Crypto Is Crashing Again. Here's What to Do With Your Portfolio.
Key Points
Many top cryptocurrencies are down over the last week.
Don't panic sell, as you'll lock in your losses if you do.
Top cryptocurrencies have historically recovered from bear markets.
- 10 stocks we like better than Bitcoin ›
The crypto market seemed to have found its floor, but it took another downturn over the last week. The Iran war has driven investors toward safer assets, and there are concerns that the Federal Reserve will raise interest rates, which could reduce cryptocurrency demand.
Market crashes are stressful, but they're a part of investing. Knowing how to handle them can make the difference between taking a significant loss or potentially coming out ahead when the dust settles.
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Most importantly, don't panic sell. If seeing your crypto portfolio in the red stresses you out, you may be better off not checking it for now. No one knows for certain whether the crypto market will continue to decline or start to recover in the near future. What we do know is that the top cryptocurrencies have recovered from bear markets like this one before.
For perspective, toward the end of 2017, Bitcoin (CRYPTO: BTC) reached a high of nearly $20,000. It then lost over 80% of its value, falling below $3,500 at one point in 2018. The sentiment around it was just as bad, if not worse, as it is now, but if you've been holding Bitcoin since then, your investment has been extremely profitable.
The kind of volatility we're seeing right now is a normal part of investing in cryptocurrency. Historically, the best move when prices are down is to wait for a recovery. This isn't guaranteed, but it has happened before, and if you sell now, you lock in your losses.
If you have some cash available and don't mind the risk, you could even consider adding to your crypto holdings. The upside of this bear market is that Bitcoin and other popular cryptocurrencies are much cheaper than they were six months ago. If you're still bullish on crypto's long-term prospects, look at this as an opportunity to build your positions for less money.
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Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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