Should I invest in crypto market when it is crashing?
The financial markets are notoriously volatile and the price of cryptocurrencies fluctuates on a regular basis. But if you’re an experienced investor, you’ve likely come to expect some level of volatility. It’s the price of admission for the people who want to participate in this emerging industry. However, it is never good to lose money, and many popular cryptocurrencies have taken a beating lately.
In fact, the crypto market has dropped 30% from its high in November 2020. There have been recessions before, but I doubt this will be the first time the market crashes. Ethereum is down 30% from its all-time high, but it is still the second most valuable cryptocurrency.
All the meme tokens that are running on Ethereum blockchain are also showing the effect of this market crash. The big meme tokens such Dogecoin and Shiba Inu are showing some steadfastness because of their strong communities behind it.
Reasons why the crypto market crash?
Two important events in the cryptocurrency space have sent Bitcoin’s value plummeting to its lowest level since early June 2018. Investors are freaking out over fears that cryptocurrency will be a victim of increased regulatory measures around the world.
Currently, Bitcoin is valued at $42,840 , down by over 6 percent over the past day. On global exchanges, the price of one Bitcoin has lost almost 9 percent in a day.
The U.S. Federal Reserve will essentially stop printing money and make it more expensive to borrow in order to stabilize the economy and keep inflation in check. Meanwhile, Kazakhstan, the country which accounts for a large 18 percent of the Bitcoin network’s hash activity, saw a nationwide Internet shutdown, causing its hash rate to drop by 13.4 percent, reflecting a sharp drop in Bitcoin’s value.
Ethereum also effected with Market Crash
The second-largest cryptocurrency by market capitalisation also took a dive. The ERC-20-based cryptocurrency went through a sharp correction this week. Investors saw a dip of about 9 percent in the price of the Ethereum-based currency in the past 24 hours. So did the coins and meme tokens associated with it that are using its blockchain.
Ether’s price spiked by almost 100% in January 2018 and has been holding the trend since then. It has a total market cap of $15.5 billion and is ranked #22 among all cryptocurrencies. Ethereum’s price has been volatile this past week. In the past, Ether’s price has increased by 20 percent.
It’s been a bad time period for the entire crypto market as stable coin (USDC) appears to have gained the most in value. Other than that, Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH) all seem to have been affected by the current cryptocurrency volatility.
Meme coins such as Dogecoin is down nearly 70 percent from its peak value of almost $40 on Aug. 9.
Meme token Shiba Inu is down 61 percent, Shib’s value has decreased by 2 percent over the last week, while Dogecoin has dropped by 3.9 percent over the same period of time. The drop in price is being attributed to a “strong [crypto] dollar.
What should Bitcoin investors do?
The crypto market experienced volatility in April when Bitcoin briefly rose to a high of $65,000 before crashing by over 50%. Factors such as the news from Tesla and the Chinese government impacted the market, causing a dip in prices.
Even though Bitcoin has been around since 2008 and has a lot of investors, there is still a lot of volatility and no one knows if the price will continue to go up or down. If you decide to invest, be willing to lose your initial investment if you don’t want to sell.
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Bitcoin and crypto including meme tokens will continue to be volatile, but that doesn’t mean you should jump into it without doing your research. Wait until the market trends up, so you don’t get stuck with more than you want to own.
But if you decide to invest in crypto, it’s important to remember that financial advisors suggest only investing a small percentage of your overall portfolio in risky assets like cryptocurrencies. I would recommend that you only invest a small percentage of your portfolio in these risky assets. Meme tokens are relatively a safer investment to make as they are backed by communities loyal to them.