Tips to remember during a Crypto Bloodbath
History repeats itself. Each year the Cryptocurrency bubble pops, causing panic and making weak hand sell their stash. Generally there is a lot of FUD around it spread by media and it happens right after a spike in the total marketcap valuation. You don't need to go far to validate my statement; this can be seen by studying charts from previous years on Coinmarketcap and relate them to past events and news.
Bloodbath, it's all red!
I have only been part of the blockchain ecosystem for little more than a year now; I have seen this bloodbath happen a few times already and I am sure it will happen again. So if this is your first time experiencing the insane volatility , let me share a few tips, that you should keep in mind while investing in cryptocurrencies.
These tips will hold you steady over the long term, helping you to earn a healthy return on your investment.
1. Never invest more than you can afford to lose
This is a basic principle which is very simple to follow, with a bit of discipline. It might sound simple in theory, but a lot of people tend to invest more than they can afford to lose . Some go even further and are willing to take loans from banks in order to invest because of FOMO.
Remember, as an asset class, cryptocurrencies are well known to be the very risky due to high volatility; it is not uncommon to see double or triple digit percentage increases in a day, but also decreases. There are three things you should take with you from this:
- Never invest more than you can afford to lose , regardless of what people around you are saying.
- Never get caught up in the FOMO and do not make sentimental decisions.
- We are still in the infancy of blockchain technology and there is still plenty of time,
2. HODL and Research
Always hold your position during a bloodbath. However, you shouldn't hold just any cryptocurrency that you come across. By carefully selecting the most valuable projects with a good long term potential, the chances of having a big loss during a bloodbath are less likely. How do you know you’re not investing in pointless, pump and dump coins? Crypto space is already a risky environment and if you want to take a step further, and play an even riskier game, nobody will stop you.
I personally do not engage in such activities and that is not what I try to teach. If you want real success, invest in valuable projects which have the potential to impact the status quo. Naturally you will be required to do your own research on projects before investing, just as you do with anything else; Crypto is no different. You always need to do your own research:
- Who is in the team?
- What they are aiming to achieve?
- What past success they had?
- Are they capable of delivering the intended product?
- Do they have a well crafted whitepaper that explains the inner workings of the product?
HODL the good projects!
To remember:
Do your own research and invest in projects that you believe in. Don't put your money into a cryptocurrency just because everyone else did; and more importantly, never invest more that you can afford to lose. You have your own mind to generate your own thoughts and make informed decisions. Use them with crypto and don't let them go out the window. Now to wrap everything up I will leave you with some final points:
Don't panic buy
Don't panic sell
These two are directly linked to the FOMO mentality and could lead you losing good amounts; Always act when you are ready and 90% confident to buy or sell.
This covers my tips for you; by following these simple rules you will be more likely to have a healthy return in the long run and hold out better during a bloodbath. Let me know if you find this useful and please feel free to share your experiences in the comment section below. Good luck in your crypto endeavours!
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