How to Handle Bitcoin Price Volatility

Soon after posting Bitcoin goes Ballistic and Smashes $11,000 it fell by $2,000 and has since moved back to above 11k. With this level of volatility in the market, and so much money on the line, it is easy to make rash, spur-of-the-moment decisions. 

The types of decisions I'm referring to are:

• selling a vast quantity or all of your Bitcoin thinking it's topped
• attempting to trade your Bitcoin to try and cash in on the volatility
• buying Bitcoin during a rapid price rise for the fear of missing out

​Making these types of decisions can have serious consequences, especially when made under financial pressure, stress or time pressure, whether it be perceived or real. This being the case, it's far better take the time to think things through and develop a plan for what you will and won't do in a volatile market. This sets you up for both present and future action, because one thing's for sure, volatility in Bitcoin isn't going away any time soon.

The following points are suggestions of some of the things to consider when making a plan for how to handle your Bitcoin in a voltile market.

Selling Bitcoin:

• Do you have to sell? Are there other ways you can meet your immediate financial needs? It puts you in a stronger position if you've only invested what you can afford to lose. Is this the case for you?
• If you must sell, how much do you need? Are you in a position to have an amount that is purely a store of value, that you will never sell or only at a pre-determined date or price?
• What will be your profit or loss if you sell at specified price points? Are you content with that?
• Will your regret selling if the price increases by 10x or more? Will you regret holding if the price decreases by 10x or more? Which will you regret more?

Trading Bitcoin:

• Do you have training and experience in trading traditional markets, Bitcoin or other cryptocurrencies? If so, have you been successful? Don't kid yourself into thinking you're a trader when you're not, or that it's easy or you'll get lucky. Like gambling, an early win can be the worst thing that can happen for you in the long term.
• Are you prepared to lose Bitcoin chasing further gains? This is a fast moving, highly unpredictable market and even experienced traders can lose Bitcoin in it.
• Will you regret not just holding? Holding, without trading, over the past 12 months has granted 10x returns, and that's without taking into consideration free coins from Bitcoin (BTC) forks, such as, Bitcoin Cash (BCH) and Bitcoin Gold (BTG).

Buying Bitcoin:

• Are you buying during a bull run purely for fear of missing out?
• Can you afford to lose the money you are buying the Bitcoin with?
• Can you afford to hold the Bitcoin long term if the price falls without recovering for an extended period of months or years?
• Would it be better to wait and buy when there is a dip?
• Do you already have a sufficient store of Bitcoin or are you trying to keep up with or impress others? Of course it's always nice to have more Bitcoin, however, understanding your motivation is also important.

Whatever you do with your Bitcoin, be as prepared and intentional as you can be about the future. More highs and lows will follow, and the temptation to act impulsively lurks in every significant move of the market.

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