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Bitcoin and crypto prices are extremely volatile ⁠-- What to do when they're crashing

James Royal, Bankrate.com on

Published in Home and Consumer News

If there’s one word that describes Bitcoin and cryptocurrency, it’s volatile. Crypto prices soar and then seem to crash almost as quickly, while rumors, sentiment and fundamental developments are quickly factored into the market. In just a four-day period in early June, Bitcoin fell from $30,500 to about $23,500 — a decline of nearly 23 percent. Over the same time, Ethereum plunged more than 31 percent, and seemingly the whole crypto market has been sinking this year.

That volatility attracts traders looking to make a profit — but it’s nerve-wracking, especially for new investors looking to get started. And traders can expect plenty more of this volatility in the future, as new cryptocurrencies emerge and others fall by the wayside.

With cryptocurrency so extremely volatile, what should investors be doing to manage their risk?

5 things to do when cryptocurrencies plummet

Scared by a plunge or thrilled at the prospect of buying in cheaper? Either way, here are five things that you need to do when cryptocurrency prices crumble.

1. Stay calm

 

Whether you decide to sell your cryptocurrency or see a dip as an opportunity to buy more, you need to act with a cool head. Making emotional decisions, especially when trading, rarely results in anything good happening. So, before you rush into the market in a panic, you’ll want to reflect on why you’re trading crypto in the first place.

Are you investing because you believe in the long-term opportunity?

Or are you here to make a quick buck on short-term trading?

The answer to these questions can help guide you to the proper decision. In either case, you’ll want to act in accordance with your own goals. In other words, if you believe in the long-term opportunity, think with that mindset. If you’re here for a quick trade, think with that mindset.

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