You are probably aware of the huge dip Bitcoin took during the beginning of September. It went from 12,000 to 10,000 in three days. If you are new to cryptocurrency, a drop like this might look something like the beginning of the end.
Fortunately, (or Unfortunately depending on the perspective) This drop is not the craziest in bitcoin’s history. Take a look at what happened to bitcoin during 2017-2018: It went from almost $20,000 by the end of December 2017 to $6,000 in February 2018.
Don’t worry, this is actually normal in the crypto market. Investing in a cryptocurrency isn’t like buying a government bond, stocks or forex. There are no guarantees and no regulations. The price moves all over the place- and just as it can drop like a twenty-ton rock, it can also rise like a missile… Often in very quick succession.
Bitcoin’s volatility can be a blessing/curse, and due to this volatility many people become very emotional when they trade. This could lead to some serious problems. That’s why we wrote this guide so that you do not trade with your emotions.
Here are some things you can do to protect yourself from an unexpected drop:
- Manually setting up a stop loss. You can do this through “Trade Manually” on the left side of your ProfitFarmers Dashboard. By setting up a stop-loss you can have more control over your money and limit your losses.For example, if you bought one BTCUSDT at $100 and you do not want to lose more than $20, set a stop loss to sell your BTCUSDT at $80.
If you want to know more, you may also read the Binance guide on how to set up a stop loss.
- Or set up a trailing stop loss.
What is a trailing stop-loss? According to The Balance, a trailing stop loss is a kind of order that is intended to help you lock in profits while protecting you from day trading losses.
It caps the amount that will be lost if the trade doesn’t work out but doesn’t cap the potential gain if the trade works in your favor.
Simply put, a trailing stop loss follows the price movements at a set distance. You can also configure this inside the ‘Trade Manually’ area.
Read the Trailingcrypto guide to help you set up a trailing stop loss.
- Trade your Bitcoin for USD tethered. If you are uncomfortable with Bitcoin’s volatility, then just selling it is a good option. The U.S Dollar Tethered is a stable coin, meaning that 1 U.S dollar is equal to 1 USDT.
In other words, it is not volatile like Bitcoin. You can do it easily with our quick trade feature found on the right side of the dashboard.
You may want to move all funds to USDT overnight or when you are on vacation for example.
What you can do when you’ve ‘lost’ money from a Bitcoin dip:
HODL. It stands for Hold on For Dear Life. It means just holding on to Bitcoin despite its constant volatility. People HODL Bitcoin because they believe that cryptocurrencies will eventually replace fiat currencies and form the basis of the future economic structure.
That may sound too extreme for most people, but If you look at Bitcoin’s history, HODLing is not a bad idea for the ordinary investor. Bitcoin went from $950 on January 1, 2017 to +$10,000 today. That is a meteoric rise in only three years.
Despite Bitcoin dipping to $10,000 from last month’s highs of +$12,000, the optimism did not disappear. Many experts are feeling confident that Bitcoin will reach six digits in the future.
The key things to take away from this: Bitcoin is volatile, so don’t panic and let your emotions do your trading when you see its price flying all over the place. It’s only part of the everyday hustle.
At the time of writing, Bitcoin had already recovered 50% of the last drop!
TRADE. Yep obvious, we know! But you can look to set sell orders at the price you paid for your coins (or any other price) and wait for the price to return. This way even if you aren’t watching, you can get out for breakeven or a profit later.
Remember that you bought Bitcoin to fuel your trades and accumulate even more Bitcoin. There is nothing to stop you continuing this! #stackingsats