After the fall of the cryptocurrency, many investors rushed to sell. However, others still decided to hold or even buy in the hope of catching the bottom.
According to CNN, Mr. Grant McGurn, 27 years old, living in Madison (Wisconsin state, USA), has poured all his money into cryptocurrencies, including Bitcoin, Ether and Dogecoin. His father, an experienced investor, warned: “It’s like a dot-com bubble and I don’t want you to lose thousands of dollars.”
Listening to his father, Mr. McGurn sold his crypto holdings in May, right before the crypto crash. Many coins are almost 50% off or even more. “I was very lucky,” he said.
Mr. McGurn is among the new investors in cryptocurrencies. Attracted by the huge price increase in 2020, they enter the market to make quick money, or avoid missing out on the opportunity to get rich.
After the first major sell-off in the crypto world, many felt lucky to have sold in time, but others were determined to hold on.
Hope to buy bottom
“I don’t want to panic over what I just bet on,” said Akshaya Parthasarathy, 24, who lives in Chennai (India).
Cryptocurrencies have skyrocketed in price over the past 12 months. The crypto frenzy was ignited after American electric car company Tesla announced it would accept Bitcoin for payments.
Other leading companies, including Mastercard and BNY Mellon, also plan to expand into cryptocurrencies. That signals that Bitcoin and other coins can become mainstream assets.
Retail investors also do not miss the opportunity to make money. During the first quarter, 9.5 million people bought and sold cryptocurrencies on the Robinhood app, compared to 1.7 million investors in the fourth quarter of 2020. Cryptocurrency platform Coinbase also reported 6.1 million active individual users in the first quarter, more than double the previous quarter.
Dogecoin – the cryptocurrency that was born as a joke – has increased in price by 7,788% since the start of the year, according to Coin Desk data.
According to professor Lisa Kramer at the University of Toronto, after hearing stories of people making a fortune in cryptocurrencies, traders “don’t want to miss out.”
However, the cryptocurrency market plunged after Tesla CEO Elon Musk announced the company would stop accepting Bitcoin payments due to environmental concerns. According to CNN, the sell-off wiped more than $410 billion from Bitcoin’s capitalization and nearly $25 billion from Dogecoin.
However, many investors remain optimistic. According to data from research firm Glassnode, small investors (those holding between $37-37,000 in Bitcoin) increased their holdings from nearly 4.8% to 5% during the latest sell-off.
On the Reddit platform, investors advise each other to “buy the bottom” to profit in the future. Dogecoin is currently trading around $0.37 after Coinbase exchange allowed Pro users to buy and sell Dogecoin.
There may be a price to pay
According to Professor Kramer, the above phenomenon can be explained by the reverse position effect. Research shows that investors tend to realize profits faster than losses. They often keep losing investments and sell profitable investments.
“The tendency to hold losing investments will continue to cost investors,” said Professor Kramer. “They often make decisions based on grit, but that can lead many people astray,” the expert added.
Many investors said they stayed because of their belief in the technology. Parthasarathy, studying for a master’s degree in data science, was once skeptical of cryptocurrencies. However, the Dogecoin craze attracted her.
She ended up investing in Ether, Hedera Hashgraph, and Polygon – two popular cryptocurrencies on Reddit’s crypto forum.
Ms. Parthasarathy admits the past few weeks have been exhausting. However, she still plans to continue investing in cryptocurrencies. “I consider it a long-term business and will continue to invest more money,” added Ms Parthasarathy.
Rebecca Robinson, a 28-year-old student in San Diego who works as a part-time chef, lost several hundred dollars after Musk’s move sent the cryptocurrency market down.
However, she still spends 10% of her salary on cryptocurrencies, including Ether and smaller coins like Cardano, Algorand. “A lot of people say, ‘We believe in these coins’ and don’t sell even if the price drops, which is great,” she said.
Mr. McGurn, who started trading cryptocurrencies in late 2020, is also thinking about other investments following the recent market crash. He was able to withdraw the money right before taking the loss.
“It was a wake-up call for me. It’s pretty exciting to have a venture capital investment, but I can’t risk my life on it,” he said.
Mr. McGurn said he is planning to pour money into Apple or Amazon stock. He considers them “more solid” options.
However, Mr. McGurn still bought back 1 Ether. “I will never invest much in crypto again,” he asserted.
Maybe you are interested:
Join our channel to update the most useful news and knowledge at:
According to Zingnews
Compiled by ToiYeuBitcoin