When the price of bitcoin dropped by 33% in April, some cryptocurrency investors decided that it was time to abandon the ship. For short-term investors, waiting for a continued price surge as seen in 2017 was not an option, considering that no one can truly predict the future price of any cryptocurrency.
oday, it has been about 6 months since the price of bitcoin peaked at roughly $20,000 in December 2017. The subsequent crash of over 70% in the market value has made some investors to lose their patience – especially those who bought amidst the frenzied price exuberance last year.
During market selloff, crypto investors and enthusiasts have been encouraging each other to “hodl”- an acronym originally designed to be a typo for “hold,” but now taken to mean “hold on for dear life.” That said, new data suggest that the investor’s faith in this principle is dwindling. Rookie investors who are not used to bitcoin’s roller-coaster price swings are resulting to panic selling as the market continues to plunge.
In the US, customers of Coinbase (the largest crypto exchange in the country) withdrew more in June as compared to April – a month when the price of bitcoin was taking an upward trend. This trend has also been noted in Paymium, one of the earliest crypto exchanges in Europe. According to an analysis done by chime based on over half a million bitcoin enthusiasts, the younger generation of investors has no confidence in the recovery of this coin.
Why Investors Are Not Ready to “Hodl”
With the price of bitcoin hitting about $20,000 late last year, the thought of quick returns and getting rich is what came into the mind of most rookie investors. Those who believed in bitcoin took mortgages on their houses to purchase these digital assets, while some poured their lifetime savings into this venture. However, the current price fluctuation in the market is making such investors feel squeezed and pressured to tap out.
On the other hand, early bitcoin adopters (long-term investors) are also deciding to sell their digital assets for various reasons. To some, the fear of losing out is the major contributor to cashing out. The study also shows that long-term investors sold close to $15 billion worth of bitcoin to speculators in the first quarter of this year.
According to the money flow patterns in the cryptocurrency industry, the investor’s timing is generally poor. It’s in the nature of most investors to buy when the prices are at the highest and sell at a significantly lower price. This is largely evident according to major crypto exchanges like paymium, coinbase and others.
While we can’t tell whether bitcoin will dominate the cryptocurrency industry in the future, we may look back at the current price rate in a few years and see that it was a great time to invest. However, you should only invest what you can afford to lose for you fulfill your long-term investment goals without feeling the pressure to sell.