One of the basic characteristics of Bitcoin is that it is an extremely unstable asset, so its price fluctuates depending on the supply and demand of the market. In recent months, one of the strongest «cracks» in its entire history has occurred, which has alarmed many enthusiasts.
After reaching all-time highs, bitcoin plunged by more than 45%, something that has generated comments at different levels. Many think that this is a disadvantage, but with strategy you can protect your wealth regardless of the trend that exists.
The key to volatility is to manage it tactically, according to a Cointelegraph article. In this sense, the essential thing to grow economically is to buy at the cheapest price and sell at the highest to obtain profits. Consequently, that could be the ideal moment.
have other income
The volatility still reflects the immaturity of the cryptocurrency market, as it depends too much on macroeconomic factors. However, the key so that these fluctuations do not affect the user is to have a defined strategy over time and apply it with patience.
So, someone who bought bitcoin at $300 was not affected as much by the latest drop from $67K to $33K as they still have profit margins above 1,000%. However, it is imperative that people do not depend 100% on these variations, because they can be affected in a time of trouble.
Savings in fiat currency, as well as investments in stable assets, are still very useful in times of uncertainty, since they do not have such a degree of volatility as cryptocurrencies. According to specialists, cryptocurrencies should not represent more than 10% of the investment portfolio.
Diversification
To be successful with crypto assets you have to be as organized as possible. Therefore, it is best to have a diversified portfolio in which a budget quota is assigned that will be allocated to different currencies. These can be divided depending on the medium and long term objectives.
For example, many investors see Ethereum and Bitcoin as a safe bet over the years, however, they have resources in other projects that are riskier but provide exponential profits in a short time.
Manage risk
A qualified investor can manage risk to a certain extent. This is achieved by identifying when the market has peaked, this being the worst time to buy.
A climate of greed is usually generated that convinces novice users, resulting in a serious risk to their finances. Then the price crashes and investors often lose everything they invested because they don’t understand the times of each asset.
That is why the higher the price, the riskier it will be. The minimums and maximums do not last for a long time, so the values will fluctuate with the passing of days.
Knowing when to buy and sell is complex, which is why we have also seen the rise of automated investment tools like Bitcoin Hack, which rely on complex algorithms to predict market values. We recommend doing searches like “ Bitcoin Hack opinions ” before investing your money.
Many specialists argue that the best strategy is to buy the same amount at specific intervals over the long term. This is known as dollar-cost-averaging and allows you to adhere to the averages of the crypto and not to the peaks of the movement.
The enormous dangers generated by the volatility of bitcoin and other cryptos can be mitigated with good management, technique and a lot of strategy, you just have to understand how the market works.
