How to Invest in Bitcoin in a Volatile Market
Cryptocurrency markets have once again been gripped by uncertainty. Bitcoin (BTC), the original cryptocurrency, has fallen 4.2% in the last 24 hours. Such situations will undoubtedly raise concerns for any investor. In such troubling times, it is important to remember some important points. When the market seems unpredictable, it is normal to experience emotions and anxiety. But when investors make investment decisions, they need to control their emotions.
With that said, let’s take a look at…
How to invest in Bitcoin in a volatile phase?
Think long term:
Although an investor may be tempted to liquidate his assets, it is very important to consider the future value of said asset. Uncertain times can provide a wonderful opportunity to look for investments to add to your portfolio rather than looking to exit existing positions. You will be in a strong position to make money in the future if you continue to invest. Generally speaking, a wise strategy is to get rid of investments that seem unlucrative over time and replace them with ones you expect to yield better results.
Bitcoin (BTC) has strong long-term prospects. Therefore, it might be a good idea to hold on to your BTC, or add more to your portfolio. With dollar cost averaging, buying when prices are falling brings the average cost of the asset lower, thereby increasing your profit during a bull run.
Diversification:
One should also keep in mind the importance of diversity. A diversified portfolio will react less harshly to market fluctuations and will increase more evenly in the long term. You can’t predict what will happen in the coming week, but you can be more certain that prices will be higher in five or 10 years.
Along with Bitcoin (BTC), it may be in your interest to buy some other assets as well. This way, you won’t be dependent on just one asset for gains. Other assets can be inflation hedges such as gold, silver, government bonds or even some stocks.
Day trading
The volatility in the crypto markets provides many opportunities for day traders. Because of the rapid fluctuations, it is a lucrative way for traders to make quick money. However, one should always remember the risks associated with trading in volatile markets. This brings us to our final point…
Do your research and keep calm
It is of utmost importance that a trader knows about everything that is happening with the asset, whether it is an update or market sentiment. For this reason, it is important that a trader does his own research before entering the arena.
However, one of the most important points to remember during a volatile phase is to stay calm, and that might just be the hardest thing to do. A few breathing exercises and a little meditation will do you good to keep your nerves in check. This will help you make quick decisions in stressful situations.
To summarize, there are many strategies to invest in during a volatile period. How an investor makes their move will depend on their knowledge and mental skill. But staying calm and doing research remains common to any strategy, and should therefore be a focus point for every investor.
