Understanding Crypto Market Psychology: How the 80/20 Rule Can Improve Long-Term Investment Results
By Michaelson Williams, TSX, author of YOU ARE ILLUMINATI, Trainwashing: The Secrets of Positive Brain Washing, True Success Naturally, The Legacy Wife, and more…
The crypto markets are a finicky beast that, for some reason, never does exactly what anyone expects. When Bitcoin rises and everyone seems to be on a high—well, at least the people who "invested at the right time"—Bitcoin seems to dump, leaving investors disappointed.
The funny thing about investing in Bitcoin, or the crypto markets in general, is that there is always someone on the other side of perception. The winners almost always believe they are winning, and the losers somehow are always of the belief that the market isn't moving in their favor.
But what's the truth?
The truth is the market just moves, and it doesn't care what anyone feels about it. Yes, there may be some direct effect human energy has on the price of Bitcoin, and there is some actual research around the idea. Meaning, research around the concept that the collective thoughts of the masses can affect events to a certain extent. However, this research—as far as I know—has not been applied to how Bitcoin or the cryptocurrency markets perform.
I think I would actually put the idea to the test if I got enough support from readers here on the platform. How it would work would be fairly simple, too. I would simply write a short trigger article with a specific time and date that would have everyone focus on a locked-in number or price for, let's say, Bitcoin—or something smaller like Millix—and see what happens.
Of course, everyone would have to do their part to amplify the energy around the projected price point. I think it would be a great experiment and fun to boot.
If anyone would be interested in attempting something like this, boost this post and comment: CPE — Crypto Price Experiment.
Okay, so back to the 80/20 rule of investing in crypto, as the title suggests.
If you're always on the emotional crypto investment roller coaster, try this little trick to calm your mind: use the 80/20 rule of investing and never move away from it—ever—no matter what the market is doing.
How it works? It's simple.
Train yourself to only cash out 20% of your total gains—never more and never less. The other 80% of gains don't exist.
At first, 20% cash-outs are going to be difficult for some of you, but force yourself to live with it. If you can train your mind to see your crypto financials from this point of view, it will start to grow, provided the overall market continues to move in a positive direction.
If you've zoomed out enough, you're likely looking at gains on your crypto investments across the board, so this should give you clarity. Meaning, if the zoomed-out view shows that you've made gains overall, then you should know right away whether you've moved more than your 20%.
If so, make the correction in your thinking right here, right now.
From here forward, no more than 20%.
Written by Michaelson Williams
Creator of The MichaelsonEffect
Editor-in-Chief at MMAP Magazine
Founder of The Fit 300 Podcast
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