It is once again getting to that point of the Bitcoin and cryptocurrency cycle that we need to have “the talk.”
Crypto is unlike any other financial asset out there. The volatility is so intense that if you have a little bit of luck, you could make a fortune during just one cycle. However, emotions sometimes can be our weak points with investing, and this can cause us to lose everything even faster.
We have come to the point of the crypto cycle when excitement is finally returning. After a year and a half of seemingly nothing but dread and depression, it is a great sense of relief for many. With that said most people are most excited to finally see prices begin to go up again. If you were invested in Bitcoin or Ethereum, you saw your portfolio drop by over 70% in the last two years. If you took on more risk with altcoins, some people saw their portfolio drop by 90% to 98%.
While the mood changing and prices increasing are great, the best thing is that the future of this market finally looks bright again. It has been quite a while since we have been able to say that. With Bitcoin serving as a safe haven during the banking crisis, BlackRock applying for a spot Bitcoin ETF and was followed suit by countless other companies doing the same. Then XRP and Ripple finally won their lawsuit again the SEC. It appears that Grayscale also has a great chance to win against the SEC. But perhaps most importantly, the next Bitcoin halving is quickly approaching.
Quickly a storm of bullish events on the horizon has the crypto market in a bullish state. If XRP isn’t considered to be a security, that likely means most of the altcoins that the SEC is trying to go after won’t be considered securities as well. In just one day XRP rose by over 80%. Many other altcoins soar their prices soar incredibly as well. The market was declaring that the next bull market had started. And that you needed to pack your bags or risk missing your trip to the moon.
However, those of us who have been in the crypto market for several years will always tell you that these types of moments are always the most dangerous. This is why it is important to have the “crypto talk.”
The crypto talk is simply this. When the crypto market is bullish and prices are soaring, the market will make you feel euphoric, unlike anything you’ve ever experienced. You will begin to think that either you are smarter than the market, that prices will definitely keep going up, or that you need to buy as much as you possibly can. The urge to FOMO into buying positions will be too strong for most people to withstand.
And that is exactly when the bubble bursts, causing people to get rekt. Always remember that the cryptocurrency market is still like the Wild West. There is danger lurking all around you. People who are trying to take advantage of your emotions to make money. Also never forget that Bitcoin is incredibly rebellious and likes to be a contrarian. Just when everything is expecting it to behave in a certain way, it does the exact opposite.
Try to remember that when everyone is feeling FOMO, that likely means we have topped for at least the short term. When everyone is depressed and declares the market is finished, that usually means we have reached the short-term bottom. Investing in the crypto market is a game of emotions. Those who can control their emotions and invest wisely are the people who end up being successful.
How about you? How do you control your emotions while investing in crypto?
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