If you still don’t know what to do when the cryptocurrency market is falling, this article is for you.
1. Learn cryptocurrency trends and understand the main indicators
The best way to deal with the volatility of the bear market is carefully prepared. While others will panic and make hasty decisions, you will approach the matter sensibly and will be able to conduct technical analysis of the market situation.
According to a study by LinkedIn and Ipsos in 2018, Millennials when making decisions about investing pay much attention to information from social networks, personal experience of interaction with businesses and advice from relatives and friends. Although all of these factors and should not be ignored, they cannot be considered the best indicators of the behavior of cryptocurrency.
Explore news, changes in legislation and regulation, as well as the actions of the key players in the cryptocurrency market.
For example, on 9 June published a report, which said that the Commission on trade in commodity futures of the USA has demanded from multiple cryptocurrency exchanges to provide trade data to investigate the possibility of manipulation of digital currencies. This has caused a major price drop in the next 24 hours, but itself was not the cause for alarm.
Instead of to approach investment with subjective positions, learn better methods of technical analysis. For example, such a useful tool as a moving average of currency, which shows its average rate over a certain period of time.
A moving average will help you create a comprehensive picture of the trends you are interested in cryptocurrency, and you will not be distracted by random fluctuations of its course.
2. Diversify your types of assets and investment strategies
Portfolio diversification is important in any situation, but especially necessary during a bear market. If to speak about cryptocurrency, many Millennials see them as a great asset for diversification. In fact, 20% perceive the cryptocurrency as a hedging tool in the event of the collapse of traditional assets.
However, not all Millennials take into account all aspects of diversification, but in vain. Here are a few items diversification strategy, which should not be forgotten:
Diversify your cryptocurrency assets
Although the majority of investors perceive cryptocurrencies as a good addition to the portfolio with traditional assets such as stocks and bonds, many of them forget about the need to diversify these digital assets. Meanwhile, there are a variety of types of cryptocurrency investments are very different from each other in risk and prospect.
Here are the top kriptosistema that should be included in your portfolio:
- Tokens — collect a set of reliable tokens such as bitcoin and ether, and several altcoins with good growth potential.
- Licenzirovanie assets — traditional asset classes such as real estate, quickly tokenizers, which increases their liquidity and make them more accessible to retail investors, while maintaining the previous capabilities of stable growth.
- Initial placement of the token — ICO are the most risky kriptosistema. Carefully examine and invest only in tokens companies with a reliable reputation and a clear business model, explaining how their project will benefit the investors.
Share investments for short term and long term
Speaking about diversification of assets, remember that your portfolio needs to be both short-term and long-term investment.
Although the conditions of a bear market the majority of kryptonsite should be long-term, it does not mean that you will not be able to benefit for a short distance. For example, there is a high risk strategy like scalping, which will allow you to take advantage of small changes of course and to profit in a bear market.
Choose those investments that seem most appropriate from the standpoint of risk, but think that at least a small percentage of your portfolio consisted of short-term high-yield investments.
3. Be prepared for market volatility
You can perfectly understand the situation and have a well diversified portfolio, but the cryptocurrency market is still exceptionally volatile. In order to survive in a bear market, you need to be ready for constant changes of price.
Unfortunately, 75% of Millennials from the USA have debts. Worse still, in 25% of these debts exceed 30 thousand dollars. Because of this, it is difficult to adhere to its investment strategy, when a bear market begins to storm.
If you expect that short-term gains will allow you to pay off debts or not willing to give their investment to Mature, you will not be able to avoid losses on a volatile market.
Don’t do anything
Sometimes during a falling market the best strategy is to do nothing. Of course, it’s hard to sit back and not to drop the falling price of assets or not to try to compensate losses at the expense of other, more risky, investments. However, if you have enough patience to refrain from panic selling, you will be able to survive this period of volatility.
On the cryptocurrency market volatility is inevitable. And the fact that the market now is bearish, also a fact. The question is how to react to all this. Becoming smart and prepared investor, you will be able to survive the bear market with minimal loss.
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