Bitcoin dropped to $43,288 Monday morning, continuing a downward trend in recent weeks.
After topping $52,000 on Monday, Sept. 6, Bitcoin took a sudden drop following news that El Salvador had purchased more than $20 million in Bitcoin and become the first country to legalize it as legal tender currency. It has hovered around $45,000 ever since, struggling to get back above $50,000
Before the recent downturn, Bitcoin had mostly been on the rise following a drop under $30,000 in July.
Bitcoin hit a high of more than $60,000 in April, and the recent movement highlights the cryptocurrency’s volatility in a time when more and more people are interested in getting in on the action. In the weeks between the most recent July low point and its high points earlier this month, Bitcoin had risen steadily, with several daily highs above $50,000. Again, Bitcoin is very volatile, so these ups and downs are par for the course.
We’ve talked to investing experts and financial advisors who advise against sinking much of your portfolio into the asset class for this very reason. They work with clients to make sure volatile crypto investments aren’t getting in the way of other financial priorities, like saving an emergency fund and paying off high-interest debt.
“You have a high chance of losing it all, but a small chance of winning it big,” says Nate Nieri, a CFP with Modern Money Management in San Diego, California. “Don’t gamble an amount that would burden your family or prevent you from achieving your goals” if you lost it all, he says.
How does this latest crash compare to previous ones, or even to regular stock market drops — and what does it mean for investors?
What Does This Price Drop Mean for Crypto Investors?
For those who invest in crypto for the long-term using a buy-and-hold strategy, swings like this are to be expected. The recent dips are nothing to be overly worried about, according to Humphrey Yang, the personal finance expert behind Humphrey Talks, who says he avoids checking his own investments during volatile market dips.
“I’ve been through the 2017 cycle, too,” Yang says, referencing the ‘crypto crash’ of 2017 that saw many major cryptocurrencies, including Bitcoin, lose major value. “I know that these things are super volatile, like some days they can go down 80%.”
Experts recommend keeping your cryptocurrency investments to under 5% of your portfolio. If you’ve done that, then don’t stress about the swings, because they’re going to keep happening, according to Bill Noble, Chief Technical Analyst at Token Metrics, a cryptocurrency analytics platform.
“Volatility is as old as the hills, and it’s not going anywhere,” Noble says. “It’s something you…
Read more:Bitcoin Keeps Dropping. Here’s How Worried Investors Should Be
