Here for a straightforward opinion/advice, “Invest only if you can afford to lose.” If you can’t then don’t buy the dip. Below, we’ll explain you why!
We keep telling our readers that the cryptocurrency market is very volatile. So volatile, that the prices could fall from high to low in matter of seconds and vice versa. We don’t give financial advices to people, but by introducing them to different factors, we want to help them figure out what’s best for them.
The market is currently red and a lot of people panic because of the sudden fall in the prices, but one should be aware that cryptocurrencies have a volatile nature and are controlled by the sentiments of people. The prices of the currencies depend a lot on the trust people have in the tech.
Basic rules of demand and supply are applicable, but there are other factors that are responsible, so it won’t be just demand and supply. If the demand of Bitcoin is high and supply is less, the prices will be high. If the demand is high and the supply is high, the price will be stable. If the demand is low and the supply is high, the prices will fall.
Also, there’s no one to regulate the cryptocurrency market, therefore users who own a huge market share can influence the prices. For instance, Let’s assume that there are only 100 Bitcoins in the market, out of which 60 are owned by you and the 40 are owned by other people. You also want the prices to fall, so you can buy more of them.
So you’ll start selling some part of your holdings which would lead to an increase in supply, but the demand won’t increase, thereby prices will fall.
Seeing the fall in the prices, 20 out of the other 40 people will start selling their bitcoins which would lead to further fall in the prices and when these people sell their stakes you buy it back for a lower price from them. That way you sold 20 coins at the market price, but bought the other 20 coins for a price less than the market price. This is how most of cryptocurrency whales manipulate the market.
Most of the times when you see a sudden rise of fall in price of a particular cryptocurrency without any negative news around, it’s an act by a whale. Although, it’s not the case always, but it’s the case majority of times. This time it seems to be an act by a whale or a panic sell, as there were no negative news about cryptocurrencies, but there were many positive stories. Below are some of the ones we covered:
- A Regulated Bitcoin Futures Exchange to be Launched soon by NYSE parent company, ICE.
- Starbucks won’t be accepting cryptocurrencies on its cash counter, but it’s surely getting into Cryptocurrencies with Microsoft and other giants.
- Ohio accepts Blockchain, Signs a new Legislation on it.
- BlockchainIST is Turkey’s first university-level blockchain center.
- “Blockchain is Real,” says Jamie Dimon, Chairman and CEO at JP Morgan Phase.
- Coinbase launches a plugin which would allow online web stores to accept cryptocurrencies.
- Ethereum Classic gets added on Robinhood.
- Coinbase announces the date on which it’ll be listing Ethereum Classic on their platform.
There are two types of investors in the cryptocurrency market. The first type knows what they’ve invested into and knows about the factors and believes in the technology. The second type includes people who entered the market just for making quick profits.
If you are the first type, then you probably know where you’ve invested and how much should you be investing. However, if you’re the second type, then follow the only solution we give, “Invest only what you can afford to.” No matter how much people speculate or analyze, one can’t control the cryptocurrency market.
So Should I buy the DIP if I have money?
Having extra money doesn’t mean you can spend it or invest it. The market is volatile and the prices may fall even or could rise to the highest point, but it’s risky. So, unless you’re okay with risking the money you have, you shouldn’t be investing in it.
However, if you’re having extra money which you can afford to lose, then diversify your money into different coins, you can select any top coins, study their network, study their working and if you like invest into them. This way, if a single coin falls, you won’t be bearing a huge loss. However, you also won’t be gaining much if the value of the coin rises.
No one can predict the market, finding the best coin could be a tough task, but is a very important task. So, make sure that you study the coins you’re planning to invest in and do thorough research.
Should I cash out my money before Bitcoin or cryptocurrency market falls even more?
As mentioned above, no one can speculate or predict the cryptocurrency market for now. So you never know what’s next. If you’re already holding cryptocurrencies then this question would come to you during every drop. However, there’s no way to find if the prices will rise or fall.
If you’re in need of money, then we suggest you to cash out your cryptocurrencies holdings. The market might fall or might even rise. If you can afford to lose what you’ve invested in the past then that’s completely a fine decision.
