How to win the race of your dreams from an underdog
You may have seen the headlines this morning: “Bitcoin bulls flee after Bitcoin price falls below $1,000.”
But for the majority of us, it’s a matter of life and death.
“There is a big chance we are going to be caught off guard,” said James Mancini, a fund manager in Sydney who started investing in bitcoin in 2008.
“The Bitcoin rally has been going on for two years and there’s been no end in sight.
If you’re an investor, you need to prepare yourself for a very steep drop.”
How to get a better return from the big drop In the case of a big sell-off, investors have a couple of options.
They can buy the currency to hedge their exposure, or they can hold on to it until the inevitable price correction.
If the Bitcoin price rises, you can sell your position in Bitcoin for a profit.
This strategy works if the Bitcoin rally is not severe enough to trigger a bear market.
But if the rally is too rapid, the chances of a sell-out decrease.
A bitcoin price crash could trigger a sellout as the price falls so low it makes buying more risky.
There is a risk that investors who hold bitcoins will lose their bitcoins in the short-term, and may never get back their money.
“If you’re a small investor, then you can’t afford to be so nervous,” said Mr Mancinis.
If Bitcoin crashes, investors who bought in the rally will lose even more.
“You’re in a bubble right now, but if you buy in and sell out, then the bubble will burst and the price will fall to zero,” he said.
You’ve got to put your money in something that is more secure than Bitcoin. “
When you see a price drop, you have to sell.
You’ve got to put your money in something that is more secure than Bitcoin.
That means if Bitcoin crashes and you lose your money, then it means you’re out of money.”
When Bitcoin price drops to $1 000, it can be hard to see where you stand in the market.
However, if you look at the charts of other cryptocurrency, you’ll see the Bitcoin value fluctuates.
A drop of 25 per cent in the value of a single Bitcoin might lead to a loss of 1 per cent of your investment.
But with Bitcoin’s value, it will take some time for it to recover.
“In a short space of time, the Bitcoin market will fall from a very solid base to a very fragile one,” said Jim Ritchie, a financial planner and investor in Sydney.
“At the same time, you will be making more money.
It’s like a snowball rolling downhill.”
What happens if the market crashes?
When the price of Bitcoin drops below $1000, investors will start losing their Bitcoin.
But unlike other cryptocurrencies, where investors have the ability to sell out their position in the currency, it is not possible to sell your Bitcoin for cash.
“I wouldn’t be comfortable selling my Bitcoin at any price,” Mr Ritchie said.
Bitcoin prices can also drop if there is another major sell-in.
If there is an economic crisis, there is the risk of the price dropping further.
If this happens, it could trigger another sell-down.
Mr Mampousi said he does not think Bitcoin is likely to crash during an economic downturn, as it is a safe and stable currency.
“My view is that Bitcoin is more likely to have a crash during a major economic downturn,” he added.
If, however, there are no major economic crises, it may be wise to consider holding your Bitcoin.
“It’s a volatile currency,” Mr Mowson said.
Mr Rigney said the best time to buy a Bitcoin is when the price is at a high level.
“For example, if it’s at $1.00, you’re likely to buy the Bitcoin at $2.00,” he explained.
“But if the price drops below that, you may want to buy at $100, because you’ll get a huge profit.”
When Bitcoin falls to $500, the potential is that the price can fall below $500,” Mr Mangos said.
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Buy it if it falls to a $1 and sell it if the value falls to the $1,” he advised.
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