The newest and inexperienced cryptocurrency investor, sooner or later, will face bearish or crashing markets. In this situation, they don’t know how to behave because the psychological impact tells them to follow the majority.
In this article, I would like to talk about these kinds of decisions and how to deal with them. After a few tips on how to invest, you will see how simple it is. Even if you are a more experienced crypto investor, you will find this article useful.
It’s early in the morning and you want to check your portfolio performance during the night. It increased by 20% in the last seven days, so the first thing you do is to open your mobile app or turn on your laptop to check the market.
Oh, surprise! All your coins are down by -30%. At this point you start to worry, your anxiety level is up to the sky and you can’t stop regretting everything in your life, but wait, calm down, and breathe because I have to tell you a few things.
Welcome To The Party
If you are new to investing, these kinds of catastrophes happen normally like hurricanes, earthquakes, or volcanoes. It happened all the time during our short story since the stock market exists. There are wars, crises, bad news, political changes or people tweeting about the end is near and always, shit happens from time to time and will be like that forever.
What I mean is, that kind of things are called the noise and it’s like a domino effect. The cryptocurrency market is hot and volatility will be its best friend. So, when the market is falling you need to have the right mindset and think is normal about what is happening.
Corrections occur from time to time and volatility doesn’t help. Normally, is easier to destroy value in a short time than create value, what it takes months to build it could take one day to be destroyed. In this situation there is one thing that helps, you just need to think is sales season and you can buy more coins with less fiat.
But Should I Sell?
This is a very personal decision but here is when mistakes take place. At this point, few things could happen, a bearish market starts, it bounces back or it begins to recover slowly, to name a few. Anyways, we don’t have the crystal ball to divine the future but what we know is in the long term, the market always goes up. This could take one month or some years to recover, so you need to be patient.
My best advice here is, always invest money you won’t regret losing or you won’t need in the next 5-7 years, at least. The market behavior in the short term is crazy and unpredictable but in the long term, it does its job. If a coin is good enough then it will increase its value. Otherwise, it could happen the coin performance poorly and another one eats the cake. If that is the case then there is nothing much to do, here is where your skill to spot good currencies to hold for the long term comes to play and also, your skill to spot bad actors in the market and retreat at the right time.
However —and here is my next advice— your lack of skill could be compensated thanks to diversification. If you hold five different coins, let say BTC, ETH, DOT, BNB, and DOGE, chances are in your favor. This means if DOGE goes to $0 but the other four increases by 500% in the next five years then it will compensate your DOGE losses. Instead, if you only hold DOGE then you will find yourself in a bad situation.
Another piece of advice I have for you, buy periodically, like weekly or monthly. We don’t know if a coin will increase or decrease in the short term but that way you will be buying the average price. Also, it’s a good practice to save money periodically and better if you can put them to work while you sleep.
We have seen that markets have different seasons like bearish markets or crash and it can be difficult for new investors. The bad decisions and mistakes happen mostly there but we can do something to avoid or minimize the damage. Patience and common sense will be our best friends, we should aim for the long term and don’t worry about what the market is doing today or what will do tomorrow.
There is no right answer to the question but I hope you did understand that shit happens and is normal. Instant money doesn’t exist and you won’t be rich in a week, there still exist a few lucky people that makes the exception but most of us will work and invest for some years.