The cryptocurrency market crashed further on Monday, 24th January 2023 with Bitcoin falling below $33,500.
The world’s largest cryptocurrency, bitcoin has lost almost a quarter of its value over the last four days, and other coins have suffered similar losses. Ethereum has dipped below $2,200 after losing more than 12 percent of its value in the last 24 hours.
Why is cryptocurrency crashing?
According to experts, cryptocurrency’s downturn is due to a combination of factors. Considering the rising inflation and the global spread of the Omicron variant of Covid-19 have affected both crypto and the stock market.
Will it recover?
Many experts are predicting crypto’s downturn to continue in the short term.
However, there is still room for positivity when looking longer term.
All the major cryptocurrencies gained significantly earlier today. The world's biggest and best-known cryptocurrency, was trading 4.83 per cent higher at $37,791.11 this morning according to CoinmarketCap. It is now about half its $69,000 peak in November. Also, the digital token further gained market dominance rose to 42.04 per cent.
How to handle crypto market volatility
What most people seem to overlook is that volatility works in both directions. Of course, Bitcoin volatility helps investors obtain three-digit returns. However, those who were reversed know that Bitcoin prices plummeted with the same force not long after. So, should volatility be interpreted as good or bad?
Depending on what a person does in the cryptographic space, volatility can be a friend or an enemy. For example, an operator who uses a scalping strategy will have a positive attitude towards volatility. However, someone looking for capital gains may find a nightmare of volatility.
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2. Discipline
It's understandable. When that price line turns red, it's stressful. It's not good either when the price skyrockets, you feel like you want to keep driving. Unfortunately, both good and bad things end at some point. That is why it is important to approach investment with discipline.
Investors who have difficulties with discipline can use stop loss and take profit orders. All the main exchanges offer them. These two are silver bullets for volatility. They require you to put a number on how much you are willing to lose or how many profits you are looking for before starting your trade.
3. Know when to use HODL, know when not
Cryptocurrency prices are corrected more abruptly than stocks. These changes come suddenly. It's almost as if you're standing on the street enjoying the sun and bam: a truck runs over you.
However, ask a cryptographic investor if he should leave the position when prices plummet, and they will say: "No, HODL!" HODL is the abbreviation for Hold On for Dear Life. Getting out of a position exactly when the price bottoms out is a terrible decision. It is also important not to listen to all Toms, Dicks and Harry in the cryptographic space. Learn how to block noise and investigate a little before taking action based on someone else's opinion.
Lastly, Choose your option. You must manage volatility well or stay away from it completely. Volatility and cryptocurrencies do not separate soon. If you plan to invest in cryptography, you need tools that can protect your money against massive changes.