Are you one of those lucky dogs who just decided to stake crypto recently and found themselves in the avalanche of crashing crypto assets? The cryptocurrency market has always been subject to high volatility, but it’s crazy how rapidly the numbers are going down each hour. Both crypto experts and newbies are following the latest news, all stunned by how drastic the changes have been lately.
Here’s a rundown of the most important observations of today’s crypto market:
The swings are relentless. It’s more than devastating to see your wallet’s value decrease by more than 80%. If you’ve ever invested in anything else other than crypto, like real estate or stocks, you’re definitely not used to seeing such swings (in both directions). That’s why crypto is so appealing – you can become stinking rich overnight. However, you need to be emotionally immune to crashes like the one we’re witnessing these days to be able to win in the end.
Always remember about the bigger scale. Those who hold crypto for quite a long time actually do well. So far, the lowest point of Bitcoin’s value in June 2022 is still much higher than the highest point in 2019 (see the graph below). Over time, long-term crypto holders have learned how necessary it is not to panic when the market crashes. Also, it seems like it’s a perfect time for buying crypto to lower the average cost basis, and earning more rewards when it’ll be growing again.
You never know when the bottom comes. You might be thinking “Crypto has already dropped” but, as you saw on the graph below, there’s still enough way to sink. During it’s highest times, the cryptocurrency market has welcomed a lot of people borrowing money to buy more crypto. During bad times on the market, when the prices fall, these people get a margin called or liquidated. So the price swings are just a healthy process of cleaning out the unstable elements before the next jump.
Bear market tears off the masks. It’s much easier to be a crypto genius in the growing market. Now it turns out that numerous projects, exchanges, and investors who did great in the past 12 months, have been building the sandcastles.
The main question most people want to get the answer to is: what is the reason for the crash? The thing is, we don’t really know it. Markets depend on numerous factors, so it’s most probably the combination of events. Let’s take a step back, though, and take a look at the chain of events that eventually caused the crash:
Inflation (8.3% in the United States)
The Federal Reserve raised the interest rates
Prices on the stock market went down
Due to their fear, investors stopped staking stablecoins and buying crypto
The prices went down because of fewer purchases
Investors who owned assets started selling more crypto to save their money
The prices went down even more.
Moreover, we need to acknowledge that, despite some drops, we’ve seen crypto skyrocket in the past 10 years. Everything just kept going up, especially over the past 2 years (just look at Q4 2020 – what a jump!), so people got greedy and started investing in crypto tokens more. With the introduction of PoS and its spreading, everybody who is at least a bit interested in crypto wanted to try some proof of stake coins. Now a lot of those people got margin calls or liquidated bringing even more instability to the market. It’s a rough sea now, and you’d better come prepared to go through it.
Were we able to predict this crash? Most probably, not. One day you’re thinking about which staking platform to try next, and now you’re not sure if you’re going to have anything in your wallet to exchange. We know that feeling, and we know that, most probably, it was inevitable. So rather than thinking about how we could’ve predicted it, let’s take a look at the mindset we should stick to and the actions we should take to stay afloat.
Your actions depend heavily on your view on crypto and whether you decide to believe in it or not. Yes, 1) crypto can turn out to be fake money and everyone who believes in it can lose all their investments. OR 2) it can turn out to be the most important financial breakthrough of our time and the temporary fluctuations, like this one, can cause investors to suffer. However, eventually, prices will find their bottom, and we will all witness another powerful rise soon. Now you have to choose what you believe in and if you decide to believe in crypto, here are a couple of things you can do to sail through it:
Employ the long-term mindset. When you look at it on a bigger scale, volatility becomes less impactful. Another rise, another fall – they no longer attack you emotionally. Don’t sell or buy anything when you’re swept away by emotions. You’ll regret it, 100%. Take care of your mental health and stop following each cent that’s gone from your wallet.
Look at it as a great buying opportunity. Instead of crying over what you’ve lost, think about how much you can win, when the market gets back to growth. This, again, applies only if you believe that crypto will be great again.
If you’re new to Proof-of-Stake crypto, DeFi etc., and now you doubt if you should do it whatsoever, just think what a great opportunity you have now and how affordable crypto became for you, compared to a couple of months ago! Choose your first crypto staking platform wisely. For example, platforms like MyCointainer have no locking period, so you don’t have to worry you’ll get caught in the middle of a crash and all your crypto will be locked. If you still have a poor idea about the crypto world, and just googled “staking crypto meaning”, save some time – the Insights section on the MyCointainer website has it all.
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