It’s no secret that the cryptocurrency market is influenced by volatility. Investors have seen the cryptocurrency market crash and then soar to new heights in a flash. Profit-builders have long been drawn to the space because of its volatility. On the other hand, for investors looking to build a long-term crypto portfolio, this aspect may be concerning.
The recent cryptocurrency market crash has sparked a global panic. Assets have been crashing hard, with top tokens losing a significant amount of value.
Bitcoin, the most valuable cryptocurrency, has dropped below $23,000 after a long time. While the current crypto market crash assures us of the potential for crypto assets to fall and emerge, it is also critical to remain well-prepared.
First, let’s know, why the crypto market is crashing?
Over the last few days, the cryptocurrency market has plummeted to an all-time low. Its value has dropped by nearly 56%, causing concern among investors around the world. Numerous factors, according to experts, are at play.
To begin with, the global financial market is grappling with rising inflation. Russia and Ukraine are becoming increasingly tense, while Sri Lanka’s economy is becoming increasingly unstable. Another major source of concern is that the Indian rupee has dropped to a new record low against the US dollar of 77.69. The current events have a significant impact on the financial market’s performance.
Simply put, there has been a decline in value across the investment spectrum. The crypto market, on the other hand, has taken a much bigger hit as a result of the rapid sell-off sentiment among investors. These factors add up to putting a lot of pressure on the overall performance of crypto assets.
How to Prepare for a Crypto Market Crash in Advance?
In the event of a crypto market crash, there is no need to be surprised. Investing experts recommend planning ahead of time and rebalancing your portfolio during these downturns.
Stay tuned to this blog to know how to Prepare for Crypto Market Crash.
As with any other market, you must first thoroughly understand how it operates. Take some time to consider the peaks and valleys, as well as the long-term implications. Examine less well-known assets on the market, such as Bitcoin.
It is the holy grail, containing all of the information you need to know before investing. Making well-informed decisions will be aided by conducting appropriate research.
2. Diversify your Crypto Portfolio
As the adage goes, “never put all your eggs in one basket.” Because most projects are still in their early stages, it is a better strategy to invest in multiple tokens based on similar technology rather than just one. Diversifying across multiple DeFi projects, for example, is preferable to investing in a single DeFi token.
3. Invest for the Long term (HODL)
There are numerous perspectives on cryptocurrency investing. Some see it as a good short-term speculative buy, while others want to get in on what could be a game-changing technology. Taking a long-term view is an excellent way to avoid panic selling when prices fall.
If you intend to hold for the next five to ten years, you are more likely to conduct thorough research before purchasing. And it’s easier to see a market crash as part of the cryptocurrency’s volatility.
4. Keep an Emergency fund
An emergency fund can help you secure your interest. In the event of a sudden downpour, it serves as an umbrella. You should always be prepared for unexpected financial disasters. Try to keep at least six months’ worth of living expenses on hand. This way, a sudden tidal wave, such as the crypto market crash, will not have as much of an impact on you.
5. Do Not Become Disoriented
Investment assets have always risen and fallen in value. Don’t be thrown off by the sudden changes. Keep an eye on your emotions and don’t let them interfere with your investment journey. Investment decisions must be made with caution and logic.
6. Don’t try to Time the Market
Market timing is neither a feasible nor scalable investment strategy. To take advantage of rupee cost averaging, it is best to make small investments at regular intervals. This allows you to average out your buy price over time and protect your market entry from volatility.
Has the Crypto Market Crashed Before?
Economic downturns and sudden market drops are natural occurrences in the economy. These stressful times help to build a healthier system. It is not the first time the crypto market has experienced a tremor. There have been dips with long-term highs over the years.
Back in July 2021, the crypto market experienced a jolt downward before rising. Bitcoin, the world’s largest crypto asset, fell to $22,115 (as of June14, 2022), similar to January 2021. It has now lost more than half of its value since reaching a high of $68,990 in November 2021.
It is a huge opportunity for crypto investors to buy on market crash and hold for the long term to get the maximum benefits from your investment journey.
Start your investment journey with the best platform to buy cryptocurrency in India.
These turbulent times may have shaken you, but they also present an opportunity for greater development. The crypto space’s long-term fundamentals are in place. Reconsider your motivations for entering the crypto space.
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