Advice for New Crypto Market Investors: Consider Bitcoin Shares

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The cryptocurrency market has been going through a rough patch lately, with Bitcoin prices experiencing a drastic downward movement in the early hours of March 3. This has caused the Bitcoin rate to plunge to around $22,000, validating the prediction that the Bitcoin course was about to make a directional determination. The crypto money has dropped about 4% during the last 24 hours of trading, which was the largest Bitcoin sell-off so far this year and came as a surprise to many investors.

For seasoned investors, this should not be too much of a concern, but for those new to the crypto market, considering Bitcoin shares instead of investing in large amounts of whole Bitcoins is recommended.

Brief Overview of Recent Developments

  • More than $62 million in long BTC positions were liquidated within a matter of hours.

  • This is the third liquidation cascade in the past 12 months, following the Terra crash and the FTX bankruptcy in 2022.

What should be done now? Forecasting is very tricky. Some think that the market has been significantly oversold and is going to stabilize soon. On the other hand, the current negative funding rates are giving the buyers a strong incentive to enter the Bitcoin market.

It is expected that the Bitcoin price will temporarily recover, which is supported by the positive signals from the US stock market shortly after the Bitcoin crash.

All in all, the situation for the Bitcoin course will remain uncertain in the upcoming weeks and months. Experts see both positives and negatives that can affect the rate. Consequently, investors should keep a close eye on the developments and adjust their investment decisions accordingly.

Correction with a Quick Shock?

Despite the recent price correction and negative news, the fundamentals of the Bitcoin network remain solid. Network activity shows that the hash rate, which measures the total computing power of the proof-of-work network, continues to grow.

The hash rate has almost doubled since November 2021, despite the fact that the rate has fallen significantly over the same period. The number of active addresses on the Bitcoin network has also increased despite the current market conditions, suggesting increasing demand and use.

Are the fundamentals the most significant variable? The positive fundamentals of the bitcoin network could soon push prices up again. The negative impact of the Silvergate issues may also be limited, as the crypto bank is relatively small and its impact on the whole market should be limited.

The Bitcoin options market has also calmed down somewhat, meaning there is less risk of panic selling or huge liquidations.

In addition, there are other signs that Bitcoin could rise again soon. A major factor is the high demand for Bitcoin ETFs, which has grown steadily since their launch in October 2021. Institutional investors are also showing increasing interest in Bitcoin, which is reflected in the increasing volume in the futures markets.

How can Bitcoin investors respond during phases of unpredictable developments?

Below are some approaches that investors can take in such phases.

Diversify: Bitcoin investors should diversify their portfolio to protect against unpredictable developments in the crypto world. Diversification can be achieved by investing in different cryptocurrencies such as Bitcoin, Ethereum, as well as stocks and other asset classes.

A stop-loss order can help minimize the risk of loss by automatically triggering the sale of bitcoins when the value drops below a certain level. However, a stop-loss order cannot guarantee that the sale will occur at the desired price – at least in the case of strong market movements or high volatility.

Anyone who uses technical analysis can also identify patterns and make decisions: Comprehensive technical analysis can help determine market sentiment and make informed decisions about buying and selling bitcoins. Key support and resistance levels are important.

Generally speaking, risk management is especially important: Bitcoin investors should have a clear understanding of how much risk they are willing to take and how much they are willing to lose.

If investors adjust to events like Silvergate, FTX and similar “crises”, these will not be able to change the long-term strategy and the successes of investors.

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