Cryptocurrency markets are witnessing a bloodbath over the last 24 hours. The global market cap is down by 8.65% in the last 24 hours and is at US$809.51 billion, CoinMarketCap data showed. Bitcoin is down by a whopping 11.20% and is trading at US$18,132. But crypto experts say that Bitcoin price can stabilize provided crypto investors stop selling their crypto out of panic. So, on that note, take a look at the article to know how you can avoid panic selling.
Whether you decide to sell your cryptocurrency or see a dip as an opportunity to buy more, you need to act with a cool head. Making emotional decisions, especially when trading, rarely results in anything good happening. So, before you rush into the market in a panic, you'll want to reflect on why you're trading crypto in the first place.
Due to a strong emotional attachment to their money, many panics sell. Investors who put in US$1,000 but cannot afford to lose it may sell in a hurry if the price drops even a little bit. It's possible they're struggling to pay their rent, buy food, or pay off their college loans. Traders are more likely to panic and sell when the price decreases if they need the money. On the other side, some folks can invest hundreds of thousands of dollars without even checking the pricing because they don't need that money right away. Treat cryptocurrency investments the same way you would if you were trading paper money. Investments should be made with funds you can lose and that you don't immediately require. In the absence of full certainty, there is no need to invest with money you cannot afford to lose in a cryptocurrency.
Even if you're investing in different cryptocurrencies, this premise holds true. It's possible to lose money even if you retain Bitcoin long-term because it is the largest and safest crypto asset. As a result, you're more likely to make rational decisions and keep your investments for months or years rather than just a few days. A long-term crypto investor is more likely to exist at a greater price than the one at which they invested. Invest with money you don't need if you don't want the emotional agony of red candles to weigh you down.
Here at The Ascent, they favor long-term investing rather than short-term trading. If you evaluate investments through a five-, 10-, or 20-year lens, there's time for prices to recover from this kind of turbulence.
Cryptocurrencies are highly speculative investments, which means investors need to know how to manage risk. One important way is to only invest money you can afford to lose and make sure your crypto investments are part of a wider plan. That way, even dramatic price drops won't stop you from achieving your financial goals. It also means you won't ever be in a position where you're forced to sell at a loss — you can wait out even a prolonged dip.
Diversification is also key. Make sure crypto-only represents a small percentage of your overall investments, and that you're comfortable with the levels of risk you're taking on. If you own some crypto alongside equities, cash, and perhaps also real estate, you'll minimize the impact of a crypto crash.
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Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.