What to do when btc goes down?

Over the long term, the price of Bitcoin is likely to trend up again, but you can expect plenty of dips and pullbacks along the way. Thankfully, there are ways to make money on Bitcoin whether no matter which way it’s trending.

There are more ways to make money on Bitcoin than taking a long position and simply holding on. Whether you want to take advantage of short-term price changes, spend your Bitcoin when it’s no longer earning money, or even bet against Bitcoin, there are plenty of opportunities for investors to take advantage of cryptocurrency price movements. Here are some ways to make money in Bitcoin when the price is going down.

One of the best ways to make money when Bitcoin’s price is down is to buy more of it. While it can feel emotionally and psychologically painful to see your account balances tumble when the price of cryptocurrency takes a dive, it’s actually a great buying opportunity for new investments. After all, buying Bitcoin after a price correction is better than buying it at its all-time highs!

I recommend allocating a fixed percentage of your total investment portfolio to cryptocurrency, somewhere between 1% to 5% is a safe bet. When the price of Bitcoin drops, you’ll likely fall below your target investment allocation. You can buy more until you are back at your target again. When the price of Bitcoin recovers, you can sell off some of your profits to keep your portfolio in balance.

I’ve been investing 1% to 3% of my portfolio in Bitcoin since 2017 and sticking to this target allocation has let me take advantage of dips and cashout on profits at Bitcoin’s highs. It’s helped me manage big swings in Bitcoin’s price by always keeping my exposure to cryptocurrency in line with my goals.

Most people think they are at the mercy of the market price of Bitcoin if they want to sell their cryptocurrency, but you can choose your own price that you feel comfortable letting your coins go for.

Limit orders allow you to sell a financial security only if it reaches a certain price during a specified time period. Many experienced investors use limit orders to trade in the stock market, but now limit orders are available on many cryptocurrency exchange platforms too! Because cryptocurrency trades around the world and around the clock, the best prices to execute a sale can happen at a time you’re not available to make a trade, like in the middle of the night. Setting a limit order ensures your Bitcoin will be sold even if you’re not logged in to press “sell.”

To set a sell limit order for Bitcoin, you choose a price higher than the current market price and a time period. Because cryptocurrency markets are open 24/7, you will choose a specific date for your limit order to expire. Typically people set their limit orders to expire in 24hrs, 48hrs, 7 days or 30 days, but your cryptocurrency platform may offer additional options.  Your Bitcoin will only be sold if the price reaches the limit order price you set before the order expires.

When using limit orders, your trade will be executed automatically so make sure you’re comfortable with the price you choose. If the price of Bitcoin continues to rise higher than the price you selected, you will miss out on those gains because your coins will have already been sold.

Cryptocurrency is exceptionally volatile, and you should expect double-digit price jumps. Instead of being scared of volatility, you can use it to your advantage with swing trades. Swing trading is the practice of making short-term bets on price movements of a financial security. Instead of buying and holding for the long term, you may only hold a financial security for a few months or a few days, or even a few hours before selling.

Because Bitcoin’s price is so volatile, it can be great for swing trading. Double-digit price jumps in a few hours or over the course of a day are normal, which is a huge opportunity to profit from swing trades. However, you need to be paying attention to the markets and have a good amount of Bitcoin on hand to make it work.

Make sure to transfer the Bitcoin you’ll be trading to your cryptocurrency exchange platform so you’re ready to take advantage of large price movements. You can set limit orders to execute trades automatically when Bitcoin hits your price targets, or you can simply set alerts on your phone to notify you when Bitcoin hits a certain price or moves by a certain amount. Many cryptocurrency exchange platforms already email their user base when whenever Bitcoin’s percentage price change is in the double digits.

Before you start swing trading, make a trading plan that includes your entry and exit price targets for Bitcoin. You need to stick to this trading plan to avoid making emotional decisions in response to Bitcoin’s price movements. Swing trading only works if you’re making rational, math-based decisions. It’s likely your intuition will be telling you to do the opposite of what your spreadsheet does, so you need to be exceptionally disciplined to execute your planned trades no matter what Bitcoin’s price is doing.

One of the easiest ways to hedge against downturns in Bitcoin’s price is to purchase shares of an inverse Bitcoin ETF. Horizons launched the BetaPro Inverse Bitcoin ETF in April 2021, which trades on the Toronto Stock Exchange under the ticker BITI.TO. It is available in both Canadian and US dollars.

