The recent fall of Bitcoin, Ether, and other cryptocurrencies is nothing to panic about. There are three reasons for this fall. The first is very obvious.
1. This is a natural correction. Prices had been soaring for months. Although this is not the stock market, it compares in the sense that following a bullish period, a correction of 5 to 10% is natural and even needed for stability. Corrections in cryptocurrency tend to be wider swings than the stock market. In my experience, when the stocks have taken a tumble, it has been a good buying opportunity.
2. Elon Musk. He had something to do with when he announced he was buying Bitcoin. Then when he recently said that he thought prices were too high, prices went down. They are still up on the year, but when high profile traders like Musk make statements that get passed around on traditional as well as social media, there is an immediate impact, for better or worse.
3. Janet Yellen. When treasury secretary Janet Yellen said that Bitcoin was inefficient, prices tumbled quickly. At one point, Bitcoin had slid 16% in 24 hours, hitting a low around $45,000. Ether also plunged 11% to around $1570.00 in that same period.
How should the average person who has put a few hundred or a few thousand in cryptocurrency deal with this recent downward trend? In my non-professional opinion, I believe it is time to buy more (if you can afford it), or at least wait this one out. In the past, I have literally waited years to watch stocks come back. There have been times I gave up and sold, only to see those stocks return to record highs later on.
The correction will pass. People will likely soon forget about Musk's and Yellen's latest statement as new headlines rise to the top of our feeds. If I have learned anything, I have learned to have patience with the stock market. Although the world of cryptocurrency is different on a number of levels, I believe in the long haul, those who stick with it will make money. Still, if you have unwisely put all of your free money into a high risk venture, then maybe it is time to get out. I remember reading a long time ago, and this is still true today, only put money in stocks (or crypto for that matter) that you are willing and can afford to lose.
