Bitcoin Reached The Low Of $7,700. Here’s How to ‘Hodl’

Bitcoin Reached The Low Of $7,700. Here’s How to ‘Hodl’

2018 has not been bitcoin-friendly at all. Only within the first month of this year, the most prominent cryptocurrency worldwide has already seen a 40% slump. It might sound luring for small investors as BTC dropped from $17,135 at the beginning of the year to $7,695 on February 2, but there’s no guarantee that it will skyrocket again. Or is there?

Anyway, bitcoin is not the only cyber coin which experiencing downward gyrations. According to Coinmarketcap.com, the whole crypto market lost over $127 million within the past 24 hours.

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The turmoil in the crypto market could have been triggered by recent South Korea’s and China’s crackdown on cryptos, Bitfinex-Tethor being subpoenaed by US regulators, as well as by the latest hack of Tokyo-based exchange Coincheck with the loss of $530 million worth NEM coins. No wonder if against such background new price swings will pop up.

But what any bitcoin investor has to learn is how not to panic, even though such gyrations can be remarkably frustrating. Here’s how to survive:

Get Distracted

According to Willemien Kets, who is an associate professor at the University of Oxford, Department of Economics, assures that reviewing bitcoin’s price continually is not efficient at all. Social psychology found out that the best way to make people attached is to provide them with a trophy without defining a timeline. That’s how bitcoin’s unsteadiness works. But investors should resist this seduction.

"You can't do anything about the price movement itself," said Kets.

On the contrary, she advised young investors to settle a price margin at which they will be ready to vend a coin. For instance, they should let their phone send notifications when the price is below $9,000.

One of the authors of "Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond," – Jack Tatar – confessed he does not have the strength to look away. However, he admits that checking your phone regularly won’t lead you to anything. Even if you gain $40,000, by the time you finish cashing out the money, the price may halve, and you won’t get that much.

Buying And Selling Should Not be End in Itself

Ric Edelman, the financial advisor and executive head at Edelman Financial Services, says people miss the idea of such phenomena as cyber money and blockchain when they merely purchase it and vend it like on the roundabout. In his firm opinion, cryptos are tomorrow.

People should not focus only on money that they can bring out of them, but they should rather get ready to ‘hodl’ on to them for a long time. Edelman’s aspiration has rewarded him back, as he observed it growing from $1 to $20,000. At the same time, he emphasized, such a lifestyle won’t suit everybody.

"If owning this asset is causing you to stare at the ceiling at night, you shouldn't own it. There's more to life than money,” Edelman said.

But everything, once again, is up to you. However, as City University of London’s Peter Ayton, who studies behavioral decision theory, says it is tough to imagine people, who pile into cryptos, as those who serve brain and reasoning. Lots of green ‘investors’ have been lured by bitcoin’s price, but they might not fully understand what it is.

Do Not Stick To Bitcoin Alone

Investors say it is essential to diversify your portfolio because in case you lose on one side, the other will bring you profits. But at the same time, a manifold portfolio will help people be less worried, investments director at crypto company Grayscale Michael Sonnenshein is sure. There are over 1,000 altcoins on the market available at the moment, so not by bitcoin alone.

Pile As Much As You Won’t Regret Losing

Another important advice is not to invest all of your funds (even 50%) into bitcoin and its ilks. Experienced pundits say people should pile into cryptos only as much as they can afford to lose.

"You're seeing too many people jumping in and betting the ranch, and just saying 'yee-haw! They're not disciplined enough to realize they have to stay within their asset allocation models," said Tatar.

Moreover, it is better to rebalance the invested capital as cryptos are likely to alter in price. For example, Tatar explained, in case one piled 15% of funds into BTC, and then out of the blue the crypto assets grew to 30%, it is better to review and rebalance the portfolio so that not more than 15% will be invested. There should be time for cashing out. Thus, you will be more stable to bitcoin’s unsteadiness.

Interestingly, it is not only investors who become worried. People, who do not pile into bitcoin or any other crypto out of its brethren, may have a fear of missing an opportunity.

Hopefully, these tips will be useful for you and as promising as the tiny signs of recovery on the cryptocurrency market, which started appearing on February 3 after a severe correction.

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