People believed that bitcoin would rise all the time, and it started to rise. Once the double-digit and unsubstantiated growth started, there was no stopping it. Everyone wanted to jump in the rocket that would take them to a millionaire’s paradise. But remember that cryptocurrency requires attention, so you should constantly be interested in updates and use crypto alerts.
Bitcoin: Where Does It Come From and Where Does It Go?
The explosive growth of the exchange rate was provoked by people’s irrational faith and ignorance of the laws of the market. The thirst for quick profits is what caused the tremendous growth of bitcoin.
- It is important to understand that all market instruments have their laws, their life cycle, and fundamental reasons that affect the price.
The rise in bitcoin was originally planned for later speculation. As soon as it peaked, the big professional players began to sell. Mid-level players followed. Meanwhile, “crypto humans,” on the other hand, waited in hopes of a miracle and lost everything as a result.
Not a fall, but a correction of the crypto market
Those who want to professionally engage in investing need to look at the market in the long term hindsight and perspective. Then it becomes apparent that nothing much is happening right now. Everything follows the same scenario from year to year. First growth, then a price correction, then a rebound again.
The potential for the growth of the rate is huge
The main reasons for the high volatility of the rate are speculations and low demand. Yes, yes, low demand, which is caused by a limited number of crypto-industry users.
Thus, according to a study, only 8% of Americans own cryptocurrencies, while globally this figure is less than 1%. According to various estimates, no more than 25-30 million people on the planet use cryptocurrency, and they have created a capitalization of about $300 billion. That’s negligible.
Irrational and rational: why the crypto market will grow
Blockchain technology is increasingly penetrating different areas of our lives, and the number of active users is increasing. This leads to an increase in demand. As for speculation, this is a feature of any market. It is important to understand that users’ belief in cryptocurrency is initially irrational. People are guided in their actions by the opinion of the majority.
For the last five years, people have been led to believe that bitcoin will be worth $50,000, $100,000, and $500,000. People want to believe that. And no matter what arguments are put forth, they won’t change their beliefs. Because everyone has seen bitcoin go up year after year. That is why somewhere in their subconscious mind there remains the idea that despite the fall, growth is inevitable. If bitcoin keeps falling for two years, then even the most desperate optimists may change their minds.
However, there is every reason for bitcoin to rise in the long run. As I said above, the new technology is becoming more popular. The community is growing and developing. The process of legalization of the crypto market is actively going on, which attracts new players and big money.
Another question is, how to make money in the market, where there are no rules, and the irrational behavior of users has a significant impact on the rate. You can always make money, but there are some important things to know.
The golden formula for the crypto market
There is a formula for success in the crypto market. If you ignore it, it is easy to get into the risk zone. And those who keep it in mind have never gone negative. If you take a cryptocurrency, forget about it for three years. Hide the keys in a safe and forget about the rate.
As a basic strategy, you can stick to the following algorithm: invest some fixed amount in the selected cryptocurrency every month, no matter how much it is worth at that moment. Such a strategy for three years helps an investor stay in the plus zone for almost 99.9%.
Three “don’ts” for safe cryptocurrency trading
- Don’t break the golden rule of the cryptocurrency market: buy a cryptocurrency – forget about it for three years
- Don’t panic. Do not pay attention to the volatility. If the rate suddenly went down and everyone is shouting that all is lost, don’t give in, don’t take any actions. Remember the rule of the first three years.
- Do not play with the exchange and do not play the exchange, if you do not have special knowledge. 97% of all traders lose their money within 3-9 months. Crypto exchanges today are unregulated, have no licenses, and do not guarantee the safety of your money. Trusting them with your money is an unreasonable risk.
Conclusion
Remember that the most important thing when playing in the market is to carefully weigh the risks of your own decisions. Do not stop believing in the crypto industry, because everything is just beginning.