Cryptocurrencies like Bitcoin, Ethereum and Luna fluctuate continually. Prices can change by several percent within hours and even minutes. Also, in extreme cases, prices can either rapidly increase or plummet within the space of a day. This can cause people’s investments to potentially explode or capitulate and vanish.
As a result, it is important to know when prices could drop, and when a cryptocurrency could potentially fall. By having improved knowledge, you can hopefully react quickly to changing circumstances, and protect your investments. In this guide, we look at if this is possible, and the things you can do to tell when crypto prices are falling.
Potentially, but with no certainty and here’s how
We all wish that there was a magic crystal ball that we could use to predict exactly when things like the Luna price will rise or drop. With this foresight we could all be millionaires! However, this will never happen. The reality is, is that there are a few things we can do and look out for to predict when prices are about to drop – we discuss them below.
1. Looking for tapering-off of upward price trends
Price drops often come after a price surge or a steady price increase. It is therefore important to monitor price trends of the Luna crypto price and other cryptocurrencies you are invested in. For example, you may see the Luna price steadily increasing over a few days.
It could rise in 10% incrementally. In an ideal scenario, this increase would continue, and the price would continue to meet potential barriers and receive continued momentum and support. In these instances, the price would go up even more.
However, on the flip side, in these scenarios, a price pump is often followed by a dump. The pump and bump strategy is a great way to make money, but you have to sell at the right time – at the peak. So always look for price increases, and be ready for that increase to suddenly taper off and reverse as people sell to make their profit and run.
2. Looking for news relating to the cryptocurrency
You can find a whole host of different news sites dedicated to cryptocurrency. We advise subscribing to some of these and keeping a news feed active on your desktop or smartphone.
Large news outlets like CNN and the BBC may report about crypto, but it is only usually mega-impactful articles that won’t really help your investing. In contrast, specialized crypto news outlets present a wealth of current info relating to the market and what’s happening. Reading news articles and keeping up to date on trends can often help you see the signs of a shift in confidence, or a particular action that could drastically alter the value of a specific crypto.
To be an effective investor, you must be active within the world of cryptocurrency and immerse yourself in the industry. News sites give you an opportunity to do this and allow you to react much quicker, than if you just read generic news sites.
3. Looking at the overall market trend
Cryptocurrencies prices are often affected by other cryptocurrencies too. The overall market is incredibly similar and when one coin starts to drop, you can usually count on others following suit. Many trading platforms and exchanges even have advice and info on common pairs or groups of cryptocurrencies that commonly fall and rise together.
Therefore, it is vital that you monitor overall market trends to see how prices are progressing. Usually, if you see cryptocurrencies like Bitcoin and Ethereum falling, this causes market panic and you can guarantee that most other crypto prices will drop too. Bitcoin is the largest cryptocurrency in circulation and therefore has a large impact on market activity. It could be an idea to always have a Bitcoin price tracker active so you can check for any monumental drops that could affect your other investments.
There is no guarantee so always stay vigilant
As you can see, there are several simple things you can do to tell when things like the Luna crypto price is dropping, or when other currencies your are invested in could be dropping off. However, this is never a certainty. You can only do your best to keep ahead of trends, analyse market data, and be ready to sell if you think things are taking a turn for the worse.
Also, remember that oftentimes after a large drop, cryptocurrency prices often stabilize quickly and bounce back too. Therefore, if you fail to spot the signs, that doesn’t automatically mean that you investment is shot.
