Important factors to ponder before venturing a BTC sale
In the ever-evolving world of cryptocurrency, predicting its future can be a challenging endeavour, given its notorious volatility. This volatility underscores the importance of having a predefined strategy for selling or holding Bitcoin, a tactic designed to shield investors from acting on emotion.
The 2020 bull run in Bitcoin, for instance, may have been catalysed by the Bitcoin Halving that occurred in May. Conversely, the 2017 bull run was primarily retail-focussed and speculation-driven by smaller investors, a stark contrast to the current market dynamics where bigger players such as banks and economists are driving the growth.
One approach to managing this volatility could be to define one day per year to review the price and act according to a predetermined strategy. This method could help avoid emotional selling, a common pitfall for many investors. Selling about 20-30% of Bitcoin could be a reasonable strategy for those wanting to sell for financial gains but not lose it all.
However, timing the market is a task fraught with difficulty for investors. The 2020 bull run, for example, is different from the 2017 bull run as it is driven by bigger players such as institutions like BlackRock, who are buying Bitcoin for long-term holding. These institutions view Bitcoin as a strategic asset for portfolio diversification and a hedge against inflation.
It's also crucial to remember that cryptocurrency transactions are considered "taxable events" in most countries. To simplify the tax management process, Bitpanda and Blockpit have joined forces to make it easier for investors to manage their crypto taxes.
It's essential to approach this information as a general guide for informational purposes only and not as investment advice. Emotionally selling Bitcoin can be a problem for investors, and having a predefined strategy can help mitigate this issue.
Lastly, it's important to note that institutions buying Bitcoin are not doing so for short-term gain but for long-term holding, a testament to the growing acceptance and recognition of Bitcoin as a viable asset class.
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