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So you want to play in crypto and become a millionaire overnight? Brace yourself for more days like Wednesday.
Bitcoin plunged as much as 30% to about $30,000, according to Coin Metrics. Ether dropped more than 40% in less than 24 hours, breaking below $2,000 at one point. Both gained back substantial ground by the end of the day.
But this is par for the course in the world of trading cryptocurrencies. Huge run-ups and equally drastic falls. Over and over.
“Massive retracements are always scary, but seasoned investors tend to see them as buying opportunities,” said Mati Greenspan, portfolio manager and founder of Quantum Economics.
Both crypto and market experts tell CNBC that this is the new normal of investing, and traders should just get used to it.
Value and volatility
Bitcoin’s volatility has to do with a lot of things.
On Wednesday, for example, news of China cracking down on banks completing crypto transactions, plus the tailwinds of Tesla‘s decision to no longer accept bitcoin as a form of payment, certainly helped drive the carnage among digital currencies. The overall crypto market was also probably due for a correction after weeks of tweet-inspired record climbs, courtesy of Elon Musk.
But volatility is