The cryptocurrency markets have been gripped by uncertainty once again. 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 unsettling times, it’s important to remember a few important points. When the market seems unpredictable, it’s normal to experience emotion and anxiety. But when making investment decisions, investors must control their emotions.
With that said, let’s take a look at…
How to invest in Bitcoin during a volatile phase?
Think long term:
While an investor may be tempted to liquidate their assets, it is very important to contemplate the future value of the said asset. Uncertain times may provide a fantastic opportunity to hunt for investments to add to your portfolio rather than look to abandon existing positions. You will be in a strong position to profit in the future if you continue to invest. Generally speaking, a wise strategy is to get rid of investments that, over time, appear unlucrative and replace them with ones that you anticipate will produce better results.
Bitcoin (BTC) has a strong long-term outlook. Therefore, holding on to your BTC, or adding more to your portfolio might be a good idea. With dollar-cost averaging, buying when prices go down 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 respond to market fluctuations less harshly and will increase more steadily over the long term. You cannot foresee what will happen in the upcoming week, but you may be more certain that prices will be higher in five or 10 years.
Along with Bitcoin (BTC), it might be in your interest to purchase some other assets as well. This way, you will not depend solely on one asset for gains. Other assets could be inflation hedges such as gold, silver, Treasury bonds, or even some stocks.
Intra-day trading
The volatility in the crypto markets provides a lot of opportunities for day traders. Because of the quick swings, it is a lucrative way for traders to make quick cash. However, one should always remember the risks associated with trading in volatile markets. This brings us to our last point…
Do your research and stay calm
It is of the utmost importance that a trader knows about everything that is going on with the asset, be it an update or market sentiment. For this reason, it is vital that a trader do their own research before entering the arena.
However, one of the most important points to remember during a volatile phase is to remain calm, and it might just be the hardest thing to do. A few breathing exercises and some meditation will do you good for keeping your nerves in check. This will help you make quick decisions in stressful situations.
To summarize, there are plenty of strategies to invest in during a volatile period. How an investor makes their move will depend on their knowledge and mental prowess. However, staying calm and doing research remain common to every strategy and, hence, should be a point of focus for every investor.