This ETF moves in the opposite direction of Bitcoin. It trades at -1X Bitcoin’s price, which means if the price of Bitcoin decreases by 10%, the share price of the BITI.TO ETF will increase by 10%. Likewise, if the trend reverses and the price of Bitcoin starts to go up, the value of the inverse Bitcoin ETF shares will go down proportionally.

Inverse ETFs make it easy to place a bet against a security, without the hassle of having to do a short Bitcoin sale. If you’re bearish on Bitcoin, want to hedge your long position in Bitcoin, or you simply want to turn a profit in Bitcoin’s down market cycles, an inverse Bitcoin ETF is the simplest way to do so.

To buy shares of an Inverse Bitcoin ETF, you need to have a brokerage account that allows you to access the stock market. Both Questrade and Wealthsimple are excellent choices for discount brokerages because purchasing shares of the ETF will be free on either platform. Wealthsimple offers no-commission trading, making it ideal for new investors who are just getting started in the stock market or active traders who will be making plenty of buy and sell trades. Questrade offers no trading commissions when you buy ETFs, but will charge fees to sell shares of an ETF. Depending on how active you expect your trading to be will determine which platform is best for you!

If you’re planning to invest both directly in Bitcoin and an inverse Bitcoin ETF, make sure you make your investments in a way that doesn’t cancel each other out. You’re trying to profit off of Bitcoin’s price movements in either direction, which means you want to own Bitcoin when the price of Bitcoin is going up and the inverse ETF when the price of Bitcoin is going down. If you hold both at the same time in the same amounts, they will cancel each other out and both your profits and losses in Bitcoin will be 0%.

If you don’t want to sell your Bitcoin or buy more, there is one way to make money on it: lend it out. Cryptocurrency lender platforms are gaining popularity because they give long-term Bitcoin holders an opportunity to earn passive income on their cryptocurrency. When you lend out your Bitcoin, you will earn interest on the balance borrowed. Usually, the interest is paid out as more Bitcoin. The transaction is facilitated by a cryptocurrency lending platform, which reduces, but does not eliminate, the risk of non-repayment from the borrower.

Lending out your Bitcoin is a great way to turn your cryptocurrency into a passive income source, but the payout is generally small and takes a long time to accumulate. Expect to receive quarterly or even annual payments for the amount borrowed, and in the meantime, your Bitcoin is tied up so you cannot sell or trade it elsewhere.

An easy way to invest in cryptocurrency even when Bitcoin’s price is decreasing is to choose another coin. Ether has shown better price recovery than Bitcoin after this most recent correction and has more to offer in the long term. If you’re looking to invest in cryptocurrency as both a financial asset and future technology, altcoins are the answer.

Lesser-known altcoins like Dash, Litecoin, Ripple, or Tether have more potential for growth but are also likely to be even more volatile than Bitcoin. If you’re underwhelmed with your returns in Bitcoin, Ether or another altcoin might be exactly what you’re looking for. However, if the recent dip in Bitcoin’s price is what is pushing you to sell, you might want to stay away from other cryptos!

Whether or not you should sell your Bitcoin when the price is decreasing depends more on your personal financial situation, investment goals, and long-term perspective on Bitcoin. Long-term investors should largely ignore volatility in Bitcoin’s price unless they are using it to find buying opportunities to increase their position. Short-term investors need to weigh the costs and benefits of selling their Bitcoin now against doing so in the future.

Whether you keep your Bitcoin or sell it off really depends on what type of investor you are. If you need the cash you have invested in Bitcoin for something else more important, then it’s always appropriate to sell your cryptocurrency to use your money where it will work best for you. Likewise, if you’ve made your profits from an earlier investment in Bitcoin, it’s always good to cash out and claim your winnings!

That said, if you’re bullish on the technology and potential of cryptocurrency in the long term, there is no reason to exit your position now. Cryptocurrency is a highly volatile asset and you should expect huge price fluctuations. You need to train yourself not to be scared of dramatic price movements, and often the best way to do that is to go through them without making any rash decisions!

One of the biggest mistakes you can make when investing is selling too soon, and another is trading too often. It takes discipline and practice to wait out volatility, but with an asset like crypto, it’s often the best course of action. Bitcoin is here to stay, and if you make it part of your portfolio you can choose how you want to make your profit!

