What to do when the bitcoin value drops?
As many people interested in trading or investing know, the value of things fluctuates – and this can be seen in all kinds of markets. One such market involves bitcoins, a cryptocurrency that is popularly traded on exchanges around the world both as an investment and for its uses when it comes to trading.
So why might someone want to invest in bitcoins? Well, the virtual coin has been known to increase in value hundreds if not thousands per cent within a very brief period. However, it’s worth noting that this is not a guaranteed thing – the value of bitcoins can also decrease. There are some things you could do if this happens:
- If the cryptocurrency starts decreasing in value, the first step you want to take is to remain calm. As with any change or fluctuation in price, staying level-headed will help you make important decisions during these times.
- It’s worth noting here that there isn’t much anyone can do except watch and wait until the market stabilizes again – which could be a few days or weeks, depending on how severe the change of value is.
- If you have both time and money at your disposal, this could be an opportunity for you to invest more in bitcoin. At the same time, its price is low – so gathering up all the bitcoins you can afford may help increase your overall amount later on when it begins to trend upwards again.
- You will want to ensure that any trading you do during these times is done with what we call ‘limit orders’, not ‘market orders’.
What would cause the value of Bitcoin to drop?
Another cryptocurrency takes over
When another cryptocurrency takes over, it could mean that there would be less demand for Bitcoins to use as an investment or for trading. This lack of demand will cause the value of Bitcoin to drop.
A government ban on cryptocurrency trading
Suppose a government announces that it will no longer allow its citizens to possess or trade with any cryptocurrency. In that case, it could mean trouble for those who rely on such currencies as an investment or as something used when earning money online. This news will inevitably make the value of every single cryptocurrency – including bitcoins – go down within time, if not immediately.
Over-speculation and manipulation
The bitcoin price can sometimes sky-rocket or drop suddenly because of over-speculation or manipulation. If individuals are eager to buy or sell bitcoins, this price fluctuation will continue. It also affects the overall value of bitcoin, which can go up and down in no time at all.
Bitcoin theft is something that happens from time to time. When hackers manage to steal a considerable amount of bitcoins from personal accounts or exchanges, it could mean that the value of Bitcoin will decrease due to their fears about not being able to trust this cryptocurrency anymore. As always, however, only time will tell if this decrease means anything significant or not.
What are the benefits of trading with Bitcoin?
Bitcoins are a decentralized cryptocurrency
Bitcoin is not regulated by any central authority, bank or financial institution. It goes through minimal third party manipulation and intervention, which often makes the value of other traditional currencies fluctuate.
Bitcoins can be conventional or unique
One benefit of using bitcoins as a significant trading currency is that you can use them for things such as buying goods online or sending/receiving money from overseas. Still, they can also be highly unconventional if someone wishes to use them for investing purposes. For example, many individuals have made bundles of cash simply by trading in different types of cryptocurrencies – including Bitcoin – when prices change.
Bitcoins aren’t free from hackers and thefts
Because any authority doesn’t monitor transactions with bitcoins and trades with this cryptocurrency, hackers can try and steal your identity by stealing your bitcoin wallet. However, there are means to ensure this doesn’t happen to you – such as using VPNs or virtual private networks which encrypt all of the information being sent back and forth so no one can get their hands on it without proper authorization.
You can read more here.
We just suggest, never panic when the price drops. Just let your coins be there in the Bitcoin wallet. The price is sure to fluctuate, but holding the Bitcoins during its drop is the best option.