Everyone gets into the cryptocurrency space to make money, but not all play out to be winners. Some have raised the white flag along the way after facing a big loss, while others have given up because they can’t properly grasp the proper way to make money with cryptocurrency, especially now that the crypto market has been in a major upheaval in the last couple of months.
The digital currency space has seen Bitcoin’s death almost 500 times since its genesis. Beyond these declared deaths of Bitcoin, we have witnessed how the entire market collapsed big-time five times. These descents took place for wildly unexpected reasons:
- Loss of 850,000 Bitcoin due to the Mt.Gox hack
- DAO hack
- ICO crash
- COVID-19 pandemic
- LUNA/TERRA crash
When these catastrophic events, headlines always say that it’s the death of Bitcoin, the blockchain technology, and everything crypto-related stuff. Such news surely is disturbing and brings an extremely perilous feeling.
The market is in great turbulence because of the perfect storm of headwinds, combing 40-year-high inflation, end to quantitative easing, Russia-Ukraine war, Covid-19 resurgence, trending down of Bitcoin with tech, and TerraUSD/LUNA downfall. But don’t immediately be afraid of these storms, but rather look at the bigger picture.
During the previous market turbulence, resets took place and this industry didn’t just recover from the collapse but also found its way to improve.
When the Mt.Gox Bitcoin disaster took place back in 2014 and disturbed the market, there happened the rise of Trustworthy and centralized exchanges. Back when DAO was hacked in 2016, we’ve seen an upsurge in the smart contract and third-party security audits.
In 2018, when the ICO bubble took place, there happened the rise of decentralized finance (DeFi). And in 2020, during the COVID-19 pandemic, we saw a heavy correlation between traditional stocks and Bitcoin prices.
History tells us that collapses aren’t always for the worst, but for the better. Sometimes, the end isn’t actually the end, but the start of something new. This 2022 market turbulence may not be something we should be frightened of, and instead something we should look forward to.
The best thing about this 2022 crash is that this is the first time people don’t really feel the existential threat of cryptocurrencies, which is so extreme way back. One other piece of good news for the crypto enthusiasts is that there’s a widespread belief that UST/Luna will not lead to crypto market contagion and the traditional financial world bleed. In fact, the entire crypto industry passed a very critical test recently when tether briefly lost its peg on Wednesday, declining to 95 cents before quickly bouncing back its price.
If Tether lost its peg, it could be a real pain for everyone in the crypto industry and could bring calamity to traditional finance as well. But it didn’t, so it’s pretty safe to say that crypto is yet to bid a farewell to this world.
This saga served as a cautionary canard of excess and led to more responsible forms of innovations in the cryptocurrency industry.
Building A Cryptocurrency Portfolio
The cryptocurrency industry is yet to reach its full maturity, but it has been growing at full blast in the past years. People are making millions of dollars by riding on a crypto boat early and selling when prices are high.
More and more people are entering the industry and these newcomers are always trying to find new ways to make money out of it. Here we take a closer look at how to make money crypto market when the market is in turbulence:
Stay Calm
It’s easy to lose cool during market declines. People tend to act on a whim, without even looking at the bigger picture. But these are critical times when you need to act with a cool head. Don’t make decisions driven by emotions, especially when trading.
Before rushing into the market in a panic, ask yourself why you are trading cryptocurrencies in the first place. Are you investing because you highly believe in the long-term opportunity it can offer? Or you are just planning to make a quick buck on short-term trading?
Pondering these questions can lead you to the proper decision. Basically, if you believe in the long-term opportunity, base your decision on that in mind. And if you’re up for a quick buck, think with that perspective.
Remember “volatility” in the name of the game
Whether the market is doing good or bad, don’t ever forget that cryptocurrencies are volatile by nature since they generate no cash flow and only depend on investors’ sentiment to move the price. Hence, the market can wobble between rabid sanguinity as it did in 2021 to cynical despair as it did a few months later.
When you own an asset that is manipulated by sentiment, the emotions of traders drive the market. This is true for stocks too. However, they have a genuine stream of cash flowing from their issuing company to rev them lofty.
Volatility is what exactly entices professional traders, who employ high-powered algorithms to make sophisticated trades, which “mom and pop” traders usually don’t have the advantage of employing. Traders like volatility because it is what gives them an opportunity to make money— a typical Wall Street game.
Evaluate the future
Examine how the fundamental situation could play out for cryptocurrencies, given new developments. Will countries’ governments get tougher on it? Or will they encourage a more widespread adoption? What else can help drive the market?
Determine how countries view cryptocurrencies in terms of regulation and their threats since it can either put cryptos up or literally out of business. Hence, it’s not out of the question that the romantic ideals of crypto purveyors are simply legislated out of reality. But of course, the political implications are but one aspect of their future.
Whichever way you go, you might want an action plan that contemplates your view on the possible risks and opportunities of cryptos. Nonetheless, it’s worth remarking that some of the world’s savviest investors won’t touch cryptocurrencies.
