Cryptocurrency Investments -What Goes up Must come Down
Why is this Crypto Token dumping? Why has the price dropped like this? Why is the price pumping? If you are in Cryptocurrency investment groups I am sure you have seen these types of questions being asked by the investors. At times you would not tell if someone does not understand how the Markets move or Maybe he is just trying to FUD and cause panic amongst investors.
Let's assume they don't understand how markets operate
They might be asking honest questions so we have to tolerate them and help them understand the process. Some just got into the cryptocurrency after they heard that you can make millions with cryptocurrencies and they invested. So when they buy a certain token they will be enjoying the ride expecting it to get to the moon, but when the market gets exhausted you will then that seeing questions like those. I will try my best to do some explanations for the benefit of those new friends of ours.
In cryptocurrencies there is pumping and dumping, so you might get into the market and buy your token when it's in the pumping process. When the price reaches a previous bearish order block or the last price zone when it sold massively the price will again fall. So those who were holding will take their profits on those levels and the price will drop. That is when you will be wondering why the price is dropping. Not every investor is a long-term investor, some are just day traders so if you are a long-term investor you should not pay much attention to the price movements.
There is also another alternative provided you know the order block zones, lets's say the price reached the bearish order block you can also take your profit and buy stable coins like Tether USDT or BUSD so that you maintain the balance of your portfolio. When the price is done with the bears and ready to go up again you then re-enter and buy. I think when you do this you should not liquidate your whole portfolio, maybe 50% or 75% will do just in case the price keeps ongoing.
If you are a long-term investor taking profit might be a bit tricky because you can not tell if the market is just retracing a little bit or it's a reversal. See the above image of Axie Infinity, it has an all-time low of $0.1234 then after a year on the exact same date it had an all-time high of $165. Let's say maybe you took your profits when Axie was at $7, how do you feel seeing it hit that all-time high. So sometimes you would not know for how long it will pump but I think it's wise to focus on the bigger picture and when taking profit do it on certain levels to give room if there is any possibility of continuity on the bull run. Avoid being amongst the panic sellers because fortune favors the brave and those who are patient enough to hold on to their tokens will rip and enjoy the fruits of being patient.
Another thing that might help you decide where the future of that token is headed is looking at their Whitepaper. If you see that they still have a lot to take care of I think it's not wise to take profits early because you might not know when it will skyrocket. If you look at Cronos, their 20 year deal with Staple center can simply tell you that a lot will happen in terms of developments and price movements. I am sure by then maybe it will be the biggest centralized crypto exchange platform in the world and their token might be worth 100's of dollars.
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