Volatility has become an integral part of cryptocurrency trading and investing. Anyone who doesn’t have the stomach to see his or her investment lose up to 99% of its value before surging to new heights in the months and years to come may want to rethink their involvement in cryptocurrency altogether. Just this week, Charlie Lee commented on this situation by explaining how his Bitcoin investment has played out.
Cryptocurrency Volatility is part of the Game
As much as most people would like it to be different, no one can deny cryptocurrency markets remain incredibly volatile these days. Regardless of whether it is Bitcoin, an altcoin, or a digital asset, there are no guarantees of profit whatsoever. In fact, most people have to suffer plenty of losses and hardship before they can even dream of making any form of profit in the first place. If every investment we made immediately yielded dividends, things would get pretty boring rather quickly.
To put this into perspective, Charlie Lee recently posted his thoughts on cryptocurrency volatility. His first Bitcoin was purchased at US$30 and it dropped to around US$2 in the year after. However, that same Bitcoin is worth over US$7,200 today. It is evident the gamble paid off in a big way, even though most people would have cut their losses well before BTC hit US$2. That is only normal, as no one likes to see the value of his or her portfolio melt like snow in the sun.
One could easily argue daytraders make a ton of money by flipping coins for smaller profits. That is certainly a valid approach to things, but it doesn’t work for everyone. On the other hand, a lot of people buy cryptocurrency and hold onto it for as long as possible. This means they need to be rather patient when it comes to volatility in the price. Unlike what most people believe these days, gains and losses can occur at any given moment of every single day.
Not everyone in the world wants to spend all day looking at charts either. Believe it or not, there is such a thing as obsessive cryptocurrency disorder, and it is not a fun experience by any means. Some people may dismiss this “disorder” as somewhat of a fad, but a lot of people suffer from issues like this without realizing it. Moreover, there are some basic rules when it comes to investing in cryptocurrency which a lot of people tend to forget. Chasing quick profits is not necessarily the best course of action whatsoever.
In most cases, people will see their portfolios’ values go down by quite a bit during volatile periods. It all depends on how the Bitcoin price performs, regardless of which currency or asset one is holding at that time. If the Bitcoin price soars and your portfolio contains no BTC whatsoever, things will get very bumpy in short order. If your portfolio is all Bitcoin and nothing else, you’ve put all your eggs in one basket, which is never a smart idea. Bitcoin certainly has a lot of upward momentum left, but altcoins shouldn’t be overlooked whatsoever.
In the end, there are those who can stomach extreme volatility and those who can’t. Cryptocurrency is still in the very early stages of gaining any sort of traction. All current valuable currencies with a proper roadmap and plan of action will eventually rise in value. This process may take days, weeks, months, or even years. Not every investment will be successful, but patient investors will eventually be rewarded, assuming they made smart choices to begin with.
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