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How to Behave Amidst the Current Crypto Crash

Denis Goncharenko

Since last couple of weeks the cryptocurrency market continues to crash – a big number of crypto coin values are decreasing. This can be bad news for those investors who decided to buy and hold digital coins. Compared to April 2022 when the crypto market capitalization was estimated at $2.16 trillion, the value has extremely decreased in May 2022, which is defined as $1.17 trillion. However, other investors can take advantage of the present market volatility and buy safe currencies like Bitcoin and Ethereum and wait until the price skyrockets again. In order to avoid losing too much money in a volatile market condition, many investors started to use automated tools like Bitcode Prime, which allows traders to set stop-loss orders. With the use of it, traders can protect their money from the risks of unpredictable fluctuations.

What If Bitcoin's Value Keeps Decreasing?

On May 4, when the Federal Reserve indicated that it will fight against inflation without bigger rate rises, Bitcoin temporarily rose beyond $40,000, but the gains were short-lived. For the last several weeks, Bitcoin has been trading in a narrow range, mostly between $26,000 and $31,000.

Wendy O, a crypto specialist, claimed in TikTok market analysis on May 15 that "Bitcoin just received a confirmation that it closed over $30,000," despite the market being "immensely tough" last week. “This week, I expect us to remain in the $34,000 to $24,000 range."

The Fed's tightening of monetary policy, increasing inflation, and geopolitical events are all contributing to the market's heightened volatility. Efforts to control inflation, which fell to 8.3% in April, were the reason for the first-rate increase in 22 years by the Federal Reserve on May 4.

Experts claim that the crypto market is becoming even more connected with macroeconomic concerns due to the recent increase in stock market monitoring and the subsequent decline in the price we've witnessed to begin the year. Similarly, Ethereum has followed the same path. One of the major stablecoins, TerraUSD (UST), is also blamed by some for Bitcoin's recent decline. UST was supposed to be tied to the dollar, but investors panicked and sold out their tokens, causing it to fall as low as $0.9993.

If you're planning to invest in crypto for the long haul, you may expect to see price fluctuations. Heavily fluctuating markets aren't a big deal, according to Humphrey Yang of the Humphrey Talks personal finance blog who says he doesn't monitor his own stocks during dramatic market falls. During the "crypto collapse" of 2017, several major cryptocurrencies lost significant value, including Bitcoin. "I've gone through the 2017 cycle, too," Yang explains. These things are quite variable, like by as much as 80% some days.

When it comes to investing money in cryptocurrency, Yang suggests putting your money in and then forgetting about it. You may have too much invested in cryptos if you find this kind of dramatic decline upsetting. It's best to only invest money that you're willing to lose, says expert.

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