Need to Sell Your Cryptocurrency Now?
The market has been not so smooth for cryptocurrencies for the past two months. The crypto market as a whole has lost almost half of its value since mid-November, and even with the biggest names like Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) their prices are falling.
If you are investing in cryptocurrency in any capacity, this recent crash may be relevant. And without end in sight, it can be tempting to sell your cryptoinvestments before prices fall. But is this the right move?
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Will cryptocurrencies continue to fall?
If you are worried that cryptocurrency prices will continue to fall, it seems reasonable to sell your investment now and save as much as possible. Sometimes, however, it can be a risky move.
No one can say for sure what will happen to the crypto market. Prices may continue to fall or return soon. This sector is renowned for its flexibility and cryptocurrencies have a long history of sharp ups and downs. And in the long run, the market has improved overall to this day. If you sell now, there’s a chance that prices will return soon after – and you’ll lose profits.
Also, if you have invested at any time in the last few months, withdrawing money now means that you are likely to sell at a loss. Major cryptocurrencies such as Bitcoin and Ethereum have lost almost half their value since November. By withdrawing money now, you will sell your investments for almost half of what you paid for them, resulting in a lot of losses.
What should you do with your investment?
Whether you are investing in stocks or cryptocurrencies, one of the most important rules to keep in mind is that you will not lose anything so far you put your money on the market. Your investments may lose 99% of their value, but when their prices eventually rise, you won’t lose a penny if you didn’t sell in times of decline.
Although it is not known when the crypto will return, this type of sequencing is relatively common in the industry. The price of bitcoin has fallen by more than 80% on many occasions, and Ethereum has lost almost 95% of its value in one year. In comparison, this recent reduction of almost 50% is relatively modest.
The best thing you can do then is probably stick to your investment. The crypto market may be even worse in the future and the time will come when your portfolio may sink even deeper. But if you do your best to stay focused for the long term and avoid catching up with daily market movements, you can benefit from it.
How to protect your money
Tracking your investment is the best way to withstand volatility times, but there are other steps you can take to keep your money safe.
First, make sure the rest of your portfolio is well diversified. Crypto must make up only a small part of your total portfolio. I’d rather keep 5% or less in cryptocurrencies. Your ideal use of cryptocurrencies may vary depending on factors such as your age, your tolerance for risk, and your understanding of blockchain technologies. If you know that you have invested a lot in the cryptocurrency, maybe now is the right time to start adding your positions to other stocks in your portfolio.
Also, make sure that each stock in your portfolio represents a solid long-term investment. Crypto is already a risky investment, and if many of your stocks also carry higher risk, your portfolio may not be as risk-resistant as it could be. By investing in high quality companies, you have a better chance of withstanding market downturns.
The crypto market is tense now, but that doesn’t mean you have to sell your investments. If you maintain them over the long term and focus on the distant future, your portfolio is more likely to survive even the worst volatility fluctuations.
Do you need to invest $1,000 in Bitcoin now? I think Yes, but diversify your portfolio