Why people believe in cryptocurrencies and how to make money in a falling market

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

The expert tells about the laws by which the bitcoin exchange rate changes, and shares the golden rule of the crypto market.

By December 2017, the market was overheated by rumors and speculation about the future of Bitcoin. Every day, new projects appeared that promised the introduction of blockchain technology in a variety of areas. The market was waiting for relief from the SEC (Securities and Exchange Commission) and new opportunities for fabulous earnings. Everyone was optimistic.

People believed that Bitcoin would grow continuously and it started to grow. As soon as the double and unreasonable growth began, there was no way to stop it. Everyone wanted to jump on a rocket that would take him to millionaire paradise.

Bitcoin exchange rate: where does what comes from and where it disappears

The explosive increase in the exchange rate was provoked by the irrational faith of people and ignorance of the laws of the market. The thirst for quick money has led to the incredible growth of bitcoin.

It is important to understand here that all market instruments have their own laws, their own life cycle, fundamental reasons that affect the price.

The rise in the bitcoin rate was originally planned for subsequent speculation. As soon as it peaked, the big professional players started selling. They were followed by mid-level players. Meanwhile, the "crypto-hamsters", on the contrary, waited in the hope of a miracle and, as a result, lost everything.

Not a fall, but a correction of the crypto market

When skeptics say that the bitcoin rate was deliberately collapsed, there is some slyness in it. Let's take a close look at the facts: when compared with August 2016, the current price is several times higher. If you look at the rate of 2014–2015 and compare it with the current values, then the situation becomes even more indicative.

Those looking to invest professionally need to look at the market from a long-term perspective. Then it becomes clear that nothing special is happening now. From year to year, everything goes according to the same scenario. First growth, then price correction, then bounce again.

I am optimistic about the prospects for the development of the market. The potential for rate growth is huge.

The main reasons for high volatility, that is, exchange rate volatility, are speculation and low demand. Yes, low demand, which is due to the limited number of users of the crypto industry.

So, according to the study, only 8% of Americans own cryptocurrencies, and in the world this figure is less than 1%. According to various estimates, no more than 25-30 million people on the planet use cryptocurrency, and they have created a capitalization of about $ 300 billion. This is negligible.

Irrational and rational: why the crypto market will grow

Blockchain technologies are increasingly penetrating into various areas of our life, and the number of active users is increasing. This entails an increase in demand. As for speculation, this is a feature of any market. It is important to understand that users' belief in cryptocurrency is inherently irrational. People in their actions are guided by the opinion of the majority.

Over the past five years, people have been taught that Bitcoin will be worth 50, 100 and 500 thousand dollars. People want to believe it. And no matter who makes any arguments, they will not change their beliefs. Because everyone has seen bitcoin grow year after year. Therefore, somewhere in the subconscious, the thought remains that, despite the fall, growth is inevitable. Now, if bitcoin continues to fall for two years, then even the most desperate optimists can change their minds.

However, there are all prerequisites for the growth of the bitcoin rate in the long term. As I said above, new technology is becoming more popular. The community is growing and developing. The process of legalizing the crypto market is actively underway, which attracts new players and a lot of money.

Another question is how to make money in a market where there are no rules, and the irrational behavior of users has a significant impact on the course. You can always make money, but for this you need to know a few important things.

The golden formula of the crypto market

There is a formula for success in the crypto market. Ignoring it, it is easy to get into the risk zone. And those who remember about it have never gone into negative territory.

I took a cryptocurrency - forget about it for three years. Hide the keys in the safe and forget about the course.

As a basic strategy, you can adhere to the following algorithm: every month, invest some fixed amount in the chosen cryptocurrency, no matter how much it costs at that moment. Such a strategy for three years helps the investor to stay in the plus zone by almost 99.9%.

Three "not" for safe working with cryptocurrency

1. Do not break the golden rule of the crypto market: if you buy a cryptocurrency, forget about it for three years.
2. Do not panic. Don't pay attention to volatility. If suddenly the course went down and they shout all around that everything was lost, do not give in, do not take any action. Remember the rule of the first three years.
3. Do not gamble with the stock exchange or gamble on the stock exchange if you do not have special knowledge. 97% of all traders lose their money within 3-9 months. Today, crypto exchanges are not regulated, do not have licenses and do not guarantee the safety of your funds. Trusting them with your money is an unreasonable risk.

Remember that the main thing when playing in the market is to carefully weigh the risks of your own decisions. Do not stop believing in the cryptoindustry, because everything is just beginning.