The cryptocurrency market selloff continues>'Don't watch every tick of the price'
During times like these, "don't watch every tick of the price," Ross says. "Zoom out and look at how crypto has performed the last year or two."
Though cryptocurrency is deemed to be a risky, speculative investment, if you already own it or are planning to buy, experts agree that a buy and hold strategy is usually the best practice. Rather than attempting to trade in the short-term, this strategy promotes holding an asset long-term and riding out the highs and lows.
Anjali Jariwala, certified financial planner, certified public accountant and founder of Fit Advisors, recommends holding bitcoin for at least 10 years. "If you are committed to a strategy that involves crypto, then you need to be comfortable with holding>Review your investment strategy
Now might also be a good time to review your investment strategy, Ross says.
To start, he suggests asking yourself the following types of questions:
- Why did you buy in the first place?
- Do you feel the same now that it's down about 50%?
- What's your broader financial goal with crypto, and does this downturn affect that?
- Is your personal financial situation still secure?
With riskier assets like cryptocurrency, experts recommend keeping your portfolio allocation small. That way, if there is a downturn, you won't lose everything.
Only invest what you can afford to lose
All in all, experts warn to only invest in cryptocurrency what you can afford to lose. As quickly as prices rise, they can tumble back down.
"For anyone nervous with the drops in bitcoin and other crypto, it is a perfect example of why you shouldn't invest more than you can afford to lose," Jariwala says. "Bitcoin and other cryptocurrencies are highly volatile so the swings that occur are pretty typical of this asset class."
