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Highlights
- The global crypto market cap saw a slump of 4.90% over the last day and was placed at $2.03T as per CoinMarketCap.
- The prices of Bitcoin were trading at US $47506%, down by 3.38% in the 24 hours
- Ethereum too down by 5.44% and was trading at US $3,125
Wednesday has been a stressful day for the cryptocurrency market. It’s barely been a couple of days that the crypto industry celebrated Bitcoin breaching the $50000 mark. It was the first time that the leading cryptocurrency reached the mark since May. But after receiving mixed responses on Tuesday, it again brought fears of market crash amongst the crypto investors. Wednesday saw a significant slump, with the majority of coins seeing red in the trading session. The global crypto market cap saw a slump of 4.90% over the last day and was placed at $2.03T as per CoinMarketCap. The prices of Bitcoin were trading at $47506%, down by 3.38%. Ethereum too down by 5.44% and was trading at $3,125 at the time of writing (BST 1:40 pm). Altcoins, too which had been rallying for some time, had a bad day.
But many experts believe that Wednesday’s crash is mainly due to the fact that the crypto market witnessed a major selloff across the entire spectrum. This meant that the market participants booked the profits. The Bears now find it an ideal opportunity to circle as the price rally seem to have cooled off.
With such a market crash happening, one is often caught in two minds about whether to buy, sell, or hold. We look at what one could do when the crypto market sees a crash like this.
Buy or Invest
But the low market could also allow traders or investors to buy cryptocurrencies at and lower rate and ensure one can reap the benefit when the market rebounds once again. Many investors seem to benefit from it as they managed to pick up some of the high-performing coins at a lower rate during the period.
Besides, it also gives the investors some alternatives, which they wouldn’t have considered had the leading cryptos shown the growth momentum.
Don’t sell?
One of the important things to avoid when the market sees such a crash is to give in to the temptation of panic selling. One of the foundations of trading is “buy low, sell high”, and therefore, one needs to ensure that the investors see if this is a one-off crash or has the prices have been consistently down over a period of time.
Panic selling could result in losses should the market consolidates the following day. So often, strategy-wise, one would prefer to hold the cryptocurrency instead of selling.
Sell
At times selling a low performing, crypto could be a wise choice. One needs to be mindful of the fact selling strategy isn’t always bad. One can sell the coins and work on others to make maximum gains if the crash is prolonged.
Go Short
A few exchanges offer the investors a chance to go short on their Bitcoins. For example, Liquid offers its customers to go short on Bitcoin when prices are going down. However, it’s a risky affair. With the crypto market being highly volatile, the underlying asset's value makes it difficult to predict the price movement of the underlying asset. Besides, the lack of a regulatory framework leaves the investors open to losses.
Re-adjust Portfolio
This is also one of the options, but it is best to venture out into something like this once the market has stabilised. Diversification helps one build the value of the assets and is one of the important things to keep in mind while investing. One can look at the investments made and adjust the portfolio accordingly to ensure that one can make up for the losses.
