It’s been a tough month for Bitcoin, which dropped to $33,000 on January 24th. That’s more than a 50% drop, considering that its value has seen previous all-time highs of nearly $70,000. And where Bitcoin goes, altcoins follow. Because of the strong positive correlation between BTC and other cryptocurrencies, all crypto-related and NFT markets have taken a hit.
But the drop in Bitcoin’s value is not as disastrous as it has been made out to be. Within the trading industry, the peaks and troughs of the financial markets are accepted as common facts. It’s natural to have a regressive bear market. The ‘to the moon’ ethos surrounding cryptocurrencies is what is seen as unrealistic.
What goes up, must come down.
The Upside of Bitcoin’s Downside
There are a number of positive takeaways from the drop in Bitcoin’s value. The first is that it allows people to get in on the asset at a better price. Bear markets are necessary in order for traders and investors to make a profit. Many traders wait for these dips in price, looking for opportunities to make a value purchase. Depending on your investment time horizon, a Bitcoin price anywhere below $40,000 could present a good value.
Cryptocurrency markets are also known to be extremely volatile. When you look across the trading history of these assets, you’ll find that price swings are simply a feature of the industry. For investors with longer time horizons, even those that only extend as far as a couple of months, crypto is a great investment. The only bad news is for traders who purchase short-term (long) futures on Bitcoin, as they will lose money.
Crypto investors with 1-to-5-year time horizons simply don’t need to care about market crashes because they are temporary. Market swings are weekly occurrences. For as often as crypto crashes, it rises just as quickly. Stoic investors should remain emotionally neutral whether the price goes up or down. Even now, the price of BTC is trading at about $37,000, up from the previous low.
Professionals wait for market crashes so they can buy at a discount. Amateurs sell during market crashes because they get spooked. There are as many ways to make money in a bear market as in a bull market, and buying crypto on the dip is one clear example
Other Benefits of Bitcoins Price Plunge
It’s no secret that the cryptocurrency industry is plagued by hacks and scams. There is no real safety net because customers have to learn crypto best practices on their own. Third-party solutions often defeat the reasons why cryptocurrency was invented in the first place – anonymity, privacy, and efficiency. The unfortunate result is that cryptocurrency is a dream come true for dishonest scammers and unviable commercial projects.
During a bull market frenzy, money gets thrown around and often sent to projects with excellent marketing and public relations but no real product. However, crashes in the crypto market mean that overpriced startups without any real value have taken a plunge. Market crashes can assist in weeding out low-quality and scam projects that don’t bring anything to the table.
The drop in Bitcoin’s value also allows people to take stock of their positions reevaluate their trading philosophy. It’s easy to think your logic is flawless when investing in a booming sector. On the other hand, you can only learn from losses. They present an opportunity to grow and learn.
Ways to Profit from Crypto Crashes
There is numerous ways to profit from the market crash. The first is simply to buy the dip. It represents a fantastic opportunity to purchase coins at a discount. By then holding them for 1-to-3-month periods, you can see price upside ranging between 10% – 50%.
To do this successfully requires patience and emotional neutrality. An asset does not simply go to the bottom, stay there, and then shoot back up to the top. It will go back and forth. However, the general trend from the crash will be to creep upwards.
Shorting the crypto market is also possible, though this is best reserved for advanced traders who can act quickly. When the price of BTC takes a dive, other coins typically tend to follow suit. But they follow at a varying pace.
There are multiple automated crypto bots that trade in both bear and bull markets. This strategy can provide an income regardless of what the markets are doing, though you’ll have to do research and take time to learn how they work.
According to this article from Crypto Dispensers, there are multiple ways to transfer profits from Bitcoin. You can withdraw via online exchange or Bitcoin ATM. It’s important to actually cash out now and again as opposed to continually re-investing.
As always, only invest what you are prepared to lose. No returns are certain and no trading philosophy is fool-proof.
A Positive Future
From a broader, long-term perspective, the drop in Bitcoin’s value is essentially meaningless. It’s bound to happen in a crypto industry known for its volatility. All the drop indicates is that there is going to be a reconsolidation, the asset will regain strength, and there will be lucrative trading opportunities to be had.
One final note to keep in mind is that the drop in the price of Bitcoin is not actually related to the strengths or weaknesses of the network. Historically, January has been a bad month for Bitcoin, before the asset reverses trend and rebounds in February. And the crypto asset is linked to a wider negative market sentiment, which will not concern medium or long-term holders.