You Are Not at a Loss During Cryptocurrency Drops Until You Cash Out

The cryptocurrency market is a fascinating and dynamic environment with great growth potential. However, it is still relatively small compared to traditional investment markets, contributing to its higher volatility. These significant fluctuations can be unsettling for new investors. Despite possible sharp declines, it is evident that cryptocurrencies will grow over the long term. For beginners, market downturns can be worrisome, making it seem like their investment is lost. However, a real loss only occurs when you decide to withdraw your funds during a market decline.

Better to Invest than to Speculate

Investing in cryptocurrencies behaves similarly to investing in other assets. All markets sometimes rise and sometimes fall, and cryptocurrencies are no exception. They differ only in the extent, timing, and speed of these fluctuations. The cryptocurrency market is volatile, which can make novice investors nervous. However, price corrections represent an opportunity to buy more and expand your investment portfolio.

Focus on long-term investing rather than speculating, which aims to make a quick profit. Speculating carries significant risk, as no one can predict short-term market movements. What can be better predicted is long-term market growth. Investors often find that the longer they keep their finances invested, the higher their chance of achieving profits. Fumbi products are built on the expectation of long-term market growth in cryptocurrencies.

Source: CoinmarketCap

When a Loss is Not Really a Loss

When your funds are invested in cryptocurrencies and the market declines, it may seem like you are losing money. In reality, however, the loss only occurs when you sell your cryptocurrencies at an inappropriate time. Although corrections in the cryptocurrency market are not pleasant, long-term investors know that markets naturally rise and fall, and the cryptocurrency market especially.

Maintaining an investment in cryptocurrencies during a downturn is the only way your portfolio can later benefit from market recovery. A market rebound can easily return investments to profitability, often with additional gains. Conversely, if you sell all your cryptocurrencies during a decline, you miss out on the recovery opportunity. Thus, you are not at a loss during drops, as it may initially appear, if you do not sell your cryptocurrencies.

Buying Bitcoin today does not automatically mean you will be in profit in a month. After a month, or even after half a year, you might still be at a loss without it disrupting the assumption of long-term growth. It is good to recognize that a possible significant price increase over several years does not come without substantial turbulence.

What to Do When the Market is in Red?

A better strategy instead of selling off is to buy more and thus rebalance your portfolio to match market conditions and outlooks, maintaining the overall desired combination of cryptocurrencies. For example, if you previously invested €1,000 and the value of your investment falls by 50% to €500, you are in an unrealized loss.

What now?

• If you do not sell your cryptocurrencies and the value of the investment grows by 100%, you would have your initial deposit of €1,000 back.

• If you were to invest another €1,000 during this decline to €500, your current investment would be €1,500. After a 100% market increase, it would be worth €3,000. After deducting your deposits totaling €2,000, this means a net profit of €1,000.

• However, if you were to withdraw the remainder of your investment in case of a 50% decline, you would no longer be able to profit from the market recovery. Therefore, it may be worth investing when the market is down.
  

Invest in Cryptocurrencies Simply with Fumbi

If you are considering investing in cryptocurrencies, Fumbi is here for you. With us, you can invest simply, transparently, safely, and effectively.

Our Fumbi Index Portfolio tracks the market capitalization of cryptocurrencies, being balanced daily by our own intelligent Fumbi Algorithm. The algorithm mimics overall market growth and does not rely on individual cryptocurrencies.

During the first half of this calendar year, the Fumbi Index Portfolio grew by a total of 43.40%.

The portfolio’s growth was mainly influenced by the January approval of spot ETFs for Bitcoin in the USA, which brought a new wave of optimism and fresh capital to the market. The Fumbi Index Portfolio reached its maximum possible appreciation in the first half of 2024 on March 11, when Bitcoin surpassed its previous all-time high.

If you are a more experienced investor, Advanced Portfolios are suitable for you. With this product, you can create your own personalized crypto portfolios that align with your investment goals and preferences. Our product is designed to provide you with greater flexibility and freedom in selecting and purchasing cryptocurrencies that meet your requirements.

For long-term savings for the future, you can also use our Bitcoin and Gold product. It uniquely combines the advantages of two worlds: the potential of the fast-growing Bitcoin and the stability of real gold. Besides Bitcoin, you also invest in the cryptocurrency PAX Gold, which is backed by real gold stored by Paxos. Gold stabilizes possible fluctuations.

This product has proven to be ideal for saving for the future – outperforming even well-known traditional stock indices such as S&P 500 and DAX.

Between January and June of this calendar year, the value of investments in this product grew by an impressive 37.29%. The performance of this product is also supported by its active rebalancing, managed by our Fumbi Algorithm. Thanks to it, the asset that increased is sold daily, and the asset that increased less or decreased is purchased, ensuring the index always remains balanced at 50:50.

Join our more than 140,000 users and take advantage of the potential of cryptocurrencies simply, safely, and effectively.