Statistics show that investors are less tolerant to a fall in the rate of cryptocurrency on the crypto market than on the traditional one. This is partly due to the unreliability of crypto assets compared to traditional tools. Partly – the inexperience of investors who sell coins at the slightest drop in the course, when their colleagues from the traditional market, more accustomed to fluctuations, behave more cautiously. Why does cryptocurrency fall? What to do when the cryptocurrency rate falls? How to make money on the fall of cryptocurrency? We will describe in this article!
Why does cryptocurrency fall?
It also does not interfere with looking at the charts if the currency had a tendency to fall strongly and grow in the past, then there is a chance that this will happen again in the future.
The owner of a cryptocurrency must remember that by selling a cryptocurrency, it lowers its rate even more. The less popular is the currency, the less is its capitalization, the more each sale will affect the rate. When it comes to unpopular currencies, even the actions of one holder can change it.
It is useful to learn how to determine how valuable an asset is as a market instrument or technically, and if it is valuable, wait such storms. If there is no obvious value, you should be more careful about the idea of keeping it when the rate drops.
However, if a not very valuable asset falls due to a falling market, then surely it will grow after it. If it falls by itself, it is worthwhile to pay more attention to the reasons for the fall.
The advantage of the waiting position is that due to the volatility of cryptocurrency, it turns out to be advantageous much more often than losing, especially in the case of the currencies of giants.
However, there is a minus and the owner may incorrectly assess their assets, not pay attention to the factor that will provoke a further depreciation and so on. The longer an investor waits, the more losses he will suffer.
Selling the currency is appropriate in the second case, if it can clearly fall below the purchase price or if the investor prefers less risk and less profit to the possibility of high profits coupled with the same risks.
If the currency falls completely, the investor will win. If the currency, falling below the purchase price, suddenly finds a tendency to increase, the investor will be able to buy it again without loss for himself. Unfortunately, if the rate does not reach the purchase price, it goes up again and “strikes” the price for which the currency was sold when it falls, it turns out that the investor lost money.
What to do when the cryptocurrency rate falls: earn
In addition to selling or occupying a wait-and-see position, the currency holder has another option – to make money on a falling rate. Tactics depend on the currency and the reasons for its fall.
If it is a giant currency, falling due to economic political events and news, the investor can begin to actively sell it in order to support the depreciation. After the collapse on the minimum price, he will buy it again, the currency will inevitably increase and the investor will work.
If it is a medium or unpopular currency an investor with large assets can practically control the depreciation. However, caution will also have to be observed, because an excessive collapse of the exchange rate can pull the currency further down against the player’s wishes.
The investor sells all of his assets at the moment of a fall in the course, observes how the course flies down, and at the moment when it seems to him that this is enough, he buys the currency for a pittance until the course as a result of his actions begins to grow.
In conclusion, it is worth noting that the fall in cryptocurrency usually indicates not the problems of the crypto market, but its formation. Sometimes the market suffers because of currency deficiencies (in case of hacking and other “crypto” problems), but they are eliminated by implementing hard forks and new technical solutions.
The fall of cryptocurrency is not a negative event for an investor, who can react in time and not only not suffer losses, but also earn good money.