The value of Bitcoin (BTC-USD) has risen on Tuesday as investors in Russia have increased their holdings in the digital currency.
As the conflict between Russia and Ukraine escalates, so does this. A number of nations have imposed sanctions on Russia as a result of the invasion that began last week. Russia's banks have been cut off by financial entities.
Russian businesses are suffering as a result of the embargo. Both the Russian stock market and the Ruble's value have declined because of these developments.
With all of this going on, it appears that Russian residents are giving up the Ruble in favor of BTC. Tether (USDT-USD) isn't the only cryptocurrency making headlines, as investors are also making the jump. In other words, the value of this coin is fixed at par with the value of the US dollar.
Today's headlines are dominated by rising Bitcoin prices, but several other cryptocurrencies are also seeing gains. Ethereum (ETH-USD), Dogecoin (DOGE-USD), and Cardano are a few examples (ADA-USD). Cryptocurrencies tend to increase and fall in tandem with Bitcoin, so this makes sense.
When Bitcoin broke beyond the $40,000 barrier with the most recent news, it was on its way up. As disappointing as this is, it's an improvement above the roughly $35,000 it was trading for in January prior to the crypto market crisis when prices plummeted to nearly $68,000.
It's up 7.1 percent in the last 3 days for Bitcoin.
After Russia's invasion of Ukraine last week, volatility spiked as Bitcoin fell below $40,000 for the first time since Monday.
Experts tell NextAdvisor that the ongoing conflict in Ukraine is introducing fresh and major volatility to the crypto and stock markets. Experts suggest that the recent volatility in the crypto market, coupled with mainstream adoption and a drop in pricing at the beginning of the year, has made it even more closely linked to developments in Eastern Europe.
When Bitcoin touched $45,000 in early February, it was its highest price since early January, when it plummeted to $34,000, its lowest price in six months. Prices of Bitcoin have fallen by 40% since their all-time high of $68,000 on Nov. 10 due to inflationary pressures, a sluggish employment market, and the Fed's consistent hints that it will begin reducing its massive stimulus measures.
So far this week, the price of Bitcoin has fluctuated between $37,000 and $45,000.
When compared to its humble beginnings and a price below $10,000 as recently as July 2020, Bitcoin's recent highs and present price are still a remarkable achievement. In November, Ethereum, the second most popular cryptocurrency, set a new all-time high of $4,800.
Bitcoin and Ethereum have had a bumpy ride since their all-time highs, but analysts believe that the price of Bitcoin will eventually reach $100,000.
Bitcoin's volatility serves as a constant reminder that the cryptocurrency is still a high-risk, high-reward investment. That's exactly what happened in mid-April, when the original cryptocurrency hit a new record high, and by mid-July, it had lost more than half of its value. While Bitcoin fell below $35,000 this month, it did so only a few days after hitting its November high.
So, in light of this volatility, what are the best practices for crypto investors? According to the specialists we've spoken to, there isn't anything. A short-term rise in the value of crypto doesn't ensure a long-term decline. If Bitcoin's price continues to rise, it's just as probable that it will plummet back down. Cryptocurrency specialists predict that long-term investors will have to live with increased volatility in the future of the currency.
Investors Need to Know These Things
If you're a cryptocurrency investor, you can expect more volatility. Because of this, experts recommend keeping your cryptocurrency investments to less than 5% of your whole portfolio.
Humphrey Yang, the personal finance guru at Humphrey Talks, previously told NextAdvisor that "I know these things are highly unpredictable, like some days they can go down 80 percent." Do not check on [Bitcoin] if you are a long-term believer in its promise. What more can you possibly do?"
Don't let a rapid rise in the price of crypto change your long-term investment strategy like a price decline did. Furthermore, don't buy additional crypto just because the price has gone up. Consider your financial situation before investing any further funds into a speculative asset like Bitcoin.
The recent surge in Bitcoin's value is nothing new. Kiana Danial, the creator of Invest Diva, notes that while Bitcoin's long-term price has generally risen, "we encounter a lot of turbulence along the way," she says.
If you're like Danial, who says she isn't "jumping on a fad," you should continue to hold on to your investments.
It doesn't matter if crypto is going up or down; the greatest thing you can do is to avoid it at all costs. As with any regular long-term investing account, you can leave it alone and forget about it. "If you let your emotions get in the way, you could sell at the wrong time or you might make the wrong judgment," explains Yang. "I don't think that's a good way to deal with it," he says.
How Much to Invest in Cryptocurrency?
A cryptocurrency investment can experience large price swings in a short period of time, making it an exceedingly risky one.
Even still, the average investor is fascinated about cryptocurrency. Cryptocurrency is also becoming a topic of conversation among some of the most prominent financial influencers. Recently, Tori Dunlap, the founder of Her First $100K, shared with us that she still errs on the side of caution, and advises her readers not to invest more than 5% of their portfolio in hazardous assets like cryptocurrency. According to Dunlap, who saved her first $100,000 at age 25 and is on target to have $6 million saved by the time she retires, "I believe it is extremely important to recognize that these things are still hypothetical." It's reasonable to assume that if you put in a particular amount of money, you'll be OK if you lose it.
Consider all of the dangers before making a decision on any new investment. Experts advise against investing in cryptocurrency if it implies that you will be unable to meet other financial obligations, such as debt repayment, emergency fund accumulation, or retirement account maximization. You don't have to invest in crypto simply because it's new and exciting; individuals have been effectively saving and investing for retirement long before crypto existed.