In a good week now, cryptocurrency prices have known only one direction: down. One of the reasons for this is the crash of Terra Network stablecoin UST.
Our columnist started investing in crypto early on, but only a little and only as “play money”. Now she has bought Ethereum with a purchase order during the crisis for 2100 euros.
It remains to be seen if she made a good purchase with it. Shortly after their purchase, the coin continued to lose value. It’s a shame, but she’s interested in long-term investments.
Is the crypto bubble finally bursting? The past week has not looked good for crypto investors. Bitcoin fell below the psychological limit of 30,000 US dollars, and the Terra Luna project caused the biggest money destruction on the market: Within a week, the coin fell from over 80 euros to 11 cents. Many investors’ hopes and dreams disappeared into thin air in a very short time.
No return without risk
The current situation reminds me of the situation in early 2018. Back then, in August 2017, I bought a bitcoin for only 3,200 euros. In addition, I have invested smaller amounts in Ethereum, Monero, IOTA and Ripple. At the time, I went in with the mindset that this was really my gambling money. I knew very well that the risk was great and that I too could lose everything.
But my willingness to take risks was rewarded: In December, I lay on the beach in Vietnam and watched my fortune grow every hour. Bitcoin alone has risen to almost 17,000 euros during this time. The other coins I kept also performed incredibly well. I had bought Monero worth 35 euros. This value was almost tenfold. But from there it only went down. Throughout 2018, no one knew what was going to happen to crypto. In December 2018, the price of a bitcoin was only 2800 euros.
The big crash or the big opportunity?
The crash we are now experiencing is quite another: we are in very turbulent times in terms of the economy as a whole. In addition, there is news almost daily about possible legislative changes, which are sometimes positive and sometimes negative for the crypto industry. However, the downward spiral came about through a stack coin. A stablecoin is a cryptocurrency that is linked to the value of a real currency. Similar to how the dollar used to be gold. Stablecoin UST was now pegged to the dollar and was to ensure that the coin remained stable in value. When stablecoin was recently at 16 cents, it was clear that the math had not succeeded and that the whole project had failed.
Such events lead to mass panic, especially in an uncertain market environment, and eventually the crash that we saw in mid-May occurred.
Now you can read again in the media about all the people who have lost all their fortune. Many people forget that, of course – or especially – the same rules apply to cryptocurrencies as to equities: diversify and spread your money across different assets. If you put all your money in just one stock or currency, you might as well go to the casino. Especially when it comes to Altcoins. Moreover, you should never put all your money in cryptocurrencies.
Buy cryptocurrencies by purchase order
So what did I do when the price collapsed? I took the chance and bought more. I have been planning to increase my position in Ethereum for a few months now. When prices dropped, I placed a purchase order. Such an order takes effect as soon as the price reaches or falls below a certain price.
Such orders are also known on the stock exchange. I have created a limited order where I have specified the price I want to buy the coin for. In my case it was 2100 euros. Of course, it is important that enough money is invested in the stock market. If the price drops to the value I entered, the order is triggered automatically and I bought the coin cheaper.
I still made a mistake: in fact, I wanted to lower my limit order even more, assuming the price would be even cheaper. Eventually I forgot about it in the evening so my purchase order was triggered during the night. For here is the difference in stock trading: Cryptocurrencies can be traded at any time.
Was my purchase the right decision?
For me, another purchase to expand my positions had been on the agenda for a long time. I will continue to monitor the market, and should there be another price drop or even a crash, I will also use this for myself. But very important: Only with money that I can do without and whose use does not ruin me financially.
Whether I have made a good purchase with it or not remains to be seen in the future. Shortly after my purchase, the coin continued to lose value. While this is annoying, I am interested in investing in the long run. Conflicting statements can also be found in the theory: some say “do not grab the falling knife”, others say “buy the dip”. Whether you have wisely used a dip, ie a price drop, or have grabbed the falling knife and now want to suffer greater losses, only one thing will emerge: the future.
Very important in the end: This is not an investment recommendation or advice. Cryptocurrencies are very risky and very volatile. In the worst case, you can lose all your efforts here! Always do your own research and never listen blindly to other opinions or recommendations.
Margarethe Honisch is a financial blogger and author. On your website fortunalista and her eponymous Instagram account She provides tips on retirement plans and investments. She writes the column “Make More Money” for Business Insider.