There is no denying that the cryptocurrency market is in bad shape right now.
After reaching its all-time high price of $19,783.21 on Dec 17, 2017, the price of Bitcoin has dropped to $3,863.35 as of Dec 5, losing 80% of its value over the course of one year. Other cryptocurrencies also suffered significant drops in price.
Understand what causes cryptocurrency prices to fall
The price drop was reportedly connected to fears of regulations and law enforcement on cryptocurrency. Previously, government investigations on cryptocurrency companies have shown that many of them were unable to provide sufficient documents for registering ICOs. If forced to pay out penalties and reimbursements, these companies could go bankrupt.
Additionally, the current ICO market is still notoriously shady in the eyes of investors, with reports saying that up to 85 percent of ICOs are scams. A study also found that up to 56 percent of cryptocurrency companies are closed within four months of their ICOs.
Eventually, investors who have got stuck with bad deals and lost their hard earned money are likely to pull out of cryptocurrency investment, which led to the massive market downturns as we see here today. As the prices fall and fall again, more investors become frustrated and feel the urge to retreat.
However, the thing is that people sell their crypto asset and decide to quit and never invest in cryptocurrency again when they see the market dip because they don’t believe in the future of crypto. For the people who say that blockchain and cryptocurrency are the future, they would not pull out of the scheme so quickly.
Know when to make your cryptocurrency investment
The basics for investing is clear: dive in when everyone else is doubtful, and be doubtful when everyone else dives in.
Every seasoned investor knows that the right time to start investing is when the price falls, but it is essential to know in advance what causes the price to drop. Once those problems are fixed, we can know for sure that the market will rise again.
Since we have identified the main problems, the period before the solutions are found is the ideal time to buy in.
The solutions could come from every corner: from governments who might consider adopting cryptocurrencies into their systems and set a clear body of guidelines and standards for cryptocurrency companies, or from further innovations on the current blockchain technology.
Many believe that in a year or two, the market will finally start to recover as solutions come in, but in fact, it might take even longer than that since the falling has been happening for a year already and nothing significant has happened.
This is why staying confident when facing downward trends is important, because what you are investing in now will grant benefits in long-term rather than short-term.
What to keep in mind when making cryptocurrency investment now
If you are a believer and confident about the future, the huge discounts offered by the current market is the investment opportunity that you need.
However, be cautious and be selective, since not all of the coins will recover and you could lose your investment. Only the coins with high potential and an active development team could take you through to the end.
You should keep your eyes on the news to know when the market starts to pick up itself, or if the current price could still go down much further. Also, do careful researches to identify good projects from an ocean of bad ones.
It is your hard earned money, so there is no reason to invest blindly.