If there is one quality that describes bitcoin prices and all cryptocurrencies in general, it would be volatility. Bitcoin’s value seems to climb the charts for quite long periods of time only to rack up huge losses in just a few days. Several factors affect these fluctuations, the general sentiment on the market, developments in legal matters, investment flows, the positions of certain figures – Elon Musk in this case – are all elements that impact the fall or the rise in value of bitcoin prices.
Thus, given the current circumstances, the purchase value of this cryptocurrency, bitcoin, has accumulated colossal losses. The purchase price had to fall, in just a few days, from a level of more than 30,000 US dollars in early June to settle at around 20,000 USD more or less. Bitcoin therefore accumulates a loss of more than 20% of its value, which expresses very high volatility. The rest of the cryptocurrency market was not spared either, with a strong general downward trend marking prices.
So how should such fluctuations be managed? And what strategy to put in place in the face of variations in the value of bitcoin, or any other crypto-currency with the same characteristics, especially when it comes to sharp declines such as we are currently seeing? This is what we will discuss in this article, and below are some attitudes to adopt during periods of sharp decline in bitcoin purchase prices.
Keep in mind that volatility is the rule of the game
Cryptocurrency price fluctuations are a completely natural thing. Since the value of bitcoin is not tied to any asset or activity that generates revenue, as is the case for example with stocks on an exchange, traders therefore rely heavily on general sentiment and reactions in the market to make profits on buying and selling bitcoin.
So where there is volatility and fluctuations, there are investment opportunities, unless it is one of those cryptocurrencies that no one knows about and that eventually disappears a few months after their launch.
Assess the situation properly
As a bitcoin trader, it is essential to fully understand the origin of the decline in value of the cryptocurrency in question. Is the fall in prices attributed to real developments in the market, such as the ban on financial entities from providing services related to cryptocurrency in 2017 by China, rather than to a passing media hype! Understanding the reason for the price fluctuation is an important element in being able to make the right decision, whether to buy or sell.
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Be wary of emotional decisions
Whether you plan to commit to an investment of buying bitcoin or liquidating your holdings and exiting the market, as a bitcoin trader it is always important to keep your cool and be wary of emotional reactions. Decisions driven by feelings, not facts, very often lead to non-positive results.
It is therefore essential to always keep in mind the reason why you have entered into an investment in btc or any other cryptocurrency. Do you believe in a long-term opportunity, or are you in the market to take advantage of fluctuations and make gains as soon as possible! The answers to these questions would allow you to focus on your goals and help you make the right decision.
Assess the future of the market and determine how to act
It should be analyzed how the evolution of the bitcoin value and the market situation in general can continue in the short and medium term. Are the measures taken by governments against BTC becoming more intense? And how much impact do they have on the market? On the other side, are there any signs that other countries, other than the Central African Republic and El Salvador, are planning to legalize Bitcoin? Etc.
These kinds of major facts about the development of the cryptocurrency market background would generally give you an idea of how the value of bitcoin may evolve in the near future.
Of course, there are also elements that can be described as minor that impact bitcoin prices and that would also interest you, especially if taking advantage of economic variations to make gains is your objective.
By therefore evaluating the near future of Bitcoin based on the general market context, it would be easier and clearer for you to see in which direction the next step should be taken according to your objective.
The gains to be made are always to be assessed in the presence of the risks associated with them, and never separately, this remains valid for any investment. Since its appearance in 2008, BTC has shown some resilience and prices always end up climbing. However, it is never guaranteed that the same scenario will continue to repeat itself, and it is essential to reassess the new situation each time, especially when the cryptocurrency faces existential risks. But since risk is always inherent in gain, bitcoin is no exception, and every dip in the price curve presents losses for some and disguised opportunities for others.