On a day like last Monday when crypto markets were experiencing a significant downturn, Binance former CEO Changpeng Zhao can help out with one of his timeless tweets, "If you can't hold on, you won't get rich."

While this message is brief, it sums up a profound investment principle many market participants overlook, especially during high volatility and panic.

The pitfalls of panic selling

When there is a market crash, panic selling often occurs. This happens when investors become afraid and uncertain due to falling asset prices, leading them to sell off their holdings to prevent further losses. However, this immediate reaction can result in significant financial setbacks for a few reasons:

1. Selling assets during a market downturn often results in losses. For instance, if an investor purchased Bitcoin for $40,000 and sold it for $30,000 during a market crash, they would realize a loss of $10,000. However, historical data shows that markets tend to recover over time. As a result, holding onto assets may eventually lead to recouping losses and even making a profit.

2. Markets can be unpredictable, with sharp declines often followed by equally sharp recoveries, as we witnessed last Tuesday. By panic selling, investors risk missing the recovery that often follows a market decline. This can mean missing out on significant profit opportunities when prices rebound.

3. "Panic selling is usually driven by fear instead of a sound investment strategy. Emotional decision-making can cloud judgment and lead to suboptimal investment decisions. Long-term investment success typically requires a disciplined approach that is not influenced by short-term market fluctuations."

The Importance of Holding

CZ Binance's advice emphasizes the significance of holding assets during challenging times. This strategy, commonly known as "HODLing" in the crypto community, is essential for several reasons.

1. Riding out volatility: Cryptocurrencies are famously volatile, with their prices fluctuating drastically in short periods. Holding during these fluctuations allows investors to avoid the difficulties of market timing, which even experienced investors find challenging.

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Long-term gains: Historical data shows that the crypto market has experienced long-term growth despite being volatile. For example, Bitcoin has gone through multiple crashes but has consistently reached new all-time highs over the years. By holding onto their investments, investors can take advantage of these long-term upward trends.

3. Compound interest: Assets offering staking or yield generation can also generate compound interest over time, significantly increasing returns compared to frequent buying and selling.

My Conclusion

CZ Binance still is a highly influential figure in the cryptocurrency space. His timeless tweet serves as a timely reminder of the core principle of successful investing: patience. 

While the instinct to sell during a market crash is understandable, it is often counterproductive. CZ Binance's tweet "If you can't hold, you won't get rich" sums up the wisdom of patience and long-term thinking in investing.

By holding even during market downturns, investors can avoid losses, miss out on potential recoveries, and ultimately benefit from the long-term growth of their investments. In the volatile world of cryptocurrency, maintaining composure and sticking to a disciplined investment strategy is critical to financial success.

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Further reading: Top 5 Coinbase Ventures Portfolio Coins & Tokens