7 reasons why you shouldn’t panic during a market crash
Last week’s market crash saw alt coin values drop drastically. Simultaneously, Bitcoin hit an all time high. If you are a traditional investor, these sort of ups and downs can unsettle you quite a bit. However, some amount of historical data and past trends point to one thing – cryptocurrency, for the most part, is a long term game. It is dependant on the underlying technology, which is revolutionary.
The seasoned crypto investor wouldn’t panic much heed to bad markets and volatile markets. If this is your first rodeo, and you’re tempted to dump and make the most of what you have, we urge you to reconsider. Here are seven reasons why you shouldn’t panic during a market crash.
The ever-rising demand and price of Bitcoin
Despite short-run fluctuations in the crypto market, the general trend shows that Bitcoin prices have been rising ever since their entry in the market. More companies have started to accept it as a means of payment, and markets are considereing it as a legitimate area of investment. This has been surging further demand and price.
A person who invested $2000 five years ago would be a millionaire now if he had invested in Bitcoin. While crashes are common in the crypto market, prices also usually pick up high values quickly.
Finite number of Bitcoins will always lead to price rise
There are 16 million Bitcoins in the market currently, and not more than 21 million Bitcoins can be mined. Due to their finite nature, this leads to price volatility and instability in the short-run. However, demand of crypto currency is ever-rising. So, in the long-run, its finite number would always lead to value-rise.
Crash of one currency provides opportunity in others
Crash of a cryptocurrency is worrisome as it leads to massive investment losses. However, investors can easily trade one digital currency for another and recur their losses. For instance, due to panic-selling occurring after the cash of Coinbase, Bitcoin prices reached an all-time high in 2017 and Ether maintained steady growth rate because of it. In this context, crashes actually provide a good opportunity for investors to invest in crypto currencies that have more room for growth and profit in future.
Widening market in Asia
The crypto market has been widely spreading its roots from the western world to the young and dynamic Asia. The growing Asian market-base provides a good opportunity to make more profit. For instance, due to rising demand for Bitcoin in Asia, Bitcoin reached a value of 5 million Won in South Korea, equivalent to $4500 on May 25.
In fact, ever since Japan legally adopted cryptocurrency as medium of exchange, Bitcoin value rose as high as $6000. Russia has also announced plans to consider it as a digital currency. And while China’s ban on crypto market led to some shocks and crashes, it is anticipated that the PRC government will consider its decision again to move from ‘ban’ to ‘regulations’. However, a profitable perspective shows that government intervention in the digital market is not much of a threat.
If government considers crypto currency legally, it’s going to lend credibility and prices will continue to rise. If not, it will remain an important medium to carry out underground transactions and will not lose its value. In this scenario, the limited currencies will continue to be high in demand and prices, and investors can make best use of them by staying calm.
Price crashes are temporary, and always lead to price surge
After the last price crash in 2014, value of Bitcoin rose by four times. A simple look at the Bitcoin value-chart shows that after short-term fluctuations, Bitcoin prices always surge dramatically. Crashes actually allow long-term investors to invest in profitable and growing currency during dip and make profits during price surges.
Bitcoin price crashes appears to be reducing
While Bitcoin has been continuously criticised for its unpredictable and fluctuating behaviour, investors must note that though fluctuations are still common, crashes have been decreasing. The crypto market is becoming more stable due to a wider market-base and legal credibility of digital currency.
Price of cryptocurrencies to rise by ten times this year
If we notice the 2014 growth trend of market shares, while commodities such as gold, bonds or shares in Microsoft, facebook, etc. increased in their values, the rising value of Bitcoin far exceeded them in terms of growth rate. Crypto market is the fastest growing market in terms of value and it is predicted to rise by ten times in 2017.
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Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.