When buying BTC, it is important to know the key factors that move the said cryptocurrency giant, whether downward or upward and across borders.
Read on about vital pieces of data regarding Bitcoin investing as you map out your investment plan.
Bitcoin Bubbles And Crashes
According to data analysis, Bitcoin gained momentum for around 7 years before its first large-scale crash shook the foundations of cryptocurrencies as a whole, and the socks off of individual investors.
The thing of the matter is that the rise and fall of the value, and therefore, the pricing of BTC, happens ever-so-randomly. Although trends and prices of cryptocurrencies are typically close-to-unpredictable since they are based on supply and demand, analysts were able to foretell said gargantuan bubble in 2018.
The unprecedented and explosive boom of bitcoins the year before was a huge tip-off to wiser onlookers/investors. That sharp and steep incline in demand, with new investors pouring all they had into Bitcoin without so much as a strategy, or even knowledge of investment sustainability— it was a recipe for a disaster we knew would stamp its name in history.
Now, what we can do is learn from our investment mistake. Do NOT get giddy when you see increases, nor immediately withdraw when you see a little gain. Bitcoin is steadily profitable only if it is followed through with, over time, and through small investments and gains.
There Is No Trading Pattern Analysis And Study
Analysts were able to somehow predict that the surge in BTC investments would cause it to bubble and then burst. But that’s all there is to it. There is no such thing as analyzing trading patterns in the sporadicity of the movement of the Bitcoin market.
In practical application, do not rely on sources who say that they have strategies you can follow when it comes to trading and pricing coins. What you should do is to remain stable and steady right around the market cap.
Market capitalization in cryptocurrency can be computed by multiplying the total number of coins in circulation at present with the current market price. What makes a significant difference (and stable, might we add) are large-cap cryptocurrencies.
Do not zero-in on small-cap sums, no matter how large their jumps are from one low price to a raging high-price at the next turn. This is because a coin’s demand-percentage or “popularity” can really only be gauged through the lens of large-cap cryptocurrencies.
For large-cap, the gains are gradual. Yet they have the highest likelihood of stability, in comparison to mid-to-low capped ones.
Mid-caps offer larger growth than their large-cap counterparts. However, the catch is that they carry higher volatility.
And with small-capped cryptocurrencies? This is where many first-time Bitcoin investors made the blunder. The promise of a larger-than-life return is high, but so is the accompanying volatility.
An amount could quadruple (or more). At the same time, the crash can be just as gargantuan and crippling. All within no less than a minute.
Large-cap cryptocurrencies. That should be your go-to.
Invest What You Can Actually Stand To Lose
News about big-fish, big-name companies starting to slowly consider cryptocurrency? Some of them are true. JP Morgan (one, among dozens of other multinational financial holding companies) has stated that they may get in the running of the cryptocurrency race.
We agree that this is amazing news, especially for current crypto-investors. Having said that, do not change your investment framework so as to have you pour your life’s savings into crypto-coins. Invest what you can stand to lose. Invest an amount that won’t shake your current financial status, and your estimated financial status in the next 5 to 10 years.
This will aid in keeping you from hitting the gas whenever a rising fluctuation shows up on charts. Moreover, this is your safeguard towards focusing on your long-term cryptocurrency investment goal.