Bitcoin fell to a 6-month low below $35,000. Here’s how investors are coping with volatility

Bitcoin fell to a 6-month low below $35,000. Here’s how investors are coping with volatility

The price of bitcoin dipped below $35,000 several times on Saturday, continuing the fall that began when it fell below $40,000 on Thursday evening. It hovered above $35,000 on Sunday morning.

Bitcoin’s fall in recent days marked the second time it has fallen below $40,000 this month and the first time it has fallen below $35,000 since July 2021. years, and following the release of the much-anticipated Federal Reserve Report on a possible national digital currency.

Before the big drop on Thursday, the price of bitcoin was between $39,000 and $45,000 last week and between $34,000 and $44,000 this week. Here’s how Bitcoin’s current price compares to its daily high over the past few months:

The recent fall in prices follows a surge in inflation, a disappointing December employment report, and the release of minutes from the Federal Reserve’s December meeting to support a steadily improving economy. Marked the end of the measures. According to CoinDesk, there was also a large sale of Bitcoin futures.

After Bitcoin nearly hit $52,000 on December 27, Bitcoin has since hovered between $34,000 and $50,000.

Despite the recent downturn, Bitcoin started 2022 on a relatively high note, with a strong November and early December giving way to a recent downtrend. After starting 2021 in the $30,000 range, Bitcoin has risen for a year and hit its current all-time high when it topped $68,000 on Nov. 10.

Volatility and price drops continue amid new economic uncertainty over the Omicron COVID-19 option, new statements from Federal Reserve Chairman Jerome Powell on the state of the economy, and constant comments from US officials such as SEC Chairman Gary Gensler on cryptocurrency regulation.

Even though the price of Bitcoin has dropped significantly since the last all-time high price, many experts still expect the price of Bitcoin to rise above $100,000 at some point, describing it as a matter of “when” rather than “if.” “. Shortly after Bitcoin’s last all-time high, Ethereum marked its own new record.

Bitcoin first peaked above $60,000 in April, and price action since then underscores the cryptocurrency’s volatility at a time when more and more people are keen to get in on the action. Bitcoin has been up and down in the weeks between a July bottom that took it below $30,000 and its recent top in November. The future of cryptocurrency is sure to involve a lot more volatility, so this all goes without saying.

We’ve spoken to investment professionals and financial advisors who advise against investing a large portion of your portfolio in the asset class for precisely this reason. They work with clients to ensure volatile crypto investments don’t get in the way of other financial priorities, like accumulating an emergency fund and paying off high-yield debt.

“You have a high chance of losing everything, but a low chance of winning big,” says Nate Nyeri, chief financial officer of Modern Money Management in San Diego, California. “Don’t play for an amount that will burden your family or prevent you from reaching your goals” if you’ve lost everything, he says.

How does this latest crash compare to previous or even regular stock market crashes – and what does this mean for investors?

What Does This Price Fall Mean for Crypto Bitcoin Investors?

What Does This Price Fall Mean for Crypto Bitcoin Investors?

Such volatility is to be expected for those who have long-term investments in cryptocurrencies using a buy-and-hold strategy. There’s nothing to be overly concerned about plunging, says Humphrey Yang, the personal finance expert behind Humphrey Talks, who says he avoids checking his investments during volatile market declines.

“I also went through the 2017 cycle,” Yang said, referring to the 2017 “crypto crash” in which many major cryptocurrencies, including bitcoin, lost significant value. “I know these things are very volatile, sometimes they drop 80%.”

Experts recommend keeping your cryptocurrency investments under 5% of your portfolio. Bill Noble, chief technical analyst at cryptocurrency analytics platform Token Metrics, said that if you’ve already done so, don’t stress about the volatility, because they’ll keep happening.

“Volatility is as old as a hill and we don’t go anywhere,” says Noble. “That’s what you have to deal with.”

Yang should use the same strategy that works for all long-term investments, as long as your crypto investment doesn’t get in the way of your other financial goals and you only put in what you can afford to lose in the end. Recommended: Set Forget it.

If you’re worried about this type of extreme drop, you may be over-investing in crypto. You should invest only what you can afford to lose. But even if Drop causes you to rethink your cryptographic assignments, the same advice is still valid-don’t act in a hurry or flip your strategy too quickly. Rather than buying cryptocurrencies directly, we will reduce the allocation to cryptocurrencies in the future, diversify through cryptocurrency-related stocks and blockchain funds, etc. Consider (although you should expect volatility if the cryptocurrency market fluctuates).

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