How To Handle A Down Market

With Bitcoin and altcoin prices currently reaching new lows for a lot of people new to crypto trading, panic and fear is sure to set in for a lot of people, if not most. The cryptocurrency market took in an astounding amount of new investors in late December, early January, raising the Total Market Cap to 850 billion dollars. The trillion dollar mark seemed within reach for cryptocurrency, as Bitcoin came close to hitting $20,000 and altcoins all seeing their all time highs. Of course, with anything in trading, what goes up, must eventually come down.

In what seemed like a domino effect of FUD(Fear, Uncertainty and Doubt), news seem to come in multiple times a week that sought to lower the price of Bitcoin. Coin Market Cap re-calibration of prices, Korean Exchange shut down rumors, followed by news of Tether cutting ties with their auditor and being subpoenaed by US regulators, the non stop barrage continued to hammer prices. What a lot of people failed to realize was that the fast parabolic growth of cryptocurrency was due for a large correction and at some point the bear market was going to come out to play.

Which leads us to the point of this blog. As a new investor you are probably worried, perhaps even scared. You invested a lot of money, maybe even forgetting the golden rule of “Don’t invest what you don’t have to lose,” and after buying many coins at their all time high prices, your portfolio doesn’t resemble anything like it used to. Now is when you stop, take a deep breath and realize that everything is going to be ok. In fact, if you have the opportunity to do so, this low point could be an opportunity to really take an advantage of a down market. Lets go over both options.

If your funds are all tied up, and you have nothing less to invest, that’s fine. You need to remember that “You have only lost money when you have sold.” So if you bought a coin at 30 cents a coin and its down to 4 cents, yes, your portfolio says you have lost a lot of money. But do you still have the same amount of coins you started with? If so, you have every opportunity to earn the money back and then into profits. The questions to ask yourself are, “Has the product changed since I bought it? Has the technology changed since I invested? Has the team changed? Has the road map changed?” If no to all, then the only thing that has changed is the market and if you still believe in everything that you did when you first invested, why should you believe that your investment will not eventually return back into profits? So your best bet is to log out of your apps for awhile, enjoy life and come back when the market has started to recover.

For those that have money available for more investments, now is the time to strike! You had the opportunity to see where these coins can reach and now are able to get them at prices you envied when you first got into trading. Imagine the coin you bought at $8.25 and thinking, “Man those guys were lucky when they got to buy it at $2.60.” Well now is your chance! And unlike them, you have the advantage of knowing where it has already reached and it would be extremely far fetched to believe it won’t reach that price again, and in a short time frame. Use this ability to “Look into the future” to capitalize on great opportunities that don’t come around too often.

The main thing to remember is to be calm, believe in why you invested in the first place and avoid making any decisions; buying or selling, out of emotion. Letting your emotions get in the way of rational thinking, or sound analysis, is a sure fire way of losing money and bringing your crypto trading career to an end.

 

The information from Simple Crypto is for informational purposes only. It should not be considered legal or financial advice. You should consult with a financial professional to determine what may be best for your individual needs.

 

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