Bitcoin falls to its lowest point in 6 months. Should we be worried?

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As talk of a crypto winter becomes more mainstream, it’s no surprise that some investors are feeling uncertain.

Key Points Bitcoin price has fallen more than half of its November high due to economic and regulatory uncertainty. It’s understandable for crypto investors to worry, but one way to cope is to focus on the long term.

The price of Bitcoin (BTC) hit an all-time high of over $68,000 in November. Since then, it has fallen more than 50%, briefly dropping below $33,000 – the lowest in six months. There are several reasons for the accident. These include:

The Federal Reserve’s pullback on its pandemic-related stimulus and planned interest rate hikes. That means there won’t be as much easy money floating around, which in turn drives people away from riskier investments like crypto. According to Bloomberg, the Biden administration is preparing a whole-of-government strategy for digital assets. Authorities in other countries are also stepping up their efforts to control the sprawling crypto industry. Concern over escalating tensions between Russia and Ukraine. Tensions between the two countries — and speculation about a possible ban on Bitcoin mining in Russia — have only added to the uncertainty.

Dramatic price declines are an integral part of crypto investing, but that doesn’t stop them from being worrisome, especially if you’re relatively new to the asset class. Many current cryptocurrency investors bought for the first time in 2021, so if you’re feeling anxious, take comfort in the fact that you’re not alone.

Should we be worried?

There is a lot of fear and uncertainty in the market right now, and some experts are warning that this could be the start of a crypto winter. Bitcoin prices may stay low for a while or even fall further.

The economic climate we face today is very different from what it was a year ago, and we are unlikely to see the crazy price gains of 2021 in the near future. This can be nerve-wracking as an investor, especially if you’ve been buying at the highs of the market and find the current lows particularly daunting.

Here are some ways to cope.

Remember Why You Originally Bought Bitcoin

What was your original reason for buying Bitcoin, and is that assumption still true? The recent boom in the cryptocurrency industry may have been partly fueled by economic conditions. But that’s not the only reason crypto has grown, and now is a good time to remind yourself of Bitcoin’s long-term prospects.

Perhaps you think Bitcoin is a good store of value, a form of digital gold that will prove valuable inflation protection in the long run. Perhaps you see it as the future of money. Maybe you hope that one bitcoin will one day be worth $1 million. A big factor in Bitcoin’s favor is that adoption has made huge strides in the past year, and it’s likely to continue growing in 2022.

As long as you still trust the reasons why you bought Bitcoin, it’s time to grit your teeth and wait for the price to rise again.

Keep your eyes on the horizon

This isn’t the first time Bitcoin has fallen dramatically, and it likely won’t be the last. If you zoom out and look at the price of Bitcoin over the past decade, two things are clear:

Declines of 50% or more aren’t that unusualFor the most part, Bitcoin has been on an uptrend every year

There is a lot of hyperbole around crypto in the news, which can make it hard to keep a cool head. But keep in mind that crypto has always generated extreme views. While it’s important to listen to them, don’t give too much weight to one opinion.

You may be tempted to cut your losses. Panic selling is one of the most understandable decisions people can make when faced with dramatic declines. But it can also be one of the most damaging if you want to achieve your long-term goals. If you sell today and prices start to recover tomorrow, you won’t profit. This is because if your Bitcoin is now worth significantly less than what you paid for, selling now only cements those losses.

Use this time to find out more

The more you know about the cryptocurrency industry, the better an investor you will be. So instead of worrying about the price of Bitcoin, now is a good time to put that energy into research. Try to get a better understanding of the Fed and what might happen to the economy in the coming year – think about the impact this might have on your Bitcoin investments. Look at altcoins that could have strong long-term potential. Examine the ways Bitcoin is used in the real world.

Another potential area of ​​research relates to ways to earn interest on your Bitcoin. There are several different sites where you can do this, but it’s important to understand the risks before you start. Personally, I find it reassuring during downturns to know that my Bitcoin is still earning interest. But I wouldn’t have the same assurance if my Bitcoin was earning interest on a platform that I thought was likely to crash.

Cryptocurrency should be part of a balanced portfolio

There are several ways for long-term investors to handle the roller coaster that is crypto investing. One is to only invest money that you can afford to lose, which makes it much easier to ride out dips. Another is to average dollar costs and buy a fixed amount of Bitcoin at the same time each month. It is also crucial to ensure that risky investments like cryptocurrency are only a small part of your overall investment portfolio.

It’s easy to see why you might have already bet everything on Bitcoin and crypto. Those coin stocks that made gains of over 5,000% in 2021 were hard to ignore. At this stage, the important thing is not to panic, and to try to wait for crypto prices to improve. Once they do, it might be time to diversify your portfolio; consider investing some of your money in safer investments and consider ways to manage risk differently in the future.

Buy and sell cryptos on an exchange selected by experts

There are hundreds of platforms around the world waiting to give you access to thousands of cryptocurrencies. And to find the right one for you, you’ll need to decide which features appeal to you the most.

To help you get started, our independent experts have sifted through the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and start your crypto journey today.

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