s volatility will decrease. As the cryptocurrency gains more users this is still in the future.
Keep in mind that the cryptocurrency market has seen and will likely experience whiplash-inducing fluctuations in the past.
3. Avoid having your portfolio ruined.
Because of its high degree of volatility, cryptocurrency is an extremely dangerous asset as a result. You should not put a large amount of money into it. Most financial experts agree that cryptocurrency holdings, including Bitcoin, What Crypto Investors Need, shouldn’t exceed 5% of your total assets.
If you’re only planning to invest a small sum in Bitcoin. It’s wise to keep it for the long haul instead of selling it when you’re worried about the price falling. Certified financial advisor and FIT Advisors founder Anjali Jariwala has spoken with Money before.
Additionally, she emphasized the need to be at ease with the possibility of that money disappearing.
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