The most common scenario during 2022 has been the sale of cryptocurrencies, not only at the individual level but also institutionally, which is why, in addition to the critical economic situation, an excess supply of crypto assets is added, which affects their price and the market in general. More information on bitqt-app.com.
A digital financial market for two types of investors
The sudden and often constant changes generated within the digital financial market give rise to volatility, where investors usually define their positions.
The most drastic changes can be seen in the short term. After that, it usually goes from an upward to a downward trend, where prices can increase or decrease unpredictably and drastically. Therefore, investors evaluate the operations with caution in the cryptocurrency market.
It is essential to know that trends in any financial market do not usually last forever; they are subject to corrections, where the bulls and bears meet to define what to do.
When the market is in a bearish stage, this could perhaps have been produced by the bears after the excessive sales of digital assets, a relevant opportunity where the fear of losing everything causes the bears to take over the market, but, once reached a significant minimum value then is when the bulls come in.
It is why the market accommodates all interested parties and does not necessarily appropriate only one type of investor, since otherwise; there would be no balance between supply and demand.
Once the price of cryptocurrencies is low, the bulls begin to consider investments because investing in bearish phases guarantees potential profits in the long term.
It may take time to reach the expected level; making a timely decision regarding purchasing digital assets is essential if you are a bull. Pullbacks at the beginning of uptrends can often lead to a rebound, which could generate massive losses.
Magic does not exist in the crypto market; everything is based on analysis, statistics, and the history of digital assets, bull runs take time, and it is not an event that occurs quickly; the evolution of the price must be directly related to the supply and demand of the digital market.
Conservative-type decisions are the most indicated for bulls or bears, always considering the periods where changes occur in terms of the investor’s psychology referring to FOMO.
A trend that upset the bulls
It is evident that when a market is as vulnerable as digital currencies, it is not usually the best scenario to make financial investments; many companies sold their Bitcoin during this crypto winter, which undoubtedly managed to keep the bears in their possession of the market.
This fact does not imply that these companies, even if they have sold, are defined as financial bears; this had to do with an attitude of protecting capital, where their bullish mood is not dismissed; on the contrary, their perspective is long-term, and they may resume their crypto investments.
The most notorious case recently in terms of bullish-type companies was that of Cypherpunk, which has proven to favor investments in cryptocurrencies to establish the condition of HODL in the stock market.
Despite having liquidated all their capital invested in cryptocurrencies, these continue to consider the possibility of investing upwards in the crypto market when the opportunity to acquire a basket of cryptocurrencies arises.
These types of investors can assess the environment where we have recently seen how many established companies in the crypto market have had to liquidate or go bankrupt due to the constant declines in the price of Bitcoin and other digital currencies.
As a preventive measure, Cypherpunk decides to sell its digital assets considering timely risk management, which represents an essential element; consequently, if the risk is not evaluated promptly, then the investments cease to have a maturity level to be beginner operations.
Given the massive sale of this type of digital financial asset, controversy arises regarding their positioning in the market and their users’ confidence in them. Still, not necessarily everyone who sells their cryptocurrencies supports a downward trend.
That is why the elements that make it up, such as investors (bulls and bears), are the fundamental pieces for the market to exist and for them to make a decision at a particular moment that goes against their characteristics as an investor says that they will not continue to maintain the position that identifies them.