Three things you shouldn't do when price of Bitcoin drops

by in Crypto 101, Cryptocurrency For Beginners

Bitcoin

Digital currencies and blockchain technology have already stood the test of time. If once cryptocurrencies and even their technology were considered a bubble, now many companies and investors are betting on them.

The volatility of bitcoin attracts many investors, who mostly act on the latest news and the slightest signs that the price is going up and down. At first glance, it may seem that there is no risk in speculating in bitcoin, and this allows you to make a profit. However, there are three things you shouldn't do when the price of bitcoin falls:

1. Don't try to predict "exact bottom"

When people see the price of the cryptocurrency they have invested in is falling, they either cash out their funds or wait for a further decline in the price of the asset and invest in it. You always need to have investment capital ready, which you can operate to make money in a falling market. If you have prepared investment money for the moment when the price of bitcoin falls, then do not try to predict the minimum price to which it can fall.

It's almost impossible to predict the bottom. If it were simple enough, powerful market players could lower the market price of bitcoin by selling large volumes and then buying back when it goes down. It must be remembered that bitcoin has a fixed supply, and controlling the market is not as easy as it seems at first glance. The speculation is backed by investors who constantly follow the latest news about Bitcoin. Technical analysts cannot make an accurate prediction of when Bitcoin will fall: they can only operate on tentative assumptions based on the historical behavior of the asset.

The constant search for the bottom is also fraught with the loss of benefits from the downward price movement - after all, Bitcoin is still volatile, and it can rise. When you see a downtrend, buy bitcoin at some point when it is down. This is better than regretting it later, at a higher price.

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2. Do not exchange your coins for those that grow

It often happens that a trader buys a cryptocurrency and, somewhere at the bottom, exchanges it for another "growing" cryptocurrency; and then bitterly discovers that the price of the previous coin has skyrocketed.

Thus, if you see that some cryptocurrency has started to grow, do not rush to exchange existing coins for it. This is what is called FOMO - the “loss of profits syndrome” that leads to many bad decisions in the trading world and should be avoided. Remember good things take time.

Let's say you bought cryptocurrency X at $ 0.1, but it went down to $ 0.05. In the meantime, you see that your friend bought cryptocurrency Y at 0.02 and almost immediately benefited by selling it for $ 0.2. Then Y rises to $ 0.3 and your coin X only reaches $ 0.08. You break down and trade X for Y. However, after a couple of days, you find that your ex-coin X has jumped to $ 1.08, and you have to regret that by exchanging X for Y, you went for a cheap treat, while parabolic growth of Y has almost stopped.

3. Do not follow the schedules day and night long

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If you do not have a strategy and a plan, then your trading is just a game of chance. Markets never guarantee growth to anyone, and making a profit is just the result of applying your mind/ability to study the market and identify possible trends in a specific period.

Keeping track of the charts will get you nowhere. But the strategy and action plan, drawn up by you based on your market analysis, can give a result. And in that case, you probably just have to trust your instincts.

Looking at charts day and night is useless, especially after you've already bought bitcoins. Make a schedule when you check the schedules and do other things. Don't waste time looking for gold that doesn't exist.

So what to do when bitcoin drops?

Investing in cryptocurrencies is not just about buying and waiting for a profit. This is the process of determining a favorable time to invest after thoroughly studying the market - no matter how much or in which direction the market may move immediately after your investment. It must be remembered that the world of cryptocurrencies is unstable, and their prices will inevitably rise and fall.

However, the general rule of action in the markets, including cryptocurrency, remains unchanged - "buy cheaper and sell more expensive." Buying bitcoins is a serious long-term investment decision, and you cannot have your steps determined by only minor banal events or FOMOs.