Bitcoin (BTC) Temporarily Topped the 600,000 Yen Mark! How to Cope with the Rise and Fall Learned From the Lessons of the Bubble
Bitcoin since 2019 has been dragging along at low speeds with a value of around 400,000 Yen, but it is finally showing signs of recovery. On April 4, 2019, it recorded the highest mark of 600,000 Yen this year.
However, Bitcoin’s price movement cannot be felt as quickly as possible, and the risk of security problems at exchanges can’t be kept behind it, so I cannot be very optimistic. Let’s review the lessons we learned during the Bitcoin bubble period so that we can stay level-headed even if Bitcoin gets rekted or moons.
The price of Bitcoin (BTC) is 600,000 Yen! Will it rise further?
The price of Bitcoin (BTC) reached 600,000 Yen on April 4, 2019 and showed very strong growth. The current price (April 12) is a little lower from the peak at 568,000 million Yen, but it is steadily increasing from the price range of 300,000 to 400,000 yen in the first half of this year.
In addition, the market capitalization of all cryptocurrencies including Bitcoin exceeded 20 trillion Yen on April 4. We have not seen this number since November 17, 2018, and it can be said that in addition to Bitcoin, the market as a whole showed signs of recovery in cryptocurrency.
(Reference: https://crypto-times.jp/btc-600k-yen-24hvolume-max/> CryptoTimes, 2019/4/4, Bitcoin temporarily reaches 600,000 in Japanese Yen! 24 hours trading high recorded as the largest this year)
If the price of Bitcoin continues to rise, it may be possible to develop into a bubble like December 2017. However, you may be surprised at the subsequent Bitcoin and Alt Coin plunge. The Bitcoin price at that time was 1 BTC = 2 million Yen, and even the word “Okuribito (Crypto Millionaire in Japanese)” was born. However, in response to China’s tighter regulations and the Coincheck hacking incident, cryptocurrencies have fallen sharply as if it all was a lie.
The overall market capitalization has shrunk by to about one-sixth, so many investors may have lost their investment or may not be able to sell them for anything. So, what should investors be aware of if Bitcoin moves sharply again this time? Now that we have learned a lot from the previous Bitcoin bubble, let’s take measures to avoid suffering the same pain.
Countermeasures against price spikes and lessons learned at the time of the bubble
At the height of the Bitcoin bubble, there was a change in the external environment with countries such as China and South Korea taking a tough stance on cryptocurrency. In addition, the hacking incident that occurred at a major exchange and the sloppy security circumstances of the exchange resulting from it, so to speak, “outside” of the cryptocurrency space is one of the main causes of the crash.
However, China has not yet loosened restrictions on cryptocurrencies and regulations have not been fully developed worldwide. The security situation of the exchange is not complete, leaving the risk of causing major problems such as hacks and 51% attacks.
For this reason, ensure that you are ready now so that you can cope with Bitcoin and Alt Coins skyrocketing. From the lessons of the cryptocurrency crash that occurred last year, it is essential to explore various measures.
Be sure to diversify from BTC
In the world of investment, it is often mentioned how important “risk diversification” is, but there is nothing like that in the cryptocurrency market. Bitcoin prices often go up and down in the order of tens of thousands of Yen during the day, and there is fear of investing in only one crypto.
To diversify these risks, distribute funds to cryptos other than Bitcoin. It is so-called “diversifying your investments.” For example, the 2nd largest market capitalization Ethereum and the 3rd largest Ripple have not been broken down in the past few years maintaining stable popularity. By investing in multiple cryptos, even if the value of a particular crypto falls, your overall portfolio can be recovered by others.
In addition, it is important to diversify into funds other than cryptocurrency. When looking at past legislative policies and exchange incidents, the negative effects are transmitted to many cryptocurrencies generally resulting in huge price falls.
Don’t panic / don’t rush
If you think the price of Bitcoin has soared, let’s say it has plunged and you have a big loss. However, even at such times, there is no risk of rushing to claim your losses. For example, the value of Bitcoin has decelerated sharply from January 2018, and the value has dropped to nearly 1 BTC = 300,000 Yen at its lowest point. If I bought 1 BTC at around 500,000 Yen and held it, an unrealized loss of nearly 200,000 Yen exists.
However, even during the above-mentioned crisis, those who acquired BTC slowly and slowly have now recovered so much that they it has risen above 500,000 Yen. On the contrary, since the price of 600,000 Yen was given on April 4, 2019, the person who bought at 500,000 Yen turned it into an unrealized profit of 100,000 Yen.
It has been about 10 years since the birth of cryptocurrency. If there is a case that the price drops temporarily, you should still visit the timing when the price will rise after updating the record highs. In fact, as it is currently recovering, one can say that it is one of the options to carefully HODL for the long-term.
Do not leave your crypto on exchanges
The Coincheck hacking incident during January 2018 damaged many people’s trust for those who had deposited crypto on the exchange. Although many of the client assets are stored on the exchange, you must always move them to an online wallet called a “Hot Wallet” when you trade. Hackers go after these hot wallets connected to the Internet. Because these hacking risks have not gone away completely, be sure to transfer your crypto to your own wallet when you are not trading. If you use “Cold Wallets” that can store cryptocurrency offline, you won’t be bothered by such hacking incidents.
The market price of Bitcoin exceeds 600,000 Yen. In the future, there may be a surge as in the past Bitcoin Bubble or there is a risk that the external environment will change overnight and cause a major crash. However, as we have already experienced bubbles, it is important to prepare for these drastic price fluctuations with the wisdom we have attained from them. Here are a few points:
・ Be sure to diversify from BTC
・ Don’t panic, don’t rush
・ Do not leave your crypto on exchanges
In particular, the excessive price fluctuation of Bitcoin and the security problems of exchanges have not been completely solved, so let’s calmly cope with the above suggestions in case something similar to the past happens.