What is happening to Bitcoin price and what is happening to cryptocurrency market in general? Why is Bitcoin price falling? What are the reasons for that? Is it the end of the cryptocurrency market or just the beginning? And the main question: how to make money on this market?
These are the most important questions for those who have already invested their money in crypto, and for those who are just going to do it. In this article, I’ll try to answer all of these questions and provide you with all the information needed for successful cryptocurrency investing in today’s uncertain market conditions.
So what’s happening to Bitcoin price? The answer is simple. It’s falling. Right here and right now. And it’s very likely that Bitcoin will continue its downward movement. Moreover, Bitcoin is the main currency and, as we can see, all coins are highly correlated. That’s why the whole market goes down when BTC price goes down.
In fact, you can take advantage of this situation if you have a good strategy. It’s a well-known fact that an opportunity lies in every crisis. It may be a good time to buy Bitcoin and other currencies for cheap, but you need to be careful: you may lose your funds as well.
Are you interested in what leads to this total downward trend?
You should know what a Market Cycle is to understand the underlying reasons for that.
What is the Market Cycle?
On the screenshot below you can see a typical Market Cycle with its main stages. Guess where the cryptocurrency market was when Bitcoin price was 19K$? The right answer is that the market was in its Euphoria stage.
What happens on the top of Euphoria? Everyone who wanted to buy BTC has already done it. Nobody wants to buy anymore but almost everybody is waiting for future growth. Someone starts to sell. The price easy goes down without resistance of buyers. More and more people sell their coins (Fear stage and Panic stage). In the Depression stage, everyone who wanted to sell their coins has already done it. Nobody wants to sell anymore. This is a good point to buy because the price will easy goes up without resistance of sellers.
It’s obvious to me that the current downward trend is not the end of the cryptocurrency market. The market will start to move up when the resistance of sellers runs out. But this leads us to another question. How do we understand when the Depression stage starts? At which point a smart investor or a long-term profitable trader should invest with low risk and high opportunities?
Unfortunately, we can’t know for sure when the Depression stage starts. But a strategy I suggest will help you to buy in a good place and time, provided that you learn to recognize typical signs of market stages. First of all, let’s name the main signs of market depression:
- A big number of negative news concerning cryptocurrency
- A big number of people who have already sold their coins
- General loss of faith in cryptocurrency among the crypto community
All of it may sound depressing, and it is depressing.
But in fact, these are the signs which indicate that it may be a very good time to enter the market.
If we buy Bitcoin at the right time, when everyone has already sold it and its price is on the bottom, we will get it for cheap. And, when the market gets into the right stage and the price rises, we can sell it for profit.
However, we can’t know for sure where will be the end of the downward movement. That’s why we need a good risk management system which allows you to buy cryptocurrency with minimal risks.
Investment Risk Management Strategy
There are many types of risk management strategies, but in my opinion, the following one is the best for these specific market conditions.
The strategy I suggest is quite simple:
- Decide for yourself how much money you are ready to invest in cryptocurrency now
- Divide your capital into 10 parts
- Buy crypto for 1/10 of your capital when you see that the market is in the Depression stage
- After 2–4 weeks buy again. Repeat it many times. After 2–4 months you’ll invest in cryptocurrency the whole sum you intended.
The main advantage of this strategy is that you can buy on the falling market with minimal risks. For example, you can buy BTC when it costs 4500$, then you buy it when the price is 4000$, 3500$ and so on. Let’s say, your average price will be 4K$. Even if Bitcoin price rises up to 4500$ again, you will double your investments.
Play big. Don’t close your position after you double your capital. Your target is to make a profit from the future bull market. Stay in position for a long time. You can increase your capital by 10–12 times. Just hold.
It’s very important to identify the next Euphoria stage and sell your coins in the right time. These are the symptoms of market Euphoria:
- Much positive news concerning the cryptocurrency
- A big number of people who have already invested in cryptocurrency
- A notable rise of belief in crypto
And one more important thing. Diversification. I highly recommend you to buy at least 3 of the most popular and well-known cryptocurrencies in order to reduce your risks. This may help you to save your capital if something goes wrong with one of them.