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Since the crypto market is very volatile, we cannot say right now whether we are in a bear market or exiting the bear market. Generally speaking, a market that is in a downtrend is called a bear market when the stock/commodity prices fall by more than 20 per cent from their previous highs, giving negative returns on the stocks.
If we talk about cryptocurrencies, then the year 2021 has been very unpredictable. If we look at bitcoin and ethereum only, after the start of the year, their price reached a record high in a couple of months. But then their prices have come down by 30 percent since May. But, in the last few weeks, there has been an increase in them.
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However, the point is that if you make the right moves even in the bear market, your cryptocurrency portfolio will benefit in the long run. Here are some things that cryptocurrency investors in bear markets can keep in mind.
right investment at right time
When the market is going down, then at that time you can make some investments, which can help you in the long term. The problem with the bear market is that you don’t know how long the downtrend will last or where the price will fall. Due to this, either you sometimes invest before the right time or else the right opportunity is lost in the affair of waiting.
Since this is a guessing game, you have to have some patience. However, a solution can be to make a plan, under which you invest a fixed amount regularly, irrespective of the direction of the market. This is called the dollar-cost averaging strategy.
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Keep your cryptocurrency profile divers
If you have been investing in the same currency till now, then you can get a good opportunity to experiment in the bear market. It is not necessary that the price of every cryptocurrency is falling. In such a situation, when the market is going down, you can carefully diversify your portfolio by doing good research.
think long term
In the bear market, you can take some good investment decisions thinking of the long term. At a time when prices are low and you invest in them, you will reap the benefits in the long term. At such a time, investing for the short term would not make much sense. Now that it is also a bit difficult to think about the long term given the volatility of cryptocurrencies, but if you make wise decisions then you can benefit.
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For example, suppose the price of bitcoin was $ 4,000 i.e. about 2.97 lakh in March 2020. This year it crossed the mark of $ 33,000 i.e. 24.55 lakh. That is, it has given a return of more than 800 percent to the investors.
Similarly, a Forbes report quoted some experts as predicting that despite the decline in value, bitcoin will ‘replace the US dollar as the leading global currency by 2050.’ Another report said that Ethereum would soon ‘replace bitcoin’s most valuable cryptocurrency.’ In such a situation, if you invest in a controlled manner, keeping an eye on the long term, then you can take advantage of the bear market.