Buying low: A few Points to Consider
Many traders know the strategy of buying a failure. Such movements sometimes turn out to be good, but sometimes, the current drop point is only the tip of the iceberg, because after the initial drop, an even greater drop occurs, and those who bought the initial drop remain at a loss. So maybe you should think a little and spend some time on some research?
Why the failure?
Fluctuations in cryptocurrency prices are a common and normal phenomenon, and this is consistent with the dynamics of the market. In fact, nothing stays green forever, after some good profit comes some price correction and a pullback. Consequently, cryptocurrency prices periodically jump between profit and loss.
However, sometimes this price drop exceeds the normal pullback range, and is not due to normal market dynamics, but due to some other market forces, including project updates, team activity or FUD. Investors are always waiting for this kind of failure, because the price tends to fall so much that it leads to a drop in prices of up to 70%. “Such failures bring the greatest benefit”, but wait! Why the failure? Why has the price dropped so much?
It is very important to study the events that led to this sudden drop in prices. Greed, when others are afraid, is undoubtedly a good move, but sometimes it can have unpleasant consequences, and in reality this step is always risky. If you take the time to consider certain thoughts before “becoming greedy”, it will increase your chances of preventing some disasters. The price can drop significantly in the case of irregular actions of the team behind the project in which you are investing. This always drives the price crazy and may possibly fall to the minimum mark if the team is gone!
In some other cases, statements of fear, uncertainty and doubt (FUD) can lead to serious consequences for the cost of projects. They always have a negative impact on the project. In this case, checking the validity of these statements may be useful in the decision-making process. If FUD is indeed present, then it is definitely not FUD, but facts that should be seriously considered.
What are the chances of recovery?
Regardless of what caused the price drop, there is always a chance of recovery, especially in the crypto space. “Impossible” is just a word thrown out for no reason. No matter how bad the project is, it can change its state if the right steps are taken. But what are the chances that the right steps will be taken, and what are the possibilities of the market, the expected reaction to these movements?
Recovery depends on two factors: the project makes the right steps and the market reacts positively to its actions. Recovery cannot occur without observing these two factors, well, at least satisfactorily. Here, of course, it is important to study the team behind the project and their reaction to the fall. How the team reacts to the fall in the cost of their project, and how they hope to get out of the hole. In a situation where the team has already given up on their project, recovery is almost impossible, however, as I have already said, “impossibility” is an illusion in the crypto space. But if the team actually drops the project, then the recovery will be far-fetched.
Restoring attention and love for the market requires constant masterpieces from the project, but this cannot happen without a cohesive team. Considering the chances that the team will go this way before buying a failure can really be a godsend for you as an investor.
After all, making decisions in cryptocurrency trading has always been a difficult task. “Luck still rules,” and the impossibility is just an illusion. Research and “informed decision” only increase your chances of making the right steps, but again, they do not guarantee a positive result.