The first half of this year has brought some big challenges on the world stage for Crypto; the crash came like thunder, leaving many investors and exchanges in a precarious predicament. With each passing day, people nervously wait to see when or even if the market will be able to recover. As we have seen in the past, whenever global events impact the bottom line on a grand scale, people tend to panic, which leads them to make rash and emotional decisions. At the moment, even if it might feel right to sell off your coins quickly before the price drops too much, you’d probably end up regretting it in the long run when the value doubles to what it was before the crash. A hasty action leads to a missed opportunity.
Always make your decisions based on logic instead of emotion; it will serve you better, especially with investments. Hopefully, you will find the information helpful in the rest of this article to lead you in the right direction moving forward.
What caused the crash
Before we get into the nitty-gritty, it is essential to understand what happened to the market. As you might know, the value of Crypto took its biggest dive in recent years, with popular coins like Bitcoin falling almost 70%.
While this isn’t new news, some people are still unclear about what caused it. In actuality, several factors contributed to the crash:
- Geopolitical turmoil with Russia and Ukraine’s conflict impacted how businesses conduct business worldwide.
- For example, Western allies banded together to punish Russia for invading Ukraine and went after Russia’s lucrative energy sector, meaning they’ll cut Russian oil imports by almost 90%.
- This is the reason why prices, especially gas, went up.
- This leads to Global Inflation.
- The US federal reserve has been trying to fight by raising interest rates. Even with that, we’ve all felt the pain of seeing the products we use every day double or even triple in price. The conflict in Ukraine, high unemployment, and other economic issues have led to companies raising prices to compensate for the difference.
- Stricter Regulations – Due to its natural volatility and growing popularity among sellers, buyers, and investors, governments are getting more aggressive in wanting to instill regulations on cryptocurrency. This is because they are concerned about how Crypto can affect traditional monetary systems and security.
- With investors being mainly attracted to Crypto because it does not have to adhere to standard regulations of other global currencies, these changes could put some people off of investing, as you can imagine.
With crypto prices being famously volatile, unexpected events and changes can and have significantly influenced the value of digital currencies.
How has the crash affected investors?
As mentioned at the beginning of the article, whenever a significant event causes market assets to drop in value, people will panic and take drastic measures to ensure they don’t lose on their investments. The crash, mixed with Crypto’s volatility, makes it even more true since Crypto has been a gateway for a superabundance of new, eager, and inexperienced investors jumping on the bandwagon of the latest trend in the digital economy.
This inexperience has led investors to make rash judgments in an attempt not to lose profit. Among those most affected were the crypto companies that had to lay off staff, smaller investors who put all their eggs in one basket on “safe investments” and lost big, and some even lost their life savings with the hope of retiring early. All of these losses resulted in over $2 trillion in losses.
How can people navigate the crash while the market heals?
The big question is, how are we supposed to deal with the crash? The first answer is simple and the most important:
- Don’t sell your assets in a panic!
It would help if you hammered this home for yourself and your fellow investors. Jumping back into inexperience, many new crypto investors started with the intention of turning a quick profit and becoming overnight millionaires. This is a mistake; the fact that digital currency value is so volatile shows that you need to think logically and play the long game. Anytime a dip, big or small, it will go up again.
A perfect example is when Bitcoin took a significant dip in 2018, only to rise back in 2021.
- Wait it out and be smart.
Whenever you invest in anything, experts recommend that you put up money you are willing to lose and spread your funds between different prospects of varying risk. Mutual funds are some of the safest low-risk investments you can make. They are slow to build up but worth it in the long run for many as you don’t have to worry about checking them constantly.
If you are set on putting money into Crypto, the wisest way is to divide it among different coins. Put some funds into some of the more prominent names, and the ones that don’t get as much attention as you feel, based on investigation, will rise in price. Also, keep your digital assets protected since cybercrime appears to rise again.
The big takeaway here is to be active and not reactive. The difference is that busy person acts based on a mix of what they see, what they know, and what they learn, while a reactive person acts according to what they see others doing without taking the appropriate time assess if that is the right move for them. So make sure to take it one step at a time; investing is a marathon, not a sprint.