Managing crypto price dips; what’s your hack?
Altcoin markets are looking bloody once again. Déjà vu? Well, most likely. The crypto space is a very dramatic zone, a quick succession of events. Each event is accompanied by a stream of emotions. Investors, likewise traders are caught in the trap of cryptocurrency price fluctuations. All digital assets are prone to fluctuations, but cryptocurrencies are arguably the most volatile digital assets.
These price movements trigger emotions from both long-term and short-term investors, while long-term investors seem to be more in control of their emotions when it comes to reactions to price movements, the fact remains that they feel an equal urge to react to them. Sometimes they win, other times, the situation prevails and they sell off (or a part) to prevent further losses or take already made profits.
-20%, that figure and the red font color that comes with it surely scare an investor and a trader to their nerves. You could tell in a flashback your ‘red day’ stories. Like a pendulum in oscillation, the constant fluctuation in the prices of cryptocurrencies is a major scare for investors and traders.
Volatility is a norm in the crypto space. This we know, but it could burn hands regardless. A couple of days back, I came across a tweet that reads ‘HODLers are the strongest beings, emotionally’ Other reads ‘if you wish for a stable relationship, marry a HODLer’. Well, you might want to take those with a pinch of salt!
Veteran cryptocurrency investors get accustomed to cryptocurrency price volatility, but just like biological adaptation, they devise different habits that enable them to live through these tough times. Different approaches by different investors, it is not certain which is the best approach, but they work…for those who adopt them.
Before we dive in; what’s your hack? As a cryptocurrency investor, how do you hope with the regular price fluctuations, especially the very ugly dips?
While you get your answers ready, here are the different ways cryptocurrency investors manage price dips…
Buy the dip
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Dip time! A good time to invest? For some investors, a loud ‘yes’ is the answer. Unarguably, this is different for a significant number of cryptocurrency investors. Veteran/experienced cryptocurrency investors who have perfected the tides of the crypto space invest even more during price dips. As the saying goes ‘Stay greedy when others are fearful and be fearful when others are getting greedy’. Experienced investors put these to good use and buy more cryptocurrencies when the prices are down.
This plays out well most times, but sometimes, the bottom is far from reached and the price gets even worse. If you were clever enough to stash some stable coins from your profits, you might want to return them to a collapsing market. If a recovery happens, the only result is gains! This approach is however only possible for investors with a stablecoin store or an alternative means of spending. Low-budget investors will find it harder to build stablecoin savings, employing this hack might only be feasible in that case.
Hold-On For Dear Life
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Some investors develop a very strong faith in their cryptocurrency holdings and are hopeful for a rebound. This category of investors would insist on not selling the whole or a part of their cryptocurrency assets despite the huge price drop. They are not scared of the drop. Regardless of how strong the tides seem, the HODLers are never scared and choose to stay put and hope the tide calms.
Cryptocurrencies with good tokenomics and a capable team leading its development are bound for success. However, the road to success is not a smooth ride, rather, it is a bumpy ride, filled with obstacles and potholes. Investors are aware of this and depending on the level of positive impression the project has created; they are willing to hold on to their tokens through the rain and shine.
This hack is relatively more popular than the former. A bigger percentage of investors prefer staying on the sidelines and watching how the events unfold. With their assets sitting comfortably in their wallets, they patiently watch the dangling market hoping things get better with their investment (s). Investors outside the ‘dip buying’ category probably fall under this category.
Sell low
“Take profit”; “stop loss”; one sounds great, but the other is more or less an unfortunate show of submission to the harsh tides of the crypto space. Whichever one comes your way, you feel the drive to sell all or at least some of your crypto portfolio. Letting go of your investments is always a dilemma, but here, you’ve given in to the vibes of selling off, either to evade some disaster or to leave the ship while it still looks good.
The panickers, the fear-gripped; everyone has probably been here. I guess most investors in one way or another fall under this category. It is advisable to leave the ship before it completely gets wrecked. But that’s another statement made out of fear. What if the ship was just shaking and not wrecked? Well, the fear-gripped investor prefers to take what he can from the ship.
I won’t call this a ‘hack’, in the real sense, it is far from being one. Should be a last line of defense for an investor. When all hope seems lost, selling off and taking a loss is an option. Things could go any way, positive or negative. Emotion takes its toll.
Get on painkillers!
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Now, I’d love to know that none of my readers are using this hack. Things could get out of hand sometimes, especially for high-risk investors. The crypto space is volatile, and investors are repeatedly warned to only invest what they can lose. But high risk comes with high rewards, our greed could reign supreme sometimes. This is a typical human attitude.
Having made a very risky investment, one you’ll find hard to bear the loss, investors place themselves in a very tough position, afraid of huge dips. Huge dips could cause a very bad emotional state for this category of investors. Mood-influencing substances might be a resort.
Alright, the fact is that this category of investors is very rare (I’d love to believe so), and this hack is a very bizarre one and not advisable. It doesn’t work in the real sense, only temporary at best.
Different approaches by different people…and different occasions, too. Practically, any investor can fall into any of these categories at a given time. One might prevail most of the time, but each hack comes in periodically.
Back to you: Which of these hacks are you familiar with? What’s your hack? I guess I omitted it. Let me know!
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