While some may wonder that we already have fiat currencies, commodities, and stocks that provide us with similar benefits. Then why do we need Bitcoin? Well, Bitcoin is a decentralized digital currency that works on a peer-to-peer network, offering security, anonymity, transparency, and so forth.
Satoshi Nakamoto, the pseudonym name of the mysterious Bitcoin creator, capped the digital currency at 21 million Bitcoins. Bitcoin's value is derived from the financial markets' volatility, which is caused by supply and demand. As a result, anytime the Bitcoin trading volume increases or decreases, the digital currency's price fluctuates dramatically. Lower prices appear to be an appealing prospect for Investors. However, a consistent price drop creates more panic and uncertainty.
Volatility in the Bitcoin market is unpredictable and inevitable, sparring many Bitcoin traders and investors, making them reconsider their investment strategies. This rollercoaster-feeling-like experience usually startles novice traders and investors, who may withdraw from the market and wait until it seems safe to dive back in. But you cannot do this all the time and what when the market is hitting the downtrends?
In this blog, we are going to discuss 9 Mistakes To Avoid Amid Bitcoin Downtrends
1. Not Doing Your Homework
The first step in Bitcoin trading is to study and learn the basics of Cryptocurrency and Blockchain Technology. Having solid knowledge and research about Bitcoin and the Crypto market, in general, will allow you to have a clear conscience instead of conjecturing the inherent volatile world of Crypto. Going into the field without any knowledge about the Crypto market is like playing a tournament without grasping the basics of the sport.
2. Investment Portfolio is the Key
It is always advisable to not place all your eggs in one basket, meaning you should always diversify your portfolio. Investing your capital in Bitcoin and other assets such as fiat or other Cryptocurrencies will help mitigate risks associated with this volatile market.
Also Read, Factors That Determine The Price Of Bitcoin
3. Do not invest all in
The golden rule of investing is “Invest what you can afford to lose”. Investing the leverage can be risky; thus it is preferable to trade Bitcoins for money that you have set aside for the purpose.
4. Entering the Exact Bottom
Buying in the exact bottom is Wall Street cool, isn’t it? After all, by catching the lowest price, you will be saving pretty much! The only thing to keep in mind is that don’t play your luck and wait for too long. It can be very enticing to wait a little more and a little more inorder to make the grand entry of catching on the exact bottom. This practice is beneficial, but if you are constantly trying to catch the exact bottom, you might lose your chance on trades to end up on a reverse trend. Thus, instead of chasing on the exact bottom, it is acceptable to enter the Bitcoin trade near the bottom.
5. Be the Yoda against FUD
Many researchers have stated that the Bitcoin market is sentiment-driven. Therefore, when you see the price is swinging towards a downtrend, people panic and withdraw their holdings. Don’t fall into FUD and stay calm; as per the analysis, when Bitcoin’s price surges, a gradual fall down is expected, and eventually, the Bitcoin market does pick up.
6. The FOMO vibe
A major alert in Bitcoin trading is to not fall for the FOMO – Fear of Missing Out. Do not follow the herd mentality. Following Bitcoin enthusiasts, influencers, and analysts is helpful, but blindly following what others are doing with their coins may not always be the right thing. Even Crypto whales are always out on the lookout, so don’t fall into the trap unless you are, ofcourse, one of the whales. In such situations, let research be your guide and trust your instincts. Read to Continue