With every sell-off in Bitcoin, the amateurs are separated from the veterans based on how they react. The smart money buys what the weak hands are selling, and so far, the buyers have always prevailed in the end.

I know, it’s hard to be thankful for a big price dip when you already own Bitcoin and the value of your cryptocurrency holdings is falling fast. However, perspective is crucial. If you’ve been in the crypto game for a while, you’ve witnessed deeper dips than Bitcoin’s drop from $70,000 to $57,000.

Speaking of perspective, Bitcoin was only $25,000 in September of last year. That’s not even a full year ago, so the buyers are still ahead of the sellers if we extend our time frame a little bit.

Besides, the causes of the Bitcoin price drop appear to be temporary. First, the Mt. Gox cryptocurrency exchange, which went bankrupt in February of 2014, still holds about 140,000 Bitcoins and is in the process of repaying the $9 billion it owes to creditors and former customers.

Courtesy: @Q8three

There’s an important lesson here for all cryptocurrency investors. The vast majority of the time, you should keep your crypto in a secure wallet rather than just leaving it in an exchange, even if you feel that it’s a trustworthy exchange.

Second, there has been some selling pressure due to spotted activity among the German and U.S. governments. Some people aren’t even aware that these governments have Bitcoin holdings, so this is a good time to conduct your due diligence.

Not long ago, Germany’s government reportedly sold up to $175 million worth of seized Bitcoin. However, the German government still holds approximately 40,000 Bitcoins, valued at more than $2 billion.

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    A separate report indicates that the U.S. and German governments have sent a combined $738 million worth of Bitcoin to exchanges during the past two weeks. This suggests that these Bitcoin holdings will probably be sold soon.

    In a highly efficient market, these types of news items get priced into assets very quickly. People who were never serious about holding cryptocurrency in the first place, or who didn’t have a plan for their investment, are often the last to react and end up selling near the bottom of the price move.

    Courtesy: Yahoo Finance

    This includes some amateur investors who bought spot Bitcoin ETFs because they heard about them from the mainstream media. If anything, we ought to thank them for bringing these assets down to a notable support level.

    Besides, not everyone is panic-selling. U.S.-based spot bitcoin ETFs saw $143.1 million in net inflows not long ago, with Fidelity’s Wise Origin Bitcoin Fund (FBTC) taking in $117.4 million of net new money all by itself.

    So, this leaves you with a crucial question. Are you going to follow the frightened crowds, or are you going to make money like Fidelity is doing? More fundamentally, are you a proactive investor or just a reactive one?

    It certainly helps if you have a long-term plan and if you know why you own cryptocurrency in the first place. It’s not all about the price movement. There’s a dynamic between Bitcoin’s limited supply and the U.S. dollar’s unlimited supply that makes Bitcoin the much more attractive choice.

    Hence, the Mt. Gox headlines will eventually be old news and Bitcoin’s high-volatility phase will give way to a calmer phase. Studying history and sticking to your plan – assuming you have one – should position you for success and excellent opportunities, thanks to the crypto amateurs who sell when they really ought to be buying.

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