Nov 11, 2019 06:38 UTC
Nov 11, 2019 at 06:38 UTC
3 Things You Should Not Do When Bitcoin’s Price Is Going Down
Cryptocurrencies and blockchain technology have survived the test of time, and are here to stay. Once believed to be a bubble bound to burst sooner rather than later, blockchain technology finds immense application in several sectors of business. The oldest, and most popular cryptocurrency of them all, Bitcoin, has seen its fair share of ups and downs. A volatile asset indeed, Bitcoin started at $3,399 on the 4th of January 2019, and rose to $12,637 on the 26th of June.
As of the 10th of November, 2019, Bitcoin stands priced at $8,832. Its volatility draws huge crowds of investors, hinging on the latest news reports, and smallest of slightest signs to indicate the cryptocurrency’s rise and fall. While riding the wave of speculation may seem to be a risk-free measure towards sustaining profits, or minimizing risk, here are three things you should not do when Bitcoin’s price is falling down.
- Do Not Try To Predict The Exact Bottom
When it comes to investing in cryptocurrencies, people either cash out when they see the price of the cryptocurrency they have invested in falling – preventing further risk of loss of invested funds, or wait for the price of the cryptocurrency to fall further – and invest in it. If you are lucky enough to have your investment capital ready when the price of Bitcoin is falling, do not try to predict the rock bottom price it may hit. First things first, if you are looking to invest in Bitcoin sooner rather than later, always keep aside an investment capital, to which you can add or remove money, as per your need.
Trying to predict the bottom of a downtrend is near impossible. If it were that easy, market influencers would cause the market price of Bitcoin to fall by selling a large amount of the cryptocurrency, and buy it back when it hits its rock bottom price. You must remember that Bitcoin has a fixed supply, and controlling its market is not as easy as it may seem. Investors continuously hinge on to the latest news regarding Bitcoin, and ride the wave of speculation. Technical analysts too, cannot accurately predict exactly where Bitcoin’s price may fall, and may be able to suggest a near bottom trend, rather than confirm it.
If you are in the constant search for the exact bottom of Bitcoin’ price, chances are that you are going to eventually miss out on its trade during its downward run – Bitcoin being volatile after all. When you see a downward trend in Bitcoin’s price, buy Bitcoin at some point during its fall. It is better than regretting it later on if you miss out on the opportunity altogether.
- Do Not Sell Your Coins For The Ones That Are Going Up
We have all been there, and done it. We may blame it on our luck, but many of us have invested in a cryptocurrency, sold it when it reached the bottom of a downtrend, only to see its price shoot up, no sooner than we traded it for another coin. When it comes to selling Bitcoin for another cryptocurrency, or buying another cryptocurrency for Bitcoin, do not let the rise in price of a cryptocurrency determine you trading your current tokens for another one. FOMO, or the Fear of Missing Out is a common fear which takes birth from the apparent need to jump ships when a trend seems to be on the rise, while the other may be stable, or falling. It leads to a lot of bad decisions in the world of trading, and must be avoided altogether. Remember, good things take time.
To put it into perspective, let’s imagine you performed your due diligence, and bought a cryptocurrency ‘X’, for $0.10 apiece. You did not need to look for a bottom trend, as you have studied the cryptocurrency and its project, and you are confident in it. The cryptocurrency performs well initially, before falling to $0.05 after a week. You start questioning your logic, and get nervous. Meanwhile your friend invests in a cryptocurrency ‘Y’, and almost immediately reaps immense benefits.
He experiences exponential growth, and sees the price of ‘Y’, rise from $0.02 to $0.20 in less than two days. You stand firm to your analysis of ‘X’, and do not give in to the temptation to trade it for ‘Y’. ‘Y’ then goes on to scale ‘$0.30’ in another two days, while ‘X’ is at $0.08. You have had enough with ‘X’ and trade it for ‘Y’ immediately. Within a few days, while scouting the market for new opportunities, you see that ‘X’ is now trading at $1.08, and you wonder why you went for a cheap thrill, when you should have backed your logic and research.
Bitcoin is a volatile cryptocurrency, and its price is bound to rise and fall. If you have performed your due diligence with respect to a cryptocurrency, or Bitcoin, do not trade it for another coin, when the price of the coin in question is on the rise. Back your cryptocurrency, do some research, and determine whether it is a temporary fluctuation in price, or a trend which may need taking action against.
- Avoid Looking At Charts All Day
Remember, if you do not a strategy in place, you are not trading with a plan in mind – you are gambling. No market assures growth, and reaping profits is a question of how you apply your mind, study the market, and determine trends and possible prices. Constantly staring at charts will get you nowhere. If you have a plan in place, back it, and trust your instincts.
When you initially decide to trade in Bitcoin, study its charts, perform your due diligence and determine when you want to invest in it. Aimlessly staring at charts all day is pointless, after you have already invested in Bitcoin. Fix a time at which you will study Bitcoin’s charts, look at trends and study about the cryptocurrency. Do no waste time looking for gold that is not there.
Conclusion on what you should do when the Bitcoin price is falling down
Investing in Bitcoin is a process of determining the best time to invest, after performing your due diligence, and backing your research, no matter how badly the market may fare immediately after you take the plunge. Remember, the cryptocurrency world is volatile, and the prices of cryptocurrencies are bound to rise and fall.
Bitcoin has a fixed supply, and its price will rise and fall as per market demand. Invest when its price is low, and think about selling Bitcoin when its price is high. Investing in Bitcoin is a long term investment solution, so do not let trivial events determine your pulling the plug on it.