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Is Now The Time To Buy The Dip? Explained Digital Currency Crash

Digital Currency Crash

Financial markets at large are going through a rough time. Investors have been dealing with rather large spells of uncertainty over the last few years. Given how frequent the market ups and downs are, cryptocurrencies have truly felt the heat. The unprecedented dip in the prices of Bitcoin as well as other cryptocurrencies has already triggered a loss of nearly $600 billion in just one week!
The losses are no joke so far…
The week started off with Bitcoin dipping in value due to which roughly 40% of the investors lost every bit of the money they had invested in. If last year’s July pot crash was bad, the per value of Bitcoin dropped further to stand at almost 50% of its market high in November.
Avalanche, ApeCoin, Cardano, Shiba Inu, and Solana are also taking a hit with double-digit losses in their values. A few blockchains have halted the trade of certain coins altogether in a bid to stabilize the market. What is alarming is the fact that this is the second time that Bitcoin has crashed. When this happened in January, almost $1trillion was wiped off the market.
Going by the age-old mantra of investments to buy when the market falls, perhaps some investors might consider getting their hands on some tokens to try their luck in the volatile market. This would only prove to be fruitful if we are to believe that this slump is only temporary and that the market will eventually rise steadily. Wondering whether to invest in crypto at the moment or not? Read on to explore some past trends, get some expert advice and learn the tricks of the trade if you’re just getting started:
What might have caused this market inflation?
Just like the way tech stocks tumbled, cryptos have seemed to mimic the dip. This has probably happened because crypto has now become a little too mainstream and investors are now responding to it the way they respond to other speculative investments in the market.
Since the trend is like that of the ‘growth stocks’ maybe if you have a fair understanding of how they work or if you’re new to the crypto world, this may be the right time to gradually build a crypto portfolio.
So how can we categorise the situation? Do we identify it as a precursor for a long-term trend or is it a temporary hurdle?
Even though the macroeconomic changes at the larger level are to blame for the fall in prices of cryptocurrencies, we must not forget that both crypto as well traditional financial markets are undergoing change. Just like the mainstream markets, crypto too is experiencing bull and bear runs. The current phase is that of the bear!
Many have lost a considerable amount of money in this bear run but others have been cautious. Those who took the time to understand the market and tread carefully are also now curious to know whether the market could crash further or should one consider this an opportunity to keep buying.
Are we “buying” the dip?
It is certain that the guiding thought behind the buy-the-dip principle is that prices fall only to rise in the future and hence, they are an opportunity to make a profit. Those who swear by this practice are keen to make their purchases at a discounted rate only to be able to sell and gain later when the prices rise.
Do bear in mind that crypto markets have the tendency of being extremely volatile and thus any kind of crypto-based transaction, be it buying or selling comes with its own set of risks. If there is a probability of the prices returning to their past levels, there is an equal chance of them falling further below.
The entire ballgame where you buy and sell crypto is tricky because you are entirely responsible for putting your assets together, maintaining a digital wallet, and trading those investments. In this case, it becomes very important to have risk management strategies in place so that you can hedge your funds. Even though like any other market, one can’t accurately predict what turns the market could take in the short term, in the long run, we can still have faith in this nascent industry’s potential to grow.
Don’t take a blind plunge
It is always best to buy after doing thorough research on your own. You do not want to repeat the mistake of others and it is not necessary that what works best for a fellow trader may work for you as well. As per an estimate from a website that tracks crypto rates, a large-scale sell-off emptied over $200 billion of wealth from the market in a matter of 24 hours.
Steered by the sudden collapse of the Terra USD stablecoin, the crypto market collapsed overall and all the top tokens were affected as a consequence. The second-largest cryptocurrency Ethereum fell by 15% and is now priced at $1,700–a market low since June 2021.
Nothing is a guarantee
If we are to take lessons from the past trends, then the prevalent slump could eventually get better just the way it did in the previous year. However, a smart investor would have to keep their eyes open as the last time the prices had even reached an all-time high only to fall again.
Of course, the case may not be identical this time so it’s best to not let your guard down. If we speak of Bitcoin prices specifically, they seem to have the tendency to fall around spring only to take a leap in the early summer months. However, the trends should only be treated as guidelines as uncertainty appears to be the norm that rules the crypto world.
For amateur traders looking to explore the crypto market , this could be a good opportunity to build a solid portfolio with cryptocurrencies. Rather, even seasoned investors could take a call based on their understanding of the market and invest while the market dips if long-term gains are in sight. The future of leading cryptocurrencies like Bitcoin, Ethereum, Litecoin etc, doesn’t seem to be hitting a roadblock any time soon.

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