New 2021 The Crypto Crash Of Should You Invest or Not
Introduction Of New 2021 The Crypto Crash Of Should You Invest or Not
New 2021 The Crypto Crash Of Should You Invest or Not. What are the major causes of this crash two is the slip in the market unprecedented and three as an investor what should you do during this crash at the end of the article I’m going to give you guys my personal opinions on this issue as well as what I plan to do with my crypto by the way if you guys want ten dollars of free bitcoin it’s apparent that the crypto hype has been booming in the general public for the past few months so then why all of a sudden is this big dip happening and is this the beginning of a crash let’s start with the most up-to-date insignificant catalyst.
This downward trend recently a statement was delivered in china that financial institutions and payment companies
So This downward trend recently a statement was delivered in china that financial institutions and payment companies should not participate in the adoption of cryptocurrency and that virtual currencies can’t be used as a form of payment because they aren’t the statement was backed by the people’s bank of china and the china insurance and banking commission so that was one of the biggest catalysts for the steep dip that we’ve seen from bitcoin but if we take a look at its price chart you’ll notice that its price has been on a downward slope for the past week or so china’s statements regarding crypto are a big contributor.
But they’re certainly not the only cause instead what we’re seeing could be the aftermath of an insane crypto bubble after all the past few months have been the most pivotal months for the growth and success of cryptocurrencies bitcoin surpassed 50 000 for the first time back in February of this year only to shock the world once again by hitting sixty thousand dollars just a month after and then meanwhile we can’t forget dogecoin’s insane run from around six cents to 70 cents in one single month the crypto market was making incredible strides during this ridiculous bull market so it’s not hard to imagine that with cryptos like most other things the higher.
The climb the harder they fall and nothing go up forever so bitcoin’s price has overall dropped by 40 and if we look at the other cryptocurrencies and the market as a whole we see a very very similar trend so I have coin market cap pulled up and we’ll just take a look at sort of what’s happening in the market pretty much everything is down as you guys can see for example bitcoin we are at a price of about 37 dollars per coin right now in the last 24 hours that’s down 13.3 percent and the last seven days it’s down 32.24 so, as a result, the market cap is well under 1 trillion at about 700 billion let’s take a closer look at bitcoin just to see.
What is happening so you can see back here um at the end of 2017 at in at the start of 2018
What is happening so you can see back here um at the end of 2017 at in at the start of 2018 we saw bitcoin jump to about uh 20 000 per coin then we saw a big decline to around a few thousand dollars per coin uh and back in 2020 during the pandemic we saw a big crash as well and ever since then the price has just gone up a lot so for anyone that has held bitcoin for a long time like you’re still making money even if the price is around 37 000 it just means that you missed out on a bunch of potential gains if you had sold at the top that’s impossible to predict and I don’t recommend trying to time the market.
If we zoom into the last three months we can see that bitcoin was hovering between like 50 60 000 for the most part with this big dip at the end so let’s zoom into the last seven days yeah we started the last seven days at about uh 55 000 and now we are just under 40 000 same thing with ethereum you guys right now it’s trading at about 2 700 per coin which is down almost 20 in the last 24 hours and the last seven days that means it’s down 34.1 percent this brings the market cap to around 312 billion dollars and yeah let’s take a look at there because this is the second biggest coin uh in the world very similar to bitcoin you guys uh similar uh increases in price and declines uh back in 2017-2018 and starting at the end of 2020 and the beginning of 2021.
That’s when we saw the price of ethereum just uh skyrocket in the last month it was still increasing a lot so you know just a few weeks ago there was going up in price like crazy hitting a high of over four thousand dollars and if we zoom into the last seven days we can see this pretty sharp decline in prices in the last few hours we actually saw it jump down to twenty about 2200 dollars a coin but it’s since recovered a little bit from that which is you know good to see I’m not going to go into detail on any of these other coins really but if I just scroll through here you can see as the prices have just been getting hammered all these red numbers right here show the uh decrease in price for the last 24 hours in the second column.
