Why is the crypto-market falling now?

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O no! Bitcoin dropped from $42,000 to $32,500 the past three days. If you’re new to cryptocurrency, and you had just bought BTC at $42,000, I could well understand any emotions you’re feeling right now. However, let me share my experience with you and how you can turn this into something positive from here.

Back in 2017, I was a student and I had just bought my first 0.25 BTC, at a price of $2,500 per Bitcoin. $625 was still a lot of money for me back then, but I was interested and considered it well worth the risk. Two days later, Bitcoin dropped from $2,500 to about $2,000. I sold, because I was afraid to lose the rest of my money.

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This was one of my biggest beginner mistakes (What are some of the most common beginner mistakes of cryptocurrency trading?).

I was new to investing and let the emotions get the better of me. Because, a few days later, Bitcoin was trading at $2,500 per BTC again and I found myself buying back less BTC.

Here’s what I learned: It’s not too late to buy Bitcoin. It is however almost impossible to time the perfect bottom.

Therefore, it’s smart to always be in the market and consider downfalls like this to be opportunities in which you can dollar-cost average down. Meaning your average purchase price per BTC decreases, enabling you to profit more from an overall uptrend (which we’re seeing in the current bull market).

Why is the crypto-market falling now?

Corrections in bull markets are normal. This doesn’t mean the market has suddenly turned bearish.

Previous bull markets saw various dips in which BTC fell 20–30–40%, before heading further back up.

2021 is a complete different market compared to the one we saw in 2017. This is something I further explain in detail in my previous Quora posts:

The influx of BTC to exchanges, is far less than the outflow. This has resulted in thinner order books on BTC. This is the result of the (in my opinion) first influx of institutional money. That’s right, the beginning of this influx. Because BTC has gone up so much in such a short time, this has left the buy side with thinner books as well. Meaning we’re now in a more volatile market where 10% moves on one day are normal.

I hope this (and the posts I referred to) provide(s) you with the information you were looking for in today’s market. I strongly believe 2021 is going to be a year of significant growth, do you?

Helpful? Feel free to upvote this post and follow me for more updates and research reports.

This post is for informative purposes only, I’m not a financial advisor and I currently do have a position in BTC and Altcoins. I have not been paid for this post, this post is out of personal interest.

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