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Bitcoin's Dramatic Plunge: What Investors Need To Understand Before Investing In Crypto?

 

January 26, 2021 (Investorideas.com Newswire) Bitcoin seemed to be riding high in early January, surging to new record highs and then wiping hundreds of billions of dollars from the cryptocurrency market only a few days later.


This epic run involved bitcoin hitting almost $41,000 on January 12th. Only a few days later, the digital currency fell about 15%, wiping out $200 billion from the crypto market which had managed to reach 1 trillion, in just 24 hours.

The next week after was no different. The bitcoin rollercoaster continued with its price fluctuating constantly. This volatility shows why curious and prospective investors need to pause and learn about the market before rushing to put money into the crypto world. Here are 5 things you'll need to understand before entering such a volatile and dynamic market.

Timing Is Key

Cryptocurrencies, such as Bitcoin or Ethereum, are inherently highly volatile and so can fluctuate wildly with little to no warning.

Therefore, it is essential to know the right time to enter the market and leave when deemed appropriate to do so. Proper research will be required to identify some key factors to be able to make better, informed decisions. Generally, cryptocurrency investors try to, what is known as, "buy the dip" which essentially means that they will purchase more quantity of an altcoin when its price falls.

Watch Out For Scammers

Ever since Bitcoin exploded on mainstream media, the crypto space has been plagued with fraudsters and swindlers lurking at every corner waiting for their next prey.

Sometimes on social media, there is a lot of hype about a particular investment exchange, app, or strategy that promises very high returns from obscure digital assets. Other scammers lure people in through attractive giveaway schemes and offers that have the sole aim of gaining access to their information. Fake ICOs (initial coin offering) are also very common, hence, practicing caution while picking out exchanges or checking out giveaway schemes or attractive offers on social media is absolutely crucial.

Only Use Reputed Trading Programs

Many trading programs are essentially trading bots that use advanced technology to generate powerful and effective algorithms to take advantage of short-term crypto booms resulting from their highly volatile nature.

However, a number of these programs or trading bots are fake. Some of them have hidden fees that are not initially disclosed and only revealed when a trader has started using it while others eat up your crypto coins after you invest money into them.

Therefore, it is best to only use well-known or reputed programs, such as the bitcoin future trading app, so you can easily earn profits without even being a daily trader.

Beware Of FOMO

Some popular cryptocurrencies such as BTC or Ethereum can be seen on a bull run from time to time, reaching new record highs. However, the bull market is extremely volatile with prices sky high one minute and down to earth the next.

Hence, proceed with caution as buying into bitcoin at very high prices can result in stomach-churning losses real quick.

BTC Can Be Bought With Traditional Money

A number of cryptocurrency exchanges are now available, such as Coinbase that are tailored specifically to novice investors. These allow new investors to buy digital currencies by means of their debit card, credit card, or even just their bank account.

Over the last few years, significant waves have been made in the financial payments sector with many big institutions such as PayPal and Square now offering crypto payment options.


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