How You Can Handle a Volatile Market

Published on
February 9, 2022

Venturing into the world of cryptocurrencies is an exciting journey. That said, if you are just getting into cryptocurrencies, you have only ever seen the good times. Experienced investors know that cryptocurrencies go through phases with ups and downs. If you want to stay in it for the long term, you have to understand that price fluctuations are part of the journey.

Market Fluctuations

The terms "bull" and "bear" are often used to describe the development of crypto markets, meaning whether they are gaining or losing value. In this context, a rising market is called a bull market, while a falling market is classified as a bear market.

Since the crypto market is generally volatile and fluctuates on a daily basis, these terms refer to longer periods of time when things are either predominantly up or down.

Bearish vs Bullish

While the term bull market can be used in a broad sense to describe any strong market activity, it is often used in traditional markets when the price of an asset rises by 20% or more from its previous low.

Bull markets are defined by optimism, investor confidence and the expectation that positive results will last for an extended time period. It is difficult to predict exactly when market trends will change. Some of this difficulty is that psychological effects and speculation can sometimes play a large role in the markets.

Cryptocurrencies have just come out of a three-year bull market. Many experts believe that this upswing was set in motion by institutional investors such as banks and hedge funds. These investors contribute huge amounts of money in one fell swoop, so prices can shoot up very quickly. Other investors try to jump on the rising prices and also buy, which keeps the momentum going. Past experience has shown that bull markets do not last forever, so investor confidence eventually fades, triggered by unfavourable developments such as new legislations or unforeseen circumstances such as the COVID 19 pandemic.

A sharp fall in prices can trigger a bear market, in which more and more investors assume that prices will fall further. This leads to a downward spiral as they sell to avoid further losses. For those who invested in cryptocurrencies at the height of a bull market, it's easy to feel frustrated when you see a price drop. Nevertheless, price corrections are best seen as an opportunity, not a burden.

How You Can Handle a Volatile Market

It is important to remember that market volatility is unavoidable. By nature, markets move up and down in the short term. Therefore, it is even more crucial to keep an eye on your long-term goals and employ measures that can help you weather this volatility. Here are some actions to keep in mind:

1. Cost-Averaging

Cost-Averaging is a strategy in which investment positions are built by investing equal sums of money at regular intervals, regardless of the asset's price or what is going on in the financial markets. It compels you to continue investing the same amount regardless of the market's fluctuations. Our new savings plans use precisely this method. With just a few taps, you can invest like a pro, whether the markets are rising or falling. You can create as many savings plans as you want and conveniently invest in the portfolios of your liking. Benefit from the cost-averaging effect today and set up your first Coinpanion savings plan!

2. Diversification

Diversification basically means not putting all your eggs in one basket. In other words, building a portfolio that is made up of many different investments that behave in different ways. At Coinpanion, we make sure to offer well-diversified portfolios: They include Bitcoin, but also altcoins, gaming projects, virtual reality, smart contract protocols, lending platforms, NFT infrastructure and decentralised exchanges. To reduce your risk exposure diversification is at the centre of our investment strategy.

3. Long-Term Investing

Short-term losses can cause anxiety, but letting emotions guide investment decisions can prove costly. A key factor in coping with market volatility is to focus on long-term results rather than the daily fluctuations along the way. Think ahead and keep your eye on the goal.

FAQ

How does Coinpanion work?
We help you to invest in the cryptocurrency market like a professional. Simply select a smart portfolio and get started straight away.

We help you to invest in the cryptocurrency market like a professional. Simply select a smart portfolio and get started straight away.

How much does Coinpanion charge?
If you invest in a portfolio (and not in a single cryptocurrency), a service fee of 2% per year is charged. The fees can be viewed at any time in your transaction history.

If you invest in a portfolio (and not in a single cryptocurrency), a service fee of 2% per year is charged. The fees can be viewed at any time in your transaction history.

