Why Bitcoin Crashed (again)?
Bitcoin crashed below $40,000 on Saturday, extending a decline that began on Wednesday afternoon. In recent days, Bitcoin has been hovering around $42,000. This week’s sharp decline came in the wake of poor December jobs data and the release of minutes from the Federal Reserve Board’s December meeting, which signaled a slowing of steps to support what is regarded as a steadily improving economy. There was also a significant sell-off in Bitcoin futures.
Bitcoin has hovered between $40,000 and $50,000 in the days since nearly reaching $52,000 on December 27. So far this week, it has ranged between $40,000 and $48,000. Recent price fluctuations have also resulted from fresh uncertainties surrounding the world’s ongoing battle with the Omicron COVID-19 variant.
Is the Crypto Market Heading Towards a Bear Market?
Despite declining from its most recent all-time high, Bitcoin’s current price reflects a significant increase from the low $40,000 area recorded in September 2021 and during the previous year. And many experts believe Bitcoin’s price will eventually increase past $100,000, describing it as a matter of when not if. Shortly after Bitcoin’s most recent all-time high, Ethereum set a new all-time high when its price surpassed $4,850. Following the recent peak, Eth has also experienced significant ups and downs.
Despite this recent crash, Bitcoin has risen significantly since it fell below $30,000 in July 2021. Bitcoin originally reached a high of more than $60,000 in April, and the ups and downs since then have highlighted the cryptocurrency’s volatility at a time when more and more people want to get in on the action. Bitcoin has consistently increased from the most recent July low point and its current high points. Crypto’s future will be volatile (for now). The volatility can presents great opportunities to BTD (buy the dip) to add to your current positions.
What Does This Drop-in Price Mean for Crypto Investors?
HODLING is key, swings like this are expected for individuals who invest in cryptocurrency for the long term utilizing a buy-and-hold strategy. According to the personal finance expert Humphrey Yanghind, big dips are nothing to be concerned about, and he avoids reviewing his own accounts during dangerous market dips.
Experts advise keeping your bitcoin investments to less than 5% of your overall wealth. Don’t worry about the swings if you’ve done that because they’ll continue to happen. It’s something you must accept. The rule of thumb in crypto or in any other investment strategy is the following. As long as your crypto investments do not interfere with your other financial goals and you have only invested what you are willing to lose. We recommend here at CasinosBitcoin that you use the method that works: set it and forget it.
If this type of extreme drop disturbs you, you may be putting too much faith in your cryptocurrency purchases. You should only invest what you are willing to lose. The same advice applies even if the downturn has caused you to reconsider your crypto allocations: don’t act rashly or change your approach too hastily. Consider what you would be more comfortable with in the future, such as allocating less to crypto or diversifying through crypto-related equities and blockchain funds rather than buying crypto directly (though you should still expect volatility when cryptocurrency markets fluctuate).