Meta: There are some ways to navigate during the Crypto crash in the year 2022. So, Let us try to understand how to do it here. So let us try to understand things in detail here.
The summers have rattled the USA and Europe, but the winter still prevails in the crypto world, and there are no signs of spring arriving. Yes, we are talking about the Crypto crash.
Cryptocurrency is volatile. You can be at the crest of your Crypto accumulation, and at the same time, you can end up losing all overnight. That's how harsh it is. In addition, social events and some intentional acts can fuel crypto crashes.
Therefore, investors are finding out ways to navigate the Crypto crash. The article discusses the different ways through which you can ensure navigation during a Cryptocurrency crash. So let's start the discussion here.
What Is A Crypto Crash?
Bitcoins and Ethereums are volatile. The prices rise and fall, but what is a Crypto crash? If the value of the coins falls behind 10% or more per day, this can be referred to as a Crypto crash.
Let's give an example. The most significant crash of the Cryptos was recorded in the year 2013. There the value of the digital or virtual asset, Bitcoin, shattered and fell from $259.34 to $70! Now that is a "great fall," indeed! You can use a platform such as quantum ai. It has integrated the latest innovations in Fintech to help you reduce investment risks.
What Causes A Crypto Crash?
This is quite a logical question that every investor will ask you. The major reasons for the crashing of Crypto can be attributed to exchange or coin crashes. The Cryptos' value falls with higher interest rates, rising inflation, and other macroeconomic factors. These factors can not be controlled. But when the crash begins to widen, the investors try their level best to draw out their investment.
Has Cryptos Crashed Before?
Yes, the Cryptos have crashed before and multiple times. Bitcoin recorded a previous high of nearly $20000 in the month of December 2017. But the value fell drastically to $3,500. Again it reached an all-time high in the month of November, which is around $69000. But Bitcoin dropped by more than 75%. Now that requires some kind of drastic measures to keep things on track.
How To Navigate?
Crypto crashes are always hard on the user's investment. Here are some ways through which you can avoid Cryptocurrency from being crashed. So let's find it out here.
1. The Evidence Of The 5% Rule
You might know that Cryptos are volatile. If the crashes are harsh to bear, the rise is also that outsized. When you trade with your Bitcoins or Ethereum, you will see that the values fluctuate with some percentage deviation.
Now with this kind of turbulence, that's natural. This denotes you expect a fall every four to five trading sessions. For instance, if you invest around $1000 in one of the Cryptocurrencies, think that you dedicate $50 to the Crypto. Anything that is lesser to it must not make you worry.
2. Commit To Investing For The Long Term
You might think that investing in Cryptocurrency for a shorter term with secure you great returns, but then you need to change your thoughts. First, remember the fact that investing for the long term can make you profitable in the time to come.
Let's check some history to understand the theory. If you considered the Bitcoin prices in December 2017, it was around 14839.59 USD. In the following month, January 2018, the price came down to 9989.69 USD. The Statista report on Bitcoin prices can give you a clear indication of the rise and fall.
But if you consider the longer picture, like the prices in the year 2018, especially the October 61837.28 USD, you will see what kind of rise the Cryptos have received during the period. Therefore, you need to take a look at things from a broader viewpoint. Therefore invest and forget.
Cryptocurrency is quite a volatile currency. The crypto markets can crash mercilessly. But things will also increase, as historical price trends suggest. All you need to do is invest your hard-earned money in these digital currencies for a longer time. Therefore consider the points discussed above to navigate during the troublesome period.