Who can invest?
You need to be over 18 and live in a country that is part of the European Union or the European Economic Area (Switzerland, Liechtenstein, Norway, Iceland).

You need to be over 18 and live in a country that is part of the European Union or the European Economic Area (Switzerland, Liechtenstein, Norway, Iceland).

Can companies invest?
Yes, we already have several corporate clients. The minimum investment for corporate accounts is €25.000. Please send us a request to support@coinpanion.com and we will take care of it.

Yes, we already have a large number of corporate clients. The minimum investment for corporate accounts is €25.000. Please send us a request to support@coinpanion.com and we will help your company along the way.

What is the minimum deposit?
The minimum deposit is €50.

The minimum deposit is €50.

How long does it usually take for my transfer to arrive?
That depends on your bank. On average, a transfer takes 1-3 working days.

That depends on your bank. On average, a transfer takes 1-3 working days.

How can I set up a savings plan?
After you have transferred your first deposit, you can easily set up a savings plan in your dashboard. The minimum monthly investment is €10.

After you have transferred your first deposit, you can easily set up a savings plan in your dashboard. The minimum monthly investment is €10.

When will the start bonus or referral bonus be credited?
The start and referral bonus will be credited within 48 hours after receipt of payment.

The start and referral bonus will be credited within 48 hours after receipt of payment.

What happens to my deposits and withdrawals?
Deposits and withdrawals are carried out via third-party providers who take care of the purchase and custody of the cryptocurrencies. Coinpanion takes care of the rest.

Deposits and withdrawals are carried out via third-party providers who take care of the purchase and custody of the cryptocurrencies. Coinpanion takes care of the rest.

How can I deposit money?
We have several payment options for you. You can deposit money with your debit card, credit card and with a direct bank transfer.

We have several payment options for you. You can deposit money with your debit card, credit card and with a direct bank transfer.

How/when can I withdraw?
You can withdraw at any time on your dashboard.

You can withdraw at any time on your dashboard.

Is there a minimum term?
No, you can withdraw at any time.

No, you can withdraw at any time.

In which currencies can I withdraw?
Withdrawals are possible at any time and are currently exclusively in euros.

Withdrawals are possible at any time and are currently exclusively in euros.

What is the difference between the Coinpanion portfolios?
Each portfolio has a unique allocation. You can find out more here.

Each portfolio has a unique allocation. You can find out more here.

Which cryptocurrencies are included in the portfolios?
Coinpanion offers risk and theme-based portfolios. Depending on the portfolio you choose, other cryptocurrencies are included. Learn more about it here.

Coinpanion offers risk and theme-based portfolios. Depending on the portfolio you choose, other cryptocurrencies are included. Learn more about it here.

How is the trading of the portfolios handled?
The cryptocurrencies are traded according to the portfolio's underlying strategy. You can also adjust this via the settings. All cryptocurrencies are traded via third-party providers. You can find more information in the terms and conditions.

The cryptocurrencies are traded according to the portfolio's underlying strategy. You can also adjust this via the settings. All cryptocurrencies are traded via third-party providers. You can find more information in the terms and conditions.

Can I invest in more than one Portfolio?
Yes, you can invest in multiple portfolios at the same time.

Yes, you can invest in multiple portfolios at the same time.

How can I take care of the taxation?
Generally, taxation depends on the legal situation in your country. Coinpanion gives you the possibility to download all transactions directly on the platform. In addition, we have a partnership with the cryptocurrency tax company Blockpit. Through them, we can offer you a complete tax report. In cooperation with Blockpit, Coinpanion offers you a complete tax report free of charge for download.

Generally, taxation depends on the legal situation in your country. Coinpanion gives you the possibility to download all transactions directly on the platform. In addition, we have a partnership with the cryptocurrency tax company Blockpit. Through them, we can offer you a complete tax report. In cooperation with Blockpit, Coinpanion offers you a complete tax report free of charge for download.