Bitcoin, cryptocurrency market crash: What investors should do now

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Prices of Bitcoin and Ethereum continued to tumble on Thursday as the cryptocurrency market was trading in the red. The total market capitalization of crypto assets has gone from almost $3 trillion in November 2021 to roughly $900 billion as of June 29, according to the tracker CoinMarketCap.

Meanwhile, bitcoin, the dominant and world’s most popular cryptocurrency, fell from a high of more than $67,000 to its current level of $20,000.

Ethereum, the world’s second largest cryptocurrency by market capitalization, fell by over four per cent to $1,093.06.

WILL BITCOIN BOUNCE-BACK?

“Bitcoin is currently trading at the $20,028 level and has been down by 56 per cent since the beginning of the year. As the selling price in the market has risen, if bulls can keep Bitcoin above the $20,000 level, we can expect a bounce-back soon,” said Edul Patel, co-founder and CEO of Mudrex.

“But if Bitcoin falls below the current level, the next support level may likely be at $17,000,” Patel said.

TIPS FOR CRYPTO INVESTORS

No matter what your personal stance on crypto, the key to handling extreme market moves is having a plan in place, so you do not act out of pure panic, as per a Reuters report.

If this year’s crypto swoon has made you realize you are not equipped to handle such swings, then do not assume even more risk.

“For clients who have a large position in crypto, we recommend using this time to tax loss harvest,” said Kevin Lum, founder and CEO of Foundry Financial in Los Angeles, according to a Reuters report.

Losses function the same as they would for equities, Lum said. If your losses exceed your total capital gains for the year, you can deduct up to $3,000 against your ordinary income. “Losses beyond $3,000 can be carried forward until death to offset future gains.”

As with any more speculative investment, it is wise to keep it to a certain percentage of your holdings a particular ‘bucket’ that will not swamp the rest of your portfolio.

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