Monday, 13 July 2020

Is Bitcoin just a temporary phenomenon, or will it survive multiple dips?

The value of many of cryptocurrrencies have reduced a lot in the past few months, confirming that we are indeed in a bear market. Times like this is when the potential for massive profits is at it’s highest.

There are two popular sayings in the investment world and I will go through them both.

You don’t make your money when you sell, you make your money when you buy

The first saying refers to the fact that profit is all about the margin between the buying price and the selling price.

For example if you bought Bitcoin when it was $900 and sold when it was $15,000 you have made a $14,100 profit. Now if you bought Bitcoin when it was $8,000 and sold when it was $15,000 you have made $7,000 profit.

Another example is Ripple, if you bought $1,000 worth of Ripple when it was $0.05 and sold when it was $0.52, you would have made $10,000.

Now if you bought $1,000 worth of Ripple when it was $0.20 and sold when it was $0.52 you would have made $2,600.

Buying into a cryptocurrency when it is cheap allows you to gain more profit when the value increases. However this does not mean that it is too late to buy since we are still in the early stages and have quite a long way to go.

Be greedy when others are fearful and be fearful when others are greedy

The principles of this saying are similar to the one above however this saying advises people to be wary of buying into an investment once it skyrockets and everyone starts buying in.

A good example is the 2017 period for cryptocurrencies when Bitcoin grew from $900 to $20,000, at the beginning of the year the average Joe didn’t even know what Bitcoin was, but as soon as the price blew past the $2,000 mark people started to talk.

Once the price of one Bitcoin blew past $15,000, all of a sudden everyone was talking about Bitcoin, people who barely even understood cryptocurrency where putting money into it.

Bitcoin’s price continued to spike and it reached $20,000, by this time EVERYBODY wanted to invest in Bitcoin. Sadly jumping on the bandwagon doesn’t always work out. The price soon dropped and declined to it’s current price point of $6,600.

The funny thing is, this has happened before and the price will rebound, so anyone who has bought high and sold low will probably regret it. At the same time, anyone who bought in before Bitcoin was $6,000 is still in profit and they will be in even more profit once the price recovers.

By Phillys Larusso
source: Quora 
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