This Week In Crypto: Bitcoin Swings, U.S. Crypto Regulations

Crypto gained international attention this week as the chairman of the United States Federal Reserve made statements about possible regulation and the Italian government banned a popular cryptocurrency exchange.

Here’s a look at this week’s big crypto news:

• The Federal Reserve Chairman said the United States might need more crypto regulation, but long-term HODLers of big coins like Ethereum and Bitcoin probably don’t have to worry about changing their strategy. , according to experts.
• The main cryptocurrency exchange Binance is no longer authorized to operate in Italy, according to a statement from Italian regulators. This decision shows how easily new national regulations can impact the current cryptocurrency infrastructure.
• Square Inc. has announced the construction of a new decentralized financial unit using Bitcoin, according to CEO Jack Dorsey tweets. This is the latest example of a major player investing in the potential of blockchain and cryptocurrency.

Square creates a new company (joining Seller, Cash App and Tidal) focused on building an open development platform with the sole purpose of facilitating the creation of non-custodial, unlicensed and decentralized financial services. Our main goal is #Bitcoin. His name is to be determined.

– jack (@jack) July 15, 2021

At the same time, the price of Bitcoin has seen its usual swings this week, rising from a high of around $ 34,463 to around $ 31,108, according to Coindesk.

Bitcoin is the largest cryptocurrency by market cap and a good indicator of the crypto market in general, as other coins like Ethereum (and smaller altcoins) tend to follow its trends. While an almost 10% drop in value would be notable for normal investments, this is a normal variation for Bitcoin, which has seen its value drop by more than 50% in recent months. That’s not to say that a 10% drop is something to be taken lightly, and that’s also why investment experts recommend investing only in crypto, which you are okay with losing.

The cryptocurrency space is still very new, and everything from innovation to regulation can have a disproportionate impact on investors. Here’s how you can invest smart, regardless of what’s in the news or Bitcoin’s price fluctuations.

How investors should manage volatility

The volatility of cryptocurrencies is nothing new, and you should be comfortable with this if you decide to invest.

The volatility can be attributed to an “immature market,” says Ollie Leech, editor-in-chief at Coindesk, a cryptocurrency outlet. Everything from a celebrity tweet to new federal regulations can cause prices to skyrocket.

“If Elon Musk puts the hashtag Bitcoin in his Twitter bio, he sends Bitcoin up to 10%,” says Leech.

This unpredictability is part of the reason investment experts warn against investing huge amounts of your portfolio in a risky asset like crypto. Many recommend keeping your crypto holdings less than 5% of your total portfolio.

For new investors, the daily fluctuations can seem frightening. But if you’ve invested with a buy-and-hold strategy, there’s nothing to worry about declines, says Huymphrey Yang, the personal finance expert behind Humphrey Talks. Yang recommends a simple solution: don’t look at your investment.

“Don’t check it. It is the best thing you can do. If you let your emotions in too much, you risk selling at the wrong time, making the wrong decision, ”says Yang.

This is the traditional ‘set it and forget it’ advice that many traditional long-term investors follow. If you can’t get on board and the extreme lows continue to worry you, you may have too much to invest in your cryptocurrency investments.

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