Special note: eye-watering, face-peeling dips
23rd February 2021 |
I got a WhatsApp message this morning.
It read,
Oof… 10K Bitcoin slump
Meanwhile online, I saw a Bloomberg article that said bitcoin’s decline was because Elon Musk said prices were too high.
You’ve also probably jumped online this morning and noticed the sea of red that’s the crypto market today.
Twenty-four hour declines of 10%, 15%, 20%, 30% and more across the board.
Wowee. Eye-watering, face-peeling dips. That’s how I’ve described it several times this morning already.
The question is, if you’re new to the crypto markets, should you be worried?
The way I see it, no, you shouldn’t be worried.
In fact, this is a healthy little move. What I’ve seen in every cycle since 2010 are moves like this. To be honest, I’ve seen much worse.
But it can be frightening if you’re not used to such widespread and sharp dips in the market. It can make you reconsider if it’s a market that you want to be involved in at all.
My view is that so long as you take into account a couple of key things then you’ll come to almost weirdly enjoy moments like this.
First off, understand your risk tolerances. That means ensuring that when you do decide to invest in the crypto market it’s only with cash that you are comfortable to risk 100%.
I know that’s quite an obvious point. But it’s the approach I’ve taken in over a decade of this market. And through all the ups and downs it has ensured a high degree of “sleep at night” reassurance.
That also goes hand in hand with something that’s become a terrifying part of recent crypto investing. Leveraged trading. In my view, leveraged trading in crypto is one of the stupidest moves you can make.
Sure, if you get on the right side of a trade then of course you look like a hero. But the volatility and wild swings on such short notice and without any warning, they can liquidate positions in the blink of an eye.
Also, we still see far too regularly “flash crashes” on exchanges that devastate traders and investors. We saw it already with this move on the Kraken exchange. It will have wiped out a lot of traders and investors that were in leveraged positions.
Finally, just come to embrace these moves. With a long-term view on the development and progress of crypto networks and crypto assets, dips like this are just that, dips.
They present accumulation points that give a chance to continue to build a portfolio in a smart way.
When I look at what’s happened in the last 24 hours, it’s not something I want to see. But it is also an inevitable part of the crypto market. I’ve seen it enough to know that it doesn’t stop progress, it just starts to shake out those who really are in it for a “fast buck”.
The “fast buck” isn’t the way to play this. The long game wins out in crypto. It’s a tried and tested approach. It also means that while prices might be down, I still see them marching higher out the back of this during this current mega-cycle.
I also wouldn’t be surprised to see bitcoin push past $60,000 and on to $100,000 when the dust settles over the next 24 hours and the cycle regains its momentum.
I don’t believe we’re even close to the peak of this current cycle. Which means the coming months are going to be exhilarating.
Regards,
Sam Volkering
Editor, Sam Volkering’s Crypto Network
