Two contrasting messages: “Cryptocurrencies are the best-performing assets in the past decade” and “Cryptocurrency investments are risky!” — both correct. While many have made life-changing wealth through cryptocurrency investments, many more have a different story. I’m not advocating cryptocurrency solely as a ‘money-making’ scheme; losing any investment is unpleasant.
Came for the technology, stayed for the money, and vice versa. Most participants are clearly interested in cryptocurrency investment’s potential to generate mind-blowing returns in a short time. Those 500% gains in 48 hours aren’t seen elsewhere; in crypto, it happens frequently. Who wouldn’t want to turn $8,000 into 5 billion dollars in a few months?
However, investors often suffer significant losses due to the volatility of cryptocurrency prices. Stepping into this space, the first thing to note is that everything is time-bound. Prices rise and fall; even influencers’ shill tweets don’t last forever; it takes a downturn to get them deleted.
Informed investing could save you a lot.
One popular mistake is ‘chasing pumps.’ It’s human nature to chase trends, and the fear of missing out is a huge drive. Investors rush to hot shots with hopes of reaping the next possible gains.
This works sometimes. Being a successful investor hardly comes from jumping on trends. Regardless of how hot the hype blows, clever investors will do their research before buying in.
If in profit, you should take some.
Cryptocurrency’s volatility means an investor could make crazy gains in a short while. 5X, 10X — huge returns; in crypto, they are meager and happen often. However, they could also go the other way at the same pace.
Filled with expectations of even crazier gains, an investor caught in a dilemma after making tangible gains wonders whether to take profits or continue holding.
Take time to consider conditions that are personal to you. What was your initial target? Why did you make this investment? To pay off rent or fix debts? The level of importance is best known to you.
Imagine waking up to a 30% drop. Jaw-dropping! It could be the other way around. But either way, what are the chances you will take this event with your head held high?
Nevertheless, it still hurts to see the project you were invested in make crazy gains after you have sold off your investment. The sideways movement constitutes this dilemma.
With this in mind, selling off your bags at once is a bad idea. Selling them in parts at different targets is probably a better approach. Selling in parts at different targets might mean you get out of the market with less, but if the price continues to go up, you’ll leave the market with more than if you sold at your first target. If the price drops after you sold a part at your first target, you’ll leave with less, but the loss is tamed.
Dealing with the ‘Winter.’
Every cryptocurrency investor wants the chart to stay green until they get to their target and sell off. Only a few realize that the path to their target is filled with trials and tribulations.
Dips are inevitable, regardless. The chart goes red whenever a holder decides to exit the market, partially or completely. The extent of the dip depends on how many people exit the market and how much control they have over the distribution. This is the main reason why whale movements are studied and dreaded.
Dips are not only ridiculous; they are very poisonous. Cryptocurrency dips are sinister; not only are they sudden, but sometimes they are wild. A 20% loss within 20 minutes. It happens faster than most times, everything a cryptocurrency investor dreads.
For intending investors, the dip time is usually the best time to buy. Maybe the coin is just pulling the strings, and you know — as the saying goes, ‘it always shines after the dark.’ So, if it’s dip time, then it’s buy time — but that’s not always the case.
The normal idea is always to buy the dip and hope it doesn’t dip further from your purchase price. Moves like this have come out good sometimes, but many times, the current dip point is just the tip of the iceberg as more dip comes after the initial dip and leaves those who bought the initial dip at a loss. Ready to buy the dip? Maybe you should give it a little thought and invest some time in doing some research.
It is essential to study the events that resulted in this sudden slash in price. Getting greedy when others are fearful is undoubtedly a good move, but sometimes this could also backfire; in reality, this move is always risky. Taking time to make certain considerations before ‘getting greedy’ increases your chances of averting some disasters. The price may dip badly in cases of irregular acts by the team behind the project you are invested in; this always drives the price nuts and could possibly dip to its lowest point — I mean, the team is gone!
Investing in what you can lose doesn’t mean you should actually lose them; it means you should try and make the most out of them. Making the most out of your cryptocurrency investment takes a level of carefulness and bold moves too. Playing safe should be considered at all times.