Warren Buffet once said: “Be fearful when others are greedy and be greedy when others are fearful”. Did most people make a huge mistake by riding the cryptocurrency hype train?
Bitcoin plunged in value from $20,000 down to $12,042. Unfortunately, Bitcoin wasn’t alone. A lot of other cryptocurrencies plummeted along with the gold standard of virtual currencies. For a lot of newbies, is this a sign that you should cash out while you still can? Or should you stay and wait for another comeback? In reality, no one could ever have a definitive answer as to why a lot of cryptocurrencies are also experiencing a bearish trend recently. However, here are some possible factors that could have contributed to this nightmarish scenario.
Let’s give cryptocurrencies the benefit of the doubt. December is notorious for draining bank accounts. And given the initial spike in the value of cryptocurrencies, it wasn’t surprising how a lot of people could’ve cashed out to spend for the holidays. End of the year is also the most likely time when short-term investors cash out of their winnings.
Cryptocurrencies Are Hedged to Bitcoin
Bitcoin is the gold in the world of virtual currencies. This only means that it is most likely to affect every altcoin today whether it goes up or down. Admit it or not, every altcoin is hedged to Bitcoin being the benchmark of cryptocurrencies.
A Possibility of Market Manipulation
In a report made by Bloomberg, it was revealed that a group of 1000 investors own 40 of circulating Bitcoin. This means that there is a chance that a large group may have dumped their shares and cashed out. This could scare fair-weather investors who just started to buy the cryptocurrency without realizing the risk. And with more random investors selling their shares at a much lower price, it is possible for these large players to buy back their Bitcoin shares and wait for another surge in the price.
It Was Actually a Bubble
Lastly, let’s admit that there is a probability that the cryptocurrency bubble may have popped already. One of the things experts dislike about the cryptocurrency is the fact that it is highly volatile.
So what should you do at this point? Before you even make a decision, you will need to consider a couple of things first.
There are a couple of things that Bitcoin has revealed for less than a decade that it has been around. One, Bitcoin in its history has always bounced back. Also, it bounces back together with other cryptocurrencies, though there are other inevitable casualties as well. And next, you also have to consider the currently increasing demand for the technology which made Bitcoin and all other cryptocurrencies possible.
Should you just cash out and cut your losses at this point or settle for whatever profit that you have? Or should you still wait around? In reality, no one really has a concrete answer. At the end of the day, cryptocurrencies can be a gamble. This means that you either win or you lose. However, there is always a chance to generate a good amount of profits along the way.