The cryptocurrency industry has been booming over the past few decades, posing several exciting opportunities for those who are looking to diversify their portfolio and get high returns on their investments. At the same time, it is also essential to remember that the crypto market is highly volatile, and a sudden market crash can occur at any moment.
One of the most severe crashes that hit the cryptocurrency market was during the initial phases of the COVID-19 pandemic on March 12, 2020. Within a matter of hours, there was a drastic drop in Bitcoin's price from $9000 to around $4,700.
As per the latest recent news from the crypto market, the Bitcoin price crashed below $45,000 for the first time since February 2021 with Elon Musk's Twitter post, saying that he might sell Tesla's crypto holdings. However, he has since then retracted this statement and instead declared that Tesla would no longer accept BTC as payment. This means that the crypto market can again show turbulence. Therefore, it is crucial to be ready to handle a market crash when it takes place.
However, the crypto market crash is not entirely a lost cause. There are several ways that investors can profit from it. Here are three good reasons not to worry about yet another cryptocurrency market crash.
1. Buying The Dip
Buying the dip is an effective strategy that investors can practice for generating compelling returns. For this strategy, the investor needs to time the market successfully, which can be challenging.
"Buying the dip" does not mean that you should go all-in while an asset's price is going down. It also means that you can buy just after it settles. Investors need to pay attention to short and long-term moving averages on different time scales, identify historical support levels, placing stops, etc, to implement the buy the dip method at a more complex level.
Recently the NYDIG said that with the latest Bitcoin crash, investors are now showing a "buy the dip" mentality to generate good returns and handle the Bitcoin volatility seamlessly.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
2. Spot Strong Opportunities
There are over 5000 cryptocurrencies available in the market. New and advanced altcoins are emerging daily. Investors do not need to worry about a cryptocurrency market crash because, even if the broader market crashes, some of these digital assets can hold up pretty well.
The Founder and CTO of Coinsetter, Marshall Swatt, comments on this scenario,
"Just like the NASDAQ bubble, there will be companies and tokens that go on to be very successful, perhaps a future Amazon."
Experts opine that investors should pinpoint every opportunity and look for digital currencies that have a strong solid foundation along with a compelling business model. There are many new and exciting altcoins available in the market with reliable support, a solid business plan, and future potential.
3. The HODL Strategy
HODL or Hold on for Dear Life is a motto referring to the buy-and-hold strategy among cryptocurrency investors. This 'hodling' strategy is beneficial for avoiding loss from the short-term volatility of cryptocurrency and gaining good returns from long-term value appreciation.
The term HODL initially came into the picture in a Bitcoin talk forum when a frustrated trader named GameKyuubi said, "I am Hodling," ranting about his plan to hold his Bitcoin from that point on. Hodl, a typo of the word "Hold" made its way into movies, memes, and finally, as a cryptocurrency strategy that can be implemented during a market crash.
It means buying a specific cryptocurrency and holding on to them for a certain substantial period, despite how much it fluctuates in value. It's a popular and effective strategy that several crypto investors practice.
Director of Operations of Whaleclub, Petar Zivkovski, said that hodling is indeed a viable strategy, and investors who practice it should stick to holding the top five cryptocurrencies by market cap.
The Bottomline:
The crypto market is largely unpredictable, and there can be turbulence at any point in time. But with sound research and a solid action plan in hand, you can bag a good return even during a market crash. The above mentioned are the best three strategies you can follow to never worry about a cryptocurrency market crash again.
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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
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