Cryptocurrency investing might be a roller coaster ride. It’s critical to consider not only buying but also when to sell cryptocurrency to have the most excellent chance of success. The standard guideline when investing in stocks is to purchase and keep them for at least five years. Crypto is a different and much riskier market, so traditional approaches aren’t always valid.
These have been relatively difficult to purchase over the last few months. Since mid-November, the cryptocurrency market has lost approximately half its value, and even industry leaders like Bitcoin (BTC) and Ethereum (ETH) have seen their values drop dramatically.
Even for seasoned investors, the recent price drop may be worrisome. And with no end in sight, it’s easy to want to sell your cryptocurrency holdings before they get even worse. But is selling now a smart move?
Early June saw Bitcoin plummet from $30,500 to around $23,500 in just four days, a loss of approximately 23%. Ether plunged more than 31% over the same period, and it appears that the whole crypto market has been declining this year.
Volatility attracts speculators looking to profit, but it’s frightening for new investors just getting started. Traders can also anticipate a lot more of this volatility in the future as new cryptocurrencies are launched, and others vanish.
Will crypto prices keep falling?
If you’re afraid that the market will continue to fall, you might believe it’s a good idea to sell your assets now and get whatever money you can. However, this may be a hazardous option at times.
It’s impossible to predict what the future holds. Prices might drop even further or recover quickly. This sector is known for its volatility, and crypto has a long history of significant ups and downs. In the end, the market has generally trended upwards throughout history. If you sell now, there are a chance prices will rebound soon after and miss out on the gains.
Volatile is one of the most common words to describe Bitcoin and other cryptocurrencies. The prices surge and then seem to plummet almost as soon, while buzz, sentiment, and fundamental developments are all integrated into the market quickly.
Also, if you’ve invested recently, withdrawing your money now will almost certainly result in a loss. Since November, Bitcoin and Ethereum, among other prominent digital assets, have dropped by nearly half their value. Withdrawing your cash will decrease the weight by approximately half, locking you into significant losses.
There are no hard and fast rules regarding when you should not sell cryptocurrencies. The most crucial thing to note is that you shouldn’t panic and sell if the price drops. If you still think it has long-term value, keep it.
Many crypto investors subsequently regret the decision to panic sell. They buy when a cryptocurrency is at a high price, sell when it drops, and then miss out if the price rebounds. You should sell if the price has fallen and you no longer believe the cryptocurrency is a good investment. However, a price drop should never be the only reason to sell.
What should you do with your crypto investments?
The most important rule is that you won’t lose anything as long as your money is invested in the market. If your investments drop 99%, you won’t lose a penny unless you sell during the slide.
Nobody can predict whether it will recover, but this degree of volatility is typical for the industry. Bitcoin’s value has plummeted by more than 80% on several occasions, and Ethereum fell nearly 95% in a year. This most recent near-50% price drop is relatively modest compared to prior declines of more than 80%.
The greatest thing you can do, then, is to keep your investments. The market could get worse in the future, and your portfolio may sink even further. But if you put out an effort to focus on the long term and stay away from day-to-day market fluctuations, you may profit from the recovery later down the road.