The last seven days so another question that we should ask is this crash a normal thing during bitcoin’s lifecycle
These are the decreases in prices for the last seven days so another question that we should ask is this crash a normal thing during bitcoin’s lifecycle I’m gonna focus specifically on bitcoin because it is still the face of the crypto space and usually whenever bitcoin goes down the entire crypto market goes down as well if we take a look at the history of bitcoin’s biggest crashes we’ll notice that bitcoin has fallen well past 90 in price before and at the very least we’ve also witnessed bitcoin dipped well past 80 percent within the past few years so a 40 setback may pale in comparison to an 80 or 90 setback but another important factor to consider.
When comparing these crashes is the amount of money invested into bitcoin during these periods and the overall liquidity of the asset back in 2011 it’s safe to say that bitcoin was by no means a popular asset and not a lot of people invested significant amounts of money into the crypto coin bitcoin’s prices were staggering and certainly not streamlined and as a small asset it was of course quite volatile but in 2021 it’s reported that more than 21.2 million adults so around 14 of the u.s population owns cryptocurrency like bitcoin or ethereum and to add on at.
Its peak in 2021 bitcoin reached its highest market cap just last month totaling 1.1 trillion dollars in value a 40 setback in bitcoin nowadays is a catastrophic decline of over 400 billion dollars in the market cap so while in terms of percentage loss 40 is not the highest loss bitcoin has ever seen even the small decline in bitcoin’s price at this point in its lifespan can mean a devastating loss in dollar value and we don’t know for sure if this decline will continue but this can very well be the beginning of a major crypto winter and you know it does sort of make sense after months and months of booming crypto prices so then as a crypto investor.
What is the best way to go about this current state of the market it boils down to the important question how much faith do you have in cryptocurrency if you’re bullish then this might be the perfect time to buy into more cryptos because everything right now is pretty much selling at a remarkable discount and if you already have money in these cryptos then the best course of action would be to probably hold because as of right now we don’t know where the crypto market will go from here sure if you don’t believe in cryptocurrencies and you think the market is going to go down even further then?
You can start selling your crypto and realize some of the losses so if you’re bearish then the sudden major correction
You can start selling your crypto and realize some of the losses so if you’re bearish then the sudden major correction we’re seeing could confirm your beliefs maybe you have money invested in crypto not because you fully understood it and believe in it but because other people invested in it see I do think this is a pretty valuable lesson because when you’re investing you should be investing for yourself and based on the research that you have done and the conviction you have in that coin and if you’re putting your own money on the line you just cannot let other people influence the way you spend and invest your money so yeah get out.
If you don’t believe in cryptos but if you do have an ounce of faith in cryptos I’d recommend probably just holding on to your crypto and not realizing any of those losses if you really believe in the future growth or the future decline of crypto your mind should already be set but here is how I’m going to approach this whole situation so you know the saying buy when others are fearful and sell when everyone’s buying I’ll be doing my version of that, in fact, I actually bought more bitcoin this morning and I’ll probably continue buying more so this is a technique called dollar-cost averaging and it’s one you’re consistently buying over time.
This does help to mitigate the risk so if the price keeps going down I’m just gonna continue buying and when I do that my average buy price will go down on the other hand if the price starts going up I’ll do the same I’m not telling you guys to go out there and spend all your money on crypto because that would be an insane recommendation but what I am saying is now is a better time to buy than one week ago and yes a lot of people are scared and for good reasons,, there’s a lot of new money pumped into crypto as a result of trends fomo stimulus money and a lot of other things and these newer investors are the ones that get scared.
The crypto market there really is not as much historical data as the stock market so it only makes more sense
The easiest and they are probably the most likely to sell for a loss I’ve lost a lot of money on paper in the last week but in reality, I haven’t realized any of those losses I don’t care too much about the unrealized losses because I know I’m not selling anyways so I see this more as an opportunity to buy more crypto while it’s on sale but you don’t know if the sale is going to get bigger tomorrow or the next day so that’s why I use dollar-cost averaging for most of you guys I think a relatively small portion of your portfolio should be in crypto.
So maybe like around five to ten percent and then for the true believers well I know people that have almost a hundred percent of their net worth in crypto with the crypto market there really is not as much historical data as the stock market so it only makes more sense for me to still recommend buying index funds for most people when you’re investing in the s p 500 now you have a lot of historical data backing that up and if you buy consistently over time.
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