The cause of the most recent disruption: the coming liquidation of crypto-friendly bank Silvergate. This news comes on the heels of the U.S. government moving $1 billion in seized Bitcoin to Coinbase-controlled wallets on Wednesday.

In addition, a lawsuit filed Thursday afternoon against crypto exchange KuCoin by New York State Attorney General Letitia James caused the world’s second-largest cryptocurrency by market capitalization, Ethereum (ETH), to drop more than 8% as well.

In the lawsuit, James argues that certain coins traded on KuCoin should have been registered as securities. She included ETH by name in her suit.

Along with these slides in the world’s two largest cryptocurrencies, other altcoins followed suit. Cardano was down nearly 9% on the week, Polygon (MATIC) lost almost 11% and memecoin Dogecoin (DOGE) was down more than 14%.

On Wednesday, Silvergate announced that it intended to write-off its assets and wind its business down. This news came on the back of rising U.S. interest rates over the past year causing an overall crypto selloff as well as the collapse of crypto exchange FTX, which had been a key client of the crypto-friendly bank.

Customers pulled more than $8 billion out of Silvergate’s coffers since the collapse of FTX in November 2022. In fact, the bank held a mere $4.6 billion in cash at the end of last year.

In recent weeks, other major crypto players—such as Coinbase, Galaxy Digital, Paxos and Circle—all scrambled to distance themselves from the bank. After these moves, Silvergate was forced to close its Silvergate Exchange Network, a major crypto payment hub.

Silveragate shares are down more than 82% year to date.

At the same time as the crypto world watched the unwinding of Silvergate, the U.S. government has moved more than $1 billion in Bitcoin to new wallet addresses, including one owned by crypto exchange Coinbase.

This led to crypto traders fearing that the U.S. government might be poised to release a portion of this confiscated Bitcoin onto the open market.

Although that action wouldn’t follow past precedents set by the government’s handling of digital assets, the fears of a supply glut haven’t stopped Bitcoin’s price from tumbling in recent days.

In addition to the headwinds Bitcoin is facing, the world’s number two cryptocurrency by market cap, Ethereum (ETH), is facing its own problems.

New York State Attorney General Letitia James filed a lawsuit Thursday afternoon against crypto exchange KuCoin, which has caused Ethereum to drop more than 8% as well.

In the lawsuit, James argues that coins such as Ethereum, TerraUSD (UST) and Terra-Luna, which are all traded on KuCoin, should have been registered as securities. This suit is the first time that a U.S. regulator has claimed in court that ETH is a security.

The suit argues that under the Martin Act, a more than century old anti-fraud law in New York State, the attorney general can bring civil and criminal charges against the exchange.

ETH, UST and Terra-Luna should have been labeled as securities, the suit claims, due to the fact that their prices are all dependent upon the efforts of others, such as ETH co-founder Vitalik Buterin.

Like Bitcoin, Ethereum is down almost 10% over the past five days as well. However, both BTC and ETH are still up more than 20% and 17% respectively year to date.

• Stay calm. Whether you decide to sell your cryptocurrency or see a dip as an opportunity to buy more, you need to act with a cool head.
• Assess the situation.
• Remember that volatility is the name of the game.
• Evaluate the future.
• Determine how to act.

That volatility attracts traders looking to make a profit — but it’s nerve-wracking, especially for new investors looking to get started. And traders can expect plenty more of this volatility in the future, as new cryptocurrencies emerge and others fall by the wayside.

With cryptocurrency so extremely volatile, what should investors be doing to manage their risk?

Scared by a plunge or thrilled at the prospect of buying in cheaper? Either way, here are five things that you need to do when cryptocurrency prices crumble.

Whether you decide to sell your cryptocurrency or see a dip as an opportunity to buy more, you need to act with a cool head. Making emotional decisions, especially when trading, rarely results in anything good happening. So, before you rush into the market in a panic, you’ll want to reflect on why you’re trading crypto in the first place.

The answer to these questions can help guide you to the proper decision. In either case, you’ll want to act in accordance with your own goals. In other words, if you believe in the long-term opportunity, think with that mindset. If you’re here for a quick trade, think with that mindset.

