Volatility is the nature of cryptocurrencies. Bitcoin was hitting an all-time high of nearly $69,000 in November 2021, and less than three months later the cryptocurrency lost roughly half of its value. Nonetheless, Bitcoin, Ethereum, and many other cryptos are still considered good investments.
With cryptocurrency prices being that much volatile, how can you manage risks?
Stay calm
Before you hit the panic button, take a deep breath. Either you want to buy more cryptocurrency or sell all your coins, keep a cool head. Emotions won’t help you in making a wise decision.
Stop reading social media influencers and experts because their predictions in most cases never come to fruition. They just use the situation to get more visibility.
Ignore volatility
Volatility is the speed or degree of the price change, and it is the nature of cryptocurrency because the price cannot go up or down all the time, this is mainly due to changes in market participants' sentiment. Despite all the high-risk factors, experienced crypto traders like volatility as it allows them to make quick money. If you use a long-term crypto investing strategy, you can ignore the volatility of crypto prices. Crypto is a forward-looking asset for experienced traders.
Analyze the situation
Many actual developments can affect the crypto prices, same as fundamental news can also drive the crypto prices up or down. Fed rate hike affected bitcoin's prices and the stock market in May 2022. Even the expectation of higher rates has a significant impact on the crypto market. However, wise crypto investors would look beyond today’s news. You should learn to recognize the economic fundamentals and technological development aspects to analyze the situation.
Consider how to act
Well, you have analyzed the situation and what it can mean for the future. Now you should plan your actions.
Are the risks the actual opportunities in disguise? Downturns can be a good time to add some crypto to your portfolio at low prices. And you can exit the crypto market with one of the strategies if you want to invest in other assets.
You should create an action plan which will reflect your investing strategy.
Whichever way you decide, it's important to find the right crypto exchange to buy or sell your bitcoins and altcoins. Many investors use EvBlock crypto exchange because it is a reliable and trusted partner.