Crypto crash or opportunity? How to make the most of the dip
The Bitcoin price has fallen over 4% in the last week while ETH is down almost 12%.
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Crypto prices are in the red again. Bitcoin has slipped, altcoins are bleeding, and if you’ve just opened your exchange app this morning, you might be wondering if you should hit the sell button.
Market drops like these are a gut-check for investors.
They feel scary, but they’re also completely normal. Crypto is one of the most volatile asset classes out there, and downturns are part of the package.
So what should you actually do when prices fall?
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Don't panic sell
The biggest mistake new investors make is selling into fear.
Prices drop, you sell and then inevitably markets recover without you. But the reality is that trying to time the market is incredibly difficult, even for professional traders.
Instead of panic selling, step back and ask yourself: Did anything fundamentally change about the market in the last week or overnight?
If not, this is likely just market noise.
Get some perspective
Instead of focusing on recent price drops, pull up a 5-year chart of Bitcoin or Ethereum and you'll see a very different story.
Crypto has always moved in cycles and short-term volatility is normal.
If you bought in for the long-term, one bad week or even a bad month doesn't change your overall strategy.
Quality trading platforms will have charting tools that can help you map out crypto rotations.
For instance, Kraken’s market charts and historical data can help investors understand cycles and spot long-term trends.
Consider buying the dip
The old adage of 'buy low, sell high' continues to ring true in crypto.
A market downturn can be a great time to buy good quality cryptos at a discounted price.
In fact this common strategy is part of what drives short-term volatility in the crypto market.
You'll see traders buying in when there's a dip (driving prices higher again) and taking profit once prices rise again (adding downward pressure).
Diversify your portfolio
Having a diversified portfolio is the key to weathering market volatility.
By holding a range of cryptos, you spread the risk of being invested too heavily in any one asset.
It also means you can more safely invest in new (riskier) projects with strong growth potential.
Just make sure to do your research before diving in. For example, read the white paper, check the terms and conditions and dig into the tokenomics.
To build a truly diversified portfolio, you'll need to sign up to an exchange that offers a good range of altcoins.
For example, Kraken offers over 450 crypto assets so investors can spread risk while still keeping crypto as part of a broader portfolio.
Learn more about investing with Kraken today
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