Alas, the market doesn’t always go up. Market hiccups are a part and parcel of trading whether it is the cryptocurrency market or the stock market. In this article, let us see the various types of investors and how they react to a dip in the market.
Cryptocurrencies have had a brutal spring, with drawdowns in May taking assets including Bitcoin (BTC) more than 60 per cent below the all-time highs they reached in 2021. The losses were particularly bad on May 9 and 10, which saw the largest crypto crash in recent memory. The global crypto market cap witnessed a sharp decline of 6.35 per cent in the last 24 hours to $1.37 trillion.
The colossal loss of more than $200 billion has become a major cause of concern for both experienced traders and beginning investors alike. The crypto market seems to be in tandem with the broader financial market as the S&P 500, Dow Jones Industrial Average, and the Nasdaq have shrunk substantially.
What Type Of Investor Are You?
Bearing in mind of the present market scenario, let us look into the different types of investors in the crypto market and capture their reaction amid a market dip.
- The Beginners: They are the newcomers in the cryptocurrency industry and probably have heard about Bitcoin (BTC) and the raging bull market. These type of investors tend to lack the specific knowledge and experience, which is why they can often be naïve. It is imperative for beginners to educate themselves and carry out an in-depth research before jumping on the trading wagon. The feelings of this type of investors fluctuate in rhythm with the market. They seem to be optimistic if they make a successful run but instantaneously turn pessimistic if the market steers downhill.
- The Professional Traders: These type of investors have been a proponent of the crypto industry for a long time. Professional traders love market volatility due to the increased chance of profit and loss. This breed of investors make detailed prediction models based on mathematical principles and are not afraid to take risks. Incidentally, they’re likely responsible for many of the progressive developments in crypto derivatives in recent months.
- The “HODLer’s”: From a misspelt word to being a widely used lingo in crypto, HODLing, means “holding a cryptocurrency” for future profits and not selling. Hodlers are the core, dedicated advocates of cryptocurrency that populate the polarizing Twitter arguments and got some of the best returns in the 2017 bull market. Hodlers accept the inevitable downward and upward swings, and they react less emotionally to bear market scenarios.
- The Common Investor: Last but not the least, this community make up the bulk of retail investors in the crypto market. This group is also know as the casual investors, looking to diversify their portfolio with Bitcoin (BTC) or any other cryptocurrency that is riding high at that moment. The common investors expect a high return and act on their ‘positive’ expectations by investing aggressively directly into the market.
With due consideration, we come to the fact that there is a diverse set of investors lurking in the crypto market. Hence, it is vitally important to learn the ropes of trade before plunging into the sea of cryptocurrency. Although, the market seems to have collapsed, we believe that this will eventually be a great buying opportunity for investors who hold a long-term view of the markets because the long-term fundamentals of Bitcoin are in place.
The content of this webpage is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product. Please do your own research before making any investment decision.