It’s no secret—the cryptocurrency market is crashing. Prices are going down and many people who have their feet wet in the space are starting to freak out. They’re panicking, beginning to convert their Bitcoin to cash, and some of them aren’t making the best decisions.
If you’re trying to figure out what to do during this very volatile time, it’ll help you to get a full understanding of what’s going on before you make any decisions.
Why It’s Crashing
Probably the first thought that entered your head when prices started going down was: why is the market crashing?
Although there’s no definitive answer to why it’s happening, it’s something that has happened in the past—particularly in late 2017 and early 2018, when the price of Bitcoin crashed right after its first big boom.
This time around, after hitting an all-time high of around 68,000 USD in November 2021, Bitcoin is barely staying above the 20,000 USD mark. Many experts and analysts are saying that it’s crashing because of the wider global climate—it isn’t just the cryptocurrency world feeling the price pains. As a result, people aren’t as free with their money. Both the big players and the average investors have less to invest and probably feel that it’s too risky at the moment.
What You Should Do
During this crash, you’ll probably be hearing “HODL” and “FUD” a lot—but what are HODL and FUD?
HODL, short for hold on for dear life, refers to the buy-and-hold trading strategy many investors use. Basically, you buy Bitcoin, hold it, and wait for it to rise in price—simple enough, right?
Although the HODL strategy is simple, easy, and perfect for beginners, the difficulty comes in when the FUD comes in. Short for fear, uncertainty, and doubt, FUD refers to the negative notions investors may spread to influence the price of Bitcoin. For example, people could spread false claims in the hopes of bringing BTC’s price down or spiking another coin’s price up.
The reason you’ll be hearing these terms a lot during this time is that this is what many people will be doing during the crash. Although it’s a viable strategy to just hold Bitcoin for many, what you should do is consider what’s best for you and your money.
For those who have been in the space for a long time, price swings are something that may seem normal to them, and big dips aren’t something they particularly worry about. However, for those who haven’t been here as long, dips in the market may cause panic.
The important thing to understand here is that as long as you’ve only put in what you’re okay with losing and your investments aren’t standing in the way of your other financial goals, the buy-and-hold strategy may work for you. On the other hand, if the dip is bothering you more than you think it should, you may have too much invested. On that note, the only thing you need to do is to not act rashly and consider what’s best for you. In this instance, panic is the enemy, so you need to make sure that you’re making informed decisions that are rooted in research.
As long as you consider what you might be comfortable with moving forward, a crash in the market isn’t the end of the world.
Why A Cryptocurrency Crash Isn’t The Worst Thing In The World
To those that got into the space strictly for investment purposes, we understand how it could seem like a world-ending circumstance. However, the beauty is that not everyone uses Bitcoin strictly for investment purposes anymore.
Bitcoin is now being used for real-use cases such as remittances, wealth preservation, e-commerce, everyday transactions, and more—making investment, price, and the like a secondary purpose. Bitcoin is literally helping people every single day, allowing them to participate in a financial system that they were previously disqualified from. When you consider that, its price really shouldn’t matter.
And to those who are still looking way too hard at Bitcoin’s price, just remember that this has happened before and Bitcoin has bounced back—this is how it’s always worked.