Connect with us

Cryto Mining

Bitcoin Dropped Back Below $56,000 This Week. Here’s How Investors Should React to the Volatility – NextAdvisor

Published

on

Share
Mortgages
Credit Cards
Loans
Insurance
Banking
Financial Goals
Follow Us
Bitcoin Will Hit $100,000, According to Experts. Here’s When They Predict It Will Happen
Two Things Crypto Investors Should Know About the Infrastructure Bill President Biden Signed
Crypto Scams Are on the Rise — Here’s How Investors Can Protect Their Coins
The Biden Administration Wants New Legislation to Regulate Stablecoins. Here’s What That Means for Investors
Ethereum Is Back Up to Around $4,500. Here’s What That Means for Investors
Bitcoin Is Down From Its Latest All-Time High Over $68,000. Here’s What Investors Should Do Now
New Bitcoin ETF Grows at Record Speed. Here’s What Investors Should Know
Blockchain ETFs Let Investors Expose Their Portfolio to Crypto Without Actually Buying Any. Here’s How They Work
How to Buy Crypto on PayPal, and What You Should Know Before You Do
Best Cryptocurrency Exchanges of November 2021
Share
Bitcoin climbed back up to $59,000 Thursday, after multiple brief drops below $56,000 in recent days. The recent drops are the lowest Bitcoin has been since early October.
The drop in Bitcoin’s price the last couple weeks represents a pronounced decline from the high it set on Nov. 10 when it went over $68,000. It follows President Joe Biden signing a $1.2 trillion infrastructure bill last week. The new legislation contains a couple key provisions that could impact the tax ramifications for crypto investors.
Even after falling back from its latest all-time high price last week, Bitcoin’s current price still represents a big upswing from the low $40,000 range seen in September. 

Shortly after Bitcoin’s latest all-time high last week, Ethereum marked its own new all-time high last month when its price went over $4,400. Ethereum, too, has seen a pronounced drop in value this week.

Earlier this year, previous sudden drops followed a ban on cryptocurrency transactions and mining from China’s central bank, which in September declared all cryptocurrencies illegal in the country. After previously topping $52,000 in early September, Bitcoin’s price had dropped and struggled to get back over $50,000 until October.
Even with its recent and usual ups and downs, Bitcoin has mostly been on the rise following a drop under $30,000 in July.
Bitcoin first hit a high of more than $60,000 in April, and the ups and downs since then highlight the cryptocurrency’s volatility in a time when more and more people are interested in getting in on the action. In the weeks between the most recent July low point and its high points in recent weeks, Bitcoin has risen steadily. Again, Bitcoin is very volatile, so these ups and downs are par for the course.
We’ve talked to investing experts and financial advisors who advise against sinking much of your portfolio into the asset class for this very reason. They work with clients to make sure volatile crypto investments aren’t getting in the way of other financial priorities, like saving an emergency fund and paying off high-interest debt. 
“You have a high chance of losing it all, but a small chance of winning it big,” says Nate Nieri, a CFP with Modern Money Management in San Diego, California. “Don’t gamble an amount that would burden your family or prevent you from achieving your goals” if you lost it all, he says.

How does this latest crash compare to previous ones, or even to regular stock market drops — and what does it mean for investors? 
For those who invest in crypto for the long-term using a buy-and-hold strategy, swings like this are to be expected. Big dips are nothing to be overly worried about, according to Humphrey Yang, the personal finance expert behind Humphrey Talks, who says he avoids checking his own investments during volatile market dips.

“I’ve been through the 2017 cycle, too,” Yang says, referencing the “crypto crash” of 2017 that saw many major cryptocurrencies, including Bitcoin, lose major value. “I know that these things are super volatile, like some days they can go down 80%.”
Experts recommend keeping your cryptocurrency investments to under 5% of your portfolio. If you’ve done that, then don’t stress about the swings, because they’re going to keep happening, according to Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency analytics platform.
“Volatility is as old as the hills, and it’s not going anywhere,” Noble says. “It’s something you have to deal with.”
As long as your crypto investments don’t stand in the way of your other financial goals and you’ve only put in what you’re ultimately OK with losing, Yang recommends using the same strategy that works for all long-term investments: set it and forget it. 

If this type of extreme drop bothers you, you may have too much riding on your crypto investments. You should only invest what you’re OK losing. But even if the drop is making you rethink your crypto allocations, the same advice still stands — don’t act rashly or upend your strategy too quickly. Reconsider what you might be more comfortable with going forward, such as allocating less to crypto in the future or diversifying through crypto-related stocks and blockchain funds rather than directly buying crypto (though you should still expect volatility when cryptocurrency markets fluctuate).
“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” says Yang.
Yang’s set it and forget it approach to crypto reflects his philosophy for investing in the traditional stock market, but some experts feel cryptocurrency is too different from traditional investments to draw any historical comparisons. That’s why A’Shira Nelson of Savvy Girl Money is staying well away.
Nelson primarily invests in low-cost index funds because “I can see history on that,” she says. The newness of cryptocurrency and lack of trackable data make her wary of these crazy swings. 
Potential investors looking to buy the dip should understand that fluctuations are par for the course, and be prepared for this kind of volatility going forward.  Even if you invest now, with prices relatively low, be prepared for them to fall even more. Again, only put in what you’re comfortable with losing — after you’ve covered other financial priorities, like emergency savings and more traditional retirement funds.

