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What should a long-term investor consider?

May 28, 2021
4:58 AM

For May 1-27, bitcoin has fallen in price by 34% and at the time of writing its price on the Binance crypto exchange is $ 38.9 thousand. authorities to tighten regulation of mining and cryptocurrency trading, writes RBC Crypto.

Despite this, Bitcoin is still in a bull market and is on its way to the $ 100 thousand mark, says Bloomberg strategist Mike McGlone.

Experts explained what to do for investors who entered the market before the collapse of quotations.

The market is changing

Recent days have shown that everything can change very quickly from positive to negative and vice versa, says Andrey Podolyan, CEO of the Cryptorg.exchange crypto exchange. According to him, the main positive criterion is the entry of funds and corporations into the cryptocurrency market. Their investment horizon is much larger than that of the average static investor, the expert explained.

If the initial investment goal is long-term, then the investor must have a plan of how to act in this or that case. As a rule, investors keep free capital for averaging and buying at those moments when the market is strongly declining, noted Andrey Podolyan.

He believes that with a long-term approach to investing with a horizon of 1-3 years, there is no point in selling in any panic, otherwise a long-term investor turns into a speculator-trader. The expert advised long-term investors to look at the trading terminal less often and not to make transactions without a clear plan.

Long-term investor tools

Market participants who open positions with a horizon of several years should use three tools: a price change chart for a month, a logarithmic price scale and an analysis of the entire price history of an asset, Vitaly Kirpichev, Director of Development for the TradingView platform in Russia, advised.

“This will allow you to see the global trend without distortions associated with the transition to disparate price areas,” the expert explained.

There were times when bitcoin cost a few cents, then hundreds of dollars, and now it costs tens of thousands of dollars, reminded Vitaly Kirpichev, and the logarithmic scale “equalizes” all these periods of time. According to him, the historical trend is still unshakable, and the correction cycle has always been accompanied by a subsequent renewal of price highs.

Photo: TradingView

Any trends, even such long-term ones, come to an end sooner or later, so it is reasonable to set goals for yourself to exit positions in the event of a negative and positive scenario, relying on the global “logarithmic” trend, he added.

Freezing positions and fixing losses

It is important for a long-term investor to consider the possibility of freezing the deposit for 3-4 years, since the likelihood of an early completion of the global bull cycle has increased, says Nikita Zuborev, senior analyst at Bestchange.ru. He is convinced that the likelihood of a repetition of the cycle of accumulation associated with halving is quite high. According to the analyst’s forecast, with the onset of a bearish cycle, Bitcoin may gradually fall to $ 10-15 thousand in the next 2-3 years.

“Only six months or a year before the onset of the next halving (in the middle of 2024), the trend may change to a bullish one,” added Nikita Zuborev.

In some cases, fixing even 20% of losses may look like a priority of freezing funds for several years, especially if these are margin positions (open for credit funds) or there is a comparable investment instrument in terms of profitability, the analyst warned.

A long-term investor should understand that the risks of losing everything are minimal, says Nikita Zuborev. According to him, if the cryptocurrency was bought on the spot market, while the asset is not sold, losses are not recorded, it is enough to wait for a new impulse for growth. Anything can become it: the launch of an ETF, new media personalities (from Elon Musk to Pavel Durov and Jeff Bezos), another halving, approval from large states and much more, Nikita Zuborev explained.

Donald Westbrook

Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.