Dealing with The Inherent Volatility of Bitcoin in Your Investment Portfolio

Volatility is something that most investors are familiar with, something that is a kind of necessary evil within the world of financial markets. But Bitcoin is an entirely different animal in terms of its volatility. The digital coins, which have garnered a lot of acclaim for the convenience with which they facilitate financial transactions and a lot of criticism for their decentralized nature, has become the poster child for volatility. For every rapid rise that they enjoy that sends investors into fits of joy, there seems to be an accompanying plummet in value that will have those same investors tearing out their hair. Imagine a rollercoaster ride that goes through a big pile of money and then through a big pile of grease that makes the money slip out of your hands and you’ve got some idea of what Bitcoin investing is all about.

Of course, that doesn’t mean that you should avoid it all together. By contrast, the Bitcoin boom still seems like it has a lot of legs left in it, which is why you should have some exposure via your own investment ideas or the assistance of a digital trader like Bitcoin Code. But you should have some kind of plan for the volatility that Bitcoin is bound to encounter. If not, you might find that no amount of medicine taken beforehand can prepare you for the queasiness of the rollercoaster ride that you are bound to endure.

1. Constant Monitoring

In the case of Bitcoin, the rises can come out of nowhere, and the drops can come just as suddenly. As a result, the person who lets their Bitcoin account be without vigilantly watching it could be in for a major investment disaster. Make sure you include some stops in your account and that you are notified when those stops are reached so that you can take immediate action. That will prevent you from debilitating losses from which you can’t recover.

2. Repositioning

Many people want to rest on their laurels when they get involved in Bitcoin and it takes one of its patented jumps in value. But that’s when you need to start thinking about protecting those profits. One way to do that is to make sure that your exposure to Bitcoin never rises above a certain amount. After a rise and it goes over that predetermined percentage, you can sell some off to once again strike the proper balance.

3. Keep Your Eye on The Prize

If you get caught up in the constant yet ultimately temporary shifts in the value of Bitcoin, you can easily get too carried away with the rises or the falls. But it might be a better idea for you to look at the long-term prospects of the coins. If you believe that Bitcoin, after all the swoons and spikes, will reach a level higher than it is right now at some point in the future, stick with it. If not, maybe it’s time for you to sell it off or don’t get involved in it at all.

Volatility will be riding side-saddle with Bitcoin for a while. Take these steps to ready yourself for it and try to enjoy the ride.