What’s Behind the Latest Bitcoin Drop? 

Many investors see Bitcoin’s price swings as part of the game, but “volatility is tough for individual investors to deal with,” Noble says. Like Yang, he warns against selling too fast.
Recent price fluctuation has followed new regulatory actions by the U.S. government, as well as the new legislation pertaining to crypto in the infrastructure bill. In an industry as new and unproven as cryptocurrency, it doesn’t take much to drive big swings in price. More generally, new short-term investors who are selling their holdings in reaction to the latest drop may be contributing to the drop in Bitcoin’s value, according to a report from Glassnode Insights, a blockchain analysis firm.
While fluctuations are expected, Noble says he’s been surprised by drops earlier this year. “I thought the market was maturing and these things would be less frequent and severe. Boy was I wrong,” he says. 
Some of this year’s drops have been caused by a combination of factors, Noble theorizes, from excitement about low-quality coins, to negative remarks from Elon Musk, to China’s recent crackdown on crypto services. This mix of factors has potential to make sell-offs “all the more violent,” says Noble. 
He likens the drop to the stock market crash of 1987, from which the markets took months to recover. But because crypto moves a lot faster today than equities did in the 1980s, Noble says we may see a quicker recovery. 

“Don’t panic and puke,” Noble says. “If you keep your positions small, you can try to tolerate the volatility.”
Bitcoin Will Hit $100,000, According to Experts. Here’s When They Predict It Will Happen
Mortgage Rates Made a Big Jump to 3.22% Last Week. Here’s What the Future Holds for Rates, According to Experts
I Beat the Stock Market By Day Trading My Instagram Followers’ Stock Picks, But Still Lost Money
What You Should Know About the S&P 500 Before You Invest
How Dividend-Paying Stocks Can Boost Your Portfolio
Learn all about finances in next to no time with our weekly newsletter.
In your inbox every Tuesday
Thanks for signing up!
We’ll see you in your inbox soon.
I would like to subscribe to the NextAdvisor newsletter. See privacy policy
Facebook
Twitter
Instagram
LinkedIn
YouTube
Tell us what you think
Did this article answer your questions?
Time is Up!
Let us know what questions you still have about this topic or any others.
Time is Up!
Thanks for your feedback!
Before you go, sign up for our newsletter to get NextAdvisor in your inbox.
Thanks for signing up!
We’ll see you in your inbox soon.
I would like to subscribe to the NextAdvisor newsletter. See privacy policy
Mortgage News
3 min read
Insurance
5 min read
Cryptocurrency
8 min read
In the News
5 min read
At NextAdvisor we’re firm believers in transparency and editorial independence. Editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by our partners. We do not cover every offer on the market. Editorial content from NextAdvisor is separate from TIME editorial content and is created by a different team of writers and editors.
Subscribe to our newsletter
Thanks for signing up!
We’ll see you in your inbox soon.
I would like to subscribe to the NextAdvisor newsletter. See privacy policy
Follow us
© 2021 NextAdvisor, LLC A Red Ventures Company All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use, Privacy Policy (Your California Privacy Rights) and California Do Not Sell My Personal Information. NextAdvisor may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.

source

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Cryto Mining

Bitcoin's wild price moves stem from its design — you'll need strong nerves to trade it – CNBC

Published

on

Bitcoin’s wild price moves stem from its design — you’ll need strong nerves to trade it  CNBC
source

Continue Reading

Cryto Mining

Coinbase CFO's outlook on the future of cryptocurrency – CNBC

Published

on

Coinbase CFO’s outlook on the future of cryptocurrency  CNBC
source

Continue Reading

Cryto Mining

Coinbase acqui-hires team behind BRD crypto wallet – TechCrunch

Published

on

As crypto proponents look to onboard a new generation of users, one of the major consumer onramps has been a host of consumer wallet apps with slick interfaces.
Today, Coinbase announced that it is bringing on the team from BRD — a crypto wallet startup that first launched its mobile wallet back in 2014. While the team is transitioning over to Coinbase, BRD’s co-founders say nothing will be changing for BRD users for the time being, and that their wallets will continue to operate normally and that user “funds are safe and secure.”
The wallet startup was an early player in the mobile crypto wallet space that started as a place for users to store bitcoin, but grew to support a wide network of tokens and the ability to buy, sell and swap cryptocurrencies thanks to partnerships with exchanges. The startup claims to have more than 10 million users.
“The team brings deep expertise in self-custody for crypto wallets, which will help Wallet enable more people to safely and securely access the decentralized world of crypto,” a tweet from the Coinbase Wallet Twitter account reads.
BRD raised a hefty amount of venture capital funding, banking nearly $55 million in venture funding from firms like SBI Crypto Investment and East Ventures.
Coinbase and BRD did not reveal terms of the acqui-hire.
Co-founder Adam Traidman and Aaron Voisine note that they plan to build out a “migration path” for users to transfer their wallet contents to the Coinbase Wallet app but that it will be entirely optional for users.
Cryptocurrency wallet BRD reaches 6 million users, driven by growth in Latin America and India

 
 

source

Continue Reading

Trending