Check out 8 tips for investing in crypto assets (cryptocurrency) when the Bitcoin price plummets.
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Investing in crypto assets (cryptocurrency) is certainly full of risks. Especially in a bear , causing the price of Bitcoin (BTC) and other crypto assets to plummet.
Crypto asset investing is full of volatility and instability. This often makes you doubt your analytical skills when investing.
Like war, an investor needs a strategy before managing the money he has in the crypto market. Moreover, Bitcoin price still has the potential to move bearish even though it is starting to show signs of a rebound. The world's largest crypto asset has the potential to touch the US$15,000 price level.
For those of you who are interested in jumping in, here are 8 tips for investing in crypto assets as reported by Make Use of on Monday (20/6/2022).
8 Crypto Asset Investment Tips when Bitcoin Prices Drop
1. Have an Investment Plan
Your success as an investor comes from proper planning. The plan for the right crypto asset transactions will be an anchor when you invest.
A good investment plan should cover your overall investment goals, such as the cryptocurrencies you wish to trade and the market conditions for trading those currencies. That way, you can control your risk to a reasonable extent and have a more prepared approach to your plunge into the investment market.
2. Manage Risk
Risk management is an important tip that should be accepted by all investors, including crypto assets. Even when you are so confident in the position above, leaving your trade open unprotected will result in heavy losses.
You need to know, the crypto market is a highly volatile space so any event can change the direction of the market and result in unexpected losses.
Never invest more than you can afford no matter how promising an asset is. Risk is unavoidable in investing and one that can keep you from trading until you go bankrupt.
The advice novice investors should listen to is to take a break from trading after recording two or three losses in a row. investors or traders short-term
3. Portfolio Diversification
Diversification is a basic method of controlling market risk by allocating investments across different crypto assets. Investors are required to respond differently to each market condition.
You can try investing in DeFi, altcoins, Bitcoin, and their derivatives to prevent exposure to the risks associated with certain crypto assets and you will be less likely to suffer heavy losses.
4. Think Long Term
Many new crypto investors want to make it big fast and expect unrealistic returns. Reckless capital will only be a bad choice for investors. Therefore, go slowly and think long.
This action proved to be a successful investment methodology, as did high-end stock investor, Warren Buffet. However, it must also be accompanied by in-depth research and analysis.
Also, long term investing requires a lot of patience as it is a buy and hold process. Many traders find it difficult to stick with their long-term plans.
5. Don't buy because it's cheap
Many people use the “Buy the Coin When the Price Drops!” strategy. Although there's nothing wrong with doing so, you can regret buying coins for the short term because the price can fall freely.
In fact, in highly volatile situations, you should stay away from the crypto market as a downtrend can last for weeks or even months before finding strong support. So you don't have to buy just because it's cheap and buy because you expect the price to go up.
6. Do In-depth Research
Proper research can offer you definite direction in implementing a trading plan and at the same time being confident to firm with your investment choices.
Many traders receive signals from various intermediaries, professional traders or expert advice from trading bots. They're basically not a bad idea. However, it is recommended that you use it to complete and confirm the analysis of your research.
As we know, signals from intermediaries are not reliable and also trading bots are also usually not sensitive to market trends. Therefore, bots and signals are not completely reliable.
7. Avoid FOMO
One of the downturns experienced by crypto investors is the fear of missing out or FOMO. FOMO is a common feeling that all investors have, because it is human nature not to want to experience loss.
Usually, when investors experience FOMO conditions they often make the wrong decisions, instead of getting them on their way to profit they lose focus and deviate from their trading plans.
FOMO usually stems from social media trends, news or rumors that can encourage investors to take reckless actions, such as increasing trading lots, trading crypto coins they don't understand, increasing trading volume, depositing more to increase trading prices and so on.
The best way to deal with FOMO is to stick to your trading plan and research no matter what.
8. Use Leverage Properly
Leverage refers to borrowed capital which allows you to trade more than your actual deposit. leverage is 1:100 which means you can trade 100 times your actual deposit.
However, no matter how good leverage is, in fact it can also make you increase the possibility of liquidation causing very large losses.
So, the higher the leverage used the lower your volatility tolerance and the lower the leverage the bigger the margin of error for trading. You should not use any form of leverage if you do not understand the cryptocurrency well.
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