- The price of cryptocurrency is driven by market sentiment.
- The volatility attracts traders hoping to make a profit.
Rumors, moods, and fundamental events are incorporated into the market practically as rapidly as the price rises and falls. In April 2021, Bitcoin, for example, soared to an all-time high of about $64,000. However, after only three months, the cryptocurrency’s value had dropped by more than half, to under $30,000! When Bitcoin achieved a new all-time high of $69,000 in November of 2021, the cryptocurrency plunged by more than 40% in late January.
Read More: Bitcoin Price Prediction
This volatility attracts traders hoping to make a profit, but it causes anxiety, particularly for rookie investors who are just getting started. This volatility will only increase as new cryptocurrencies debut and old ones disappear.
The essence of cryptocurrency is to be volatile. The price of crypto, driven only by market sentiment since the technology itself does not provide any cash flow. That implies that the market may swing from euphoria to pessimism in a matter of months, as it happened in early 2021.
Sell off Complete Holdings?
Popular crypto analyst Lark Davis tweeted, asking his followers whether they should sell off all of their holdings. The analyst posted a video discussing the same. Have a look at the tweet.
Time to sell all of your #crypto and #bitcoin?
— Lark Davis (@TheCryptoLark) January 26, 2022
Some people think so.
But is it a good idea? https://t.co/IN6zGqHwRY
It was 2021 when the hype around Coinbase’s initial public offering (IPO) pushed up interest in cryptocurrency, and it was 2021 and 2022 when decreasing government support for it led to a downturn. One must adhere to the fundamentals of investing in crypto trading. According to research, Crypto investors who have held on to their money for at least two years have achieved significant gains. Experts predict that the cryptocurrency market will continue to rise in the future.