Is there news driving the trading price of Bitcoin and other cryptos? It’s possible that there’s fundamental news that’s shifted the market’s sentiment and it’s not just price action or rumor driving sentiment.

In 2021, actual developments hurt prices. China’s move to ban financial institutions from providing crypto-related services was a further clampdown, since the country had already banned crypto exchanges in 2017, though it hadn’t prohibited individuals from owning cryptocurrencies. Then late in 2021 the Federal Reserve decided to reduce liquidity in the financial system, and many cryptos have been on a significant downturn well into 2022.

In May 2022, the stablecoin TerraUSD plummeted as traders engaged in an old-fashioned “bank run,” as they feared that it didn’t have the crypto assets to back its peg to the dollar. This news spilled over into other crypto markets, as traders worried that selling would beget more selling.

So, these moves have been further significant blows to the burgeoning market, which had been enjoying significant capital inflows.

Cryptocurrency is volatile by nature. Because crypto generates no cash flow, traders have to rely on changes in sentiment to drive the price. That means the market can swing between rabid optimism, as it did in early 2021, to pessimistic despair, as it did a few months later. The furor around the Coinbase IPO in 2021 helped drive positive sentiment to crypto, while the reduction in monetary stimulus drove pessimism at the end of 2021 and start of 2022.

So when you have an asset that’s driven by sentiment, the emotions of traders propel the market. That’s true in the case of stocks, too, but they also may have a real stream of growing cash flows from their issuing company to accelerate them higher.

This volatility is exactly what draws professional traders, who use high-powered algorithms to make sophisticated trades, something that “mom and pop” traders don’t typically have the advantage of using. Traders like volatility since it gives them a chance to make money – that’s Wall Street’s game.

Analyze how the fundamental situation could play out for crypto, given new developments: Will governments get tougher on it? Will they encourage wider adoption of it? Will new regulations help rather than hinder the cryptocurrency market? What else might drive the market?

Is China’s move to ban crypto a harbinger of things to come? Maybe. India had been mulling the idea of banning cryptocurrency, while the Russian central bank has also voiced opposition to it, too. But other countries, including the United States, are exploring how to regulate cryptocurrency instead of prohibiting it outright. A couple countries, namely El Salvador and the Central African Republic, have even made it legal tender.

How other major countries proceed remains to be seen, but it’s clear that cryptocurrencies face real threats in the form of regulation, including regulation that could literally put them out of business. As crypto gains traction, it risks becoming a victim of its own success.

It doesn’t help that crypto is used as part of ransom attacks and other criminal activities.

Therefore, it’s not out of the question that the utopian dreams of crypto purveyors are simply legislated out of existence. Of course, the political implications are but one facet of their future. Crypto faces other significant hurdles, including the financial and environmental costs of “mining” them.

Another risk: because of their volatility, many cryptocurrencies are mostly unusable as currency and it’s “being sold to people who have no intention of using it” as currency, as I discussed on Cheddar TV. And finally, IRS rules on taxation make crypto unwieldy as a payment system.

After you’re done cooling down and have assessed the situation and what it means for the future, you’ll want to consider how to act.

Whichever way you go, you’ll want an action plan that reflects your view on the potential risks and opportunities of cryptocurrencies. But it’s worth noting that some of the world’s smartest investors won’t touch cryptocurrencies and strongly caution you about them, too. Legendary investor Charlie Munger, vice chairman of Berkshire Hathaway, said, “I admire the Chinese, I think they made the correct decision, which was to simply ban them.”

Munger is also on record with the following statement about cryptocurrency: “To me, it’s just dementia. It’s like somebody else is trading turds and you decide you can’t be left out.”

Cryptocurrencies are highly volatile and speculative, and many investors don’t feel comfortable putting much, if any, money in them. The good news for investors is that they have alternatives to cryptocurrency that offer attractive long-term returns:

Those are some of the highest-potential alternatives to cryptocurrency.

A plunge in the cryptocurrency markets may have you feeling rattled. Use it as a wake-up call to re-assess why you’re involved in the market to begin with. What opportunities and risks does it present?

While Bitcoin, for one, has rallied back hard following previous major declines, there’s no guarantee that it will do so again, especially if it’s facing serious existential questions as countries ban the use of it and potentially the ability to even own it. And that’s the kind of real risk that an investment can be destroyed by or profit from, if the reality is less severe than the expectation.