Bitcoin crashed over 25% last week. And it took the whole crypto market with it.
Make no mistake; crashes are always painful.
As Livy, a famous Roman historian, said, “Nothing hurts worse than the loss of money.”
But is this really a loss?
Not really; it’s never a loss unless you sell.
It’s obvious that crashes are exciting news, but they don’t need to be a source of anxiety.
There are many ways to cope with a market crash, but here’s how I choose to deal with them.
Realize that volatility is a necessary evil
Guess how many times Bitcoin crashed in its history?
1? 4? 8?
With the current crash, it’s 14 times.
Some of them were quite horrific. For example, in 2013, Bitcoin lost 87 percent of its value in three days.
Don’t get me wrong; volatility is frightening, and it usually scares away many people. But the smart money is unaffected by it.
Smart money knows that you need volatility to get price appreciation. And smart money also knows that innovation almost always leads to volatility. And Bitcoin, as one of the best fintech innovations of the century, thrives on it.
Remember that this too shall pass.
The behavior of Bitcoin during its 12-year history emphasizes one point:
Crashes never last.
Sometimes the market recovers with lightning speed. Other times, the reversal of a crash takes years.
Take the crash of 2017, for example. It took more than three years for Bitcoin to return to its peak levels.
Bitcoin always recovers, so invest long-term and ignore the short-term price movements.
According to FactSet data, missing 100 top days in the stock market could reduce your return on your portfolio by 200%.
As legendary investor Warren Buffett said, “Our favorite holding period is forever.”
So don’t try to be a hero and HODL.
Use crashes as an opportunity if you dare
Crashes in Bitcoin price are nothing exceptional. So, let the media and haters argue for or against them. The crowd is always wrong anyway.
Your job is to keep your hands steady and accumulate more Bitcoin after each dip. In an up-trending market, it’s a viable strategy.
The smart money drools for their occurrence. It’s evident from recent years that buying on dips has been an easy way to boost your profits.
Large dips lead to high returns.
In summary, if you don’t have enough courage to buy on dips, at least try not to sell when they occur.
Keep holding and mentally prepare yourself for the next one when Bitcoin reaches $100,000.