The cryptocurrency market battles such extreme volatility that many people who understand the markets tend to take advantage of it. While the cryptocurrency ecosystem promises massive returns, a stint of caution is also exercised, both by crypto coaches and exchanges according to required regulatory requirements.
Besides these, the onus lies on blockchain media outfit to make prospective investors understand the risk in making cryptocurrency investments, which sometimes, may bring more losses than any potential high return expectations.
Navigating the crypto space based on the market dynamics may seem an arduous task, this is one major reason why investors consult established trading or crypto investment services firms like the Grayscale Bitcoin Trust, to take charge of their investment transactions. This is not to discount the high rate of activities from sole investors and traders, a group, collectively known as the retail investors.
The market moves in response to the forces of buying and selling, just as it is in traditional markets. When the demand for Bitcoin is higher than the supply, the price of the asset moves higher and marks a bullish move. On the other hand, if the market is dominated by those who are selling off their holdings for whatever reason, the prices of Bitcoin fall, marking a market crash.
The market buyers are generally known in the crypto space as the bulls, while the sellers are the bears. The past week has been characterized by a series of switches from periods of highs and lows, as the bulls and bears fight to take control of the market. For the better part of the previous week, however, the bears appear to dominate.
Action Point for Investors with Technical Knowledge
During the period when Bitcoin experienced one of its recent price dips, the CEO of investment firm Ark Invest, Cathie Woods, correctly noted in a Bloomberg interview that she’s “very positive on Bitcoin, very happy to see a healthy correction here.”
It is worth noting that downward swings in the price of Bitcoin or other cryptocurrencies as it were may not necessarily be a call for a market crash, no matter how long they tend to last, but rather a mere correction.
There is practically no mainstream market that is built solely for buyers. Selling activities are imminent, and after every increased buying spree, a healthy correction is to be expected.
In the cryptocurrency ecosystem, these corrections occur more often, and the volatility tends to make them more resounding. These moments also coincide with the time when many get involved in panic selling.
A major action point for investors with knowledge is to acquire more of the dumped cryptocurrencies, in what is being known in the crypto-space as “Buying the Dip.”
What if Buying the Burns
The influx of new funds from corporate entities is helping to stabilize the market more, a development that was once absent in the crypto-space. Besides mainstream investors, some government bodies, such as the City of Miami are already embracing the realities of Bitcoin potential, granting tax remittance using digital currencies amongst many other things.
These and more factors are helping to establish investments in digital currencies as a futuristic venture, as space is bound to bloom more with more mainstream adoption.