Why the market has bubbles and crashes

Prices fluctuate because of confidence in the market — the addition of mined coins factor in, as do large purchases or sales, and everything in between. A bubble occurs when confidence in a coin escalates quickly at a rate disproportionate to its actual value.

But ... bubbles burst. A crash occurs when confidence in a coin starts to fail. Once investors start to believe that a coin’s price is over-inflated they start to sell which can cause a frenzy of selling and the market to crash.

A lot of stocks and crypto are based on how bullish (confident) or bearish (a lack of confidence) investors collectively are. So if you’re looking to make short term financial gains, it’s a good idea to keep an eye on the market and follow a few simple guidelines:

Celebrate the good times … When the cryptocurrency you’ve invested in shoots up in price, many investors consider selling at least a portion of their sales. When people say "buy low sell high" this is what they're talking about. If you're hoping to make short-term profits, market spikes are great for you. Sell some portion of your coins and keep the remainder in the market to continue growing or riding the waves of the market.

HODL through the bad times … back in 2013 someone in the crypto community misspelled "hold" as "HODL" and they did it in all caps. Now you'll see all over Twitter and Reddit when the market takes a dip and crypto enthusiasts encourage each other to hold on tight to their current crypto, essentially telling you to wait out the dip for better times ahead.

Ride that crypto roller coaster to the moon. Many people get into bitcoin or another cryptocurrency to make profits in the long term. If it's the future of money you might as well have some and hold on to it as long as you can.

It’s worth it to check out different strategies to help maximize your profits ... including dollar-cost averaging, where you buy in at a certain amount on a regular basis. You might buy $25 worth of Bitcoin every week regardless of peaks and dips in hopes that long term you’ll average out on top without having to make a one-time large investment and any particular price.

No matter what strategy you use, or what your plan is for the inevitable market fluctuations, in my opinion getting into the market in some way is a good idea - but this isn’t financial advice so if you want to just keep learning about crypto without getting any skin in the game - that’s worthwhile too, education is the first step!