How To Avoid Losing Money When Volatility Takes Over Bitcoin

By Daniel Zo Bitcoin, Volatility

During the last couple of months, the value of bitcoin has both increased and decreased substantially, and recently, it has managed to reach an all-new all-time high, which is great news for digital currency enthusiasts from all around the world.

Because of this volatility, most people who have ever held bitcoin, were affected by the value increases and decreases. Common sense tells people to sell the currency when its value is high, to make a profit, and buy the digital currency when the value is low. Regardless of this aspect, most people do the complete opposite, because it is often hard to predict how the value of the digital currency will change over the next couple of days. Therefore, people who have already joined, or are considering the idea of joining the bitcoin train, need to be well-educated on the best practices that need to be followed, to help reduce losses attributed to the currency’s volatility.

Bitcoin volatility

Using Bitcoin as a currency of transmission, rather than as a value asset

Not many members of the digital currency community are willing to agree with this tip, yet storing little amounts of bitcoin, and using it for buying/selling products and services may be utile for those who are scared about losing the value of their funds. Based on this, by using bitcoin as a mode of transmission, rather than of storing, chances are that you’ll never have enough bitcoin to actually be affected by volatility and decreases in value, while still actively using the digital currency and contributing to its evolution on the market. However, there’s a clear downside to this practice, which is that you also won’t really benefit from value increases, which are getting considerably more common nowadays.

Always keep an eye on the state of the market

Due to lack of time or interest, many of the people who hold bitcoin don’t often check out market news, look at charts, or consider the evolution of the digital currency over time. Because of this, they have little to no knowledge on how future events can influence its value, alongside with when increases and decreases in value are expected. Because of this aspect, they can often be caught off-guard when the value falls, thus losing money. By keeping an eye on the evolution of the market, and crypto-news, you’ll also be more aware of the latest developments, but also get an inner feeling that will warn you whenever a big value increase/decrease is about to happen.

Consider the idea of trading bitcoin

If you’re a fan of the markets, and how they tend to evolve over time, then you can also consider trading bitcoin. This, of course, requires an in-depth knowledge and understanding of the market’s mechanics, but will allow you to both avoid losing value, while also helping you earn a considerable profit if you know how to trade well.

Based on everything that has been outlined so far, these are just some of the tips that you can follow in order to avoid losing money whenever bitcoin is hit by volatility. Let us know your thoughts on the tips in the comment section below.