If you follow the evolution of the price of cryptocurrencies, you will be seeing everything in red, the color associated with the fall in crypto prices. It is not a rare color in any price chart, since the rises and falls are constant, but this one that is taking place seems to go a little further.
Cryptocurrencies are crashing … but before you panic, consider the likelihood of a correction
Are we at the gates of another 2017? It could be but most likely it is a correction. During the last few months, the price of Bitcoin has experienced unprecedented growth, reaching an all-time high of more than $ 58,000. When this happens, all altcoins (in this video we explain what altcoins are) are behind.
In fact, especially during the last few weeks, some altcoins like ADA, AVAX, DOT, BAO, Link, etc … have grown up to 20% without messing up. It is clear that this growth is somewhat abnormal, and when these spikes occur, a correction usually follows. Which seems to be what is happening right now, as there are widespread losses across all cryptos.
A correction is a price drop of more than 10%, which seen on the charts may seem somewhat catastrophic, but after the correction, the price usually stabilizes at the values of the smoothest lateral movement before the peak. That is why corrections and drops (dips) they may be a good time to shop and fill bags.
Personally, my strategy is this: when a very pronounced increase in price occurs and new all-time highs are reached (ATH, as you can see in our glossary), I prepare. When I see a drop of around 5%, I wait until the bounce (if there is one) and sell. From here two things can happen: that I have made a mistake or that, indeed, a correction occurs.
If it is the latter, when the crypto in question has collapsed I buy again (in case the project still seems interesting to me) obtaining much more than before the fall. This can be greatly simplified by setting up automatic orders, which some exchanges allow you to do, as we explained in our last video with the best exchanges to get started in the world of cryptocurrencies.
Remember that we are not financial advisors and that investing always carries risk. Money is never invested that is not willing to lose!