In the long run, will market adjustments affect your investment decisions? | Author: Dwayne D’cunha | The Capital | June 2021
The market adjustment is related to a sharp drop of at least 5-10%. This usually happens when a particular asset rises sharply. This market adjustment has brought prices back to their long-term trend. Most of the time, they are beneficial, but in some cases, they will last too long and eventually lead to a terrible “bear market.” During a bear market, prices may fall by 20%, which may be a good time to buy, but it is also very unpleasant for investors who are caught off guard. When it comes to stocks, bear markets rarely happen because they are more stable in the long run. This does not necessarily make them a better investment because they are manipulated by powerful individuals, depending on their needs. For cryptocurrencies, volatility is not cheap because it is more likely to experience a bear market, or at least a major adjustment.
Most cryptocurrencies, or basically all cryptocurrencies, have been following a bullish trend. After other major altcoins such as Bitcoin and Ethereum lost about 30% of their value, this does not seem to be the case. Market adjustment is not the worst thing, because it reduces the number of new investors and cryptocurrencies entering the market. The sole purpose of these new investors and cryptocurrencies is to make money quickly. You can think of it as a test of your belief in a particular investment and how long you are willing to hold it. Day traders will receive a terrible end to such corrections, but this is why not everyone should trade daytime.
It is undeniable that when the price of an asset continues to rise, it will make you feel good about your investment, but this will only last for a while. Once the new investors are driven away, the price will return to a more impressive figure. This leads to changes to specific currencies, the introduction of new upgrades, and most importantly, provides actual value. Investors who focus on specific assets will not let adjustments affect their willingness to hold. Although this did not eliminate the fear of the imminent bear market.
If you find yourself in a major adjustment, you can set up an order and start selling once the price is too low for you. In addition, you can start to reinvest in stablecoins that are most likely to maintain their value, and then you can reinvest in more volatile cryptocurrencies. If you really believe that the asset you want will pass adjustments and that it has a strong foundation for it to rebound, then you should be able to continue to hold your investment and let the market determine its value.