Use Dollar Cost Average (DCA) Strategy
The average cost in dollars or English Dollars Cost Averaging is one of the simplest, yet most powerful investment methods! It is even more effective when the markets go down.
Dollar Cost Averaging consists of dividing your investment into small parts that will be placed in the long term over several months or years.
For example, you have 10,000 euros that you want to invest in Bitcoin. Instead of taking the risk of buying 10,000 euros in BTC at the worst time (in November 2021 for example), you divide your 10,000 into 20 shares of 500 euros. Each part will be used to buy Bitcoin each month for example.
Thus, you spread your investment over 20 months and you will have different purchase prices for each month.
The objective of DCA is to reduce the impact of volatility and the sudden drop in the markets.
The other benefit is that you buy more BTC when the markets go down, and you reduce your exposure when the Bitcoin price is too high.
For example, your 500 euros will allow you to buy more BTC when its price is at $25,000 than when the price is at $50,000.
Crypto exchanges do not allow you to sell tokens without owning them first. The possibilities are thus limited to take advantage of the fall in the crypto markets.
However, derivatives are a solution. Most crypto brokers (among the big ones) offer cryptocurrency futures. These futures allow you to have exposure to the downside. You can sell the Bitcoin without having purchased coins beforehand.
CFDs are even simpler. They are offered by online brokers traditional. CFDs allow you to sell cryptocurrencies and take advantage of their decline.