From giving FOMO (Fear of Missing Out) to taking out mortgages on their homes to maximizing returns, most people are quick to jump to cryptocurrency and lost everything. These problems arise from a mixture of bad timing, ignorance, greed, fear and impulsive trading behavior that always leads to financial ruin. Fortunately, these self-destructive behaviors are easy to avoid.
The cryptocurrency has gone through three market bubbles in its 13-year history, with a fourth bubble expected to occur around 2024-2025. Every market bubble following the Bitcoin halving event, which occurs every four years and takes several months to two years before reaching its ‘peak.’ Once the market has exited, the crypto ‘bear market’ begins, where the price of most cryptocurrencies will fall by more than 90 percent, most of which will never come back.
As CNBC and many other stores are guaranteed in 2018, many retail buyers invested everything they had during the 2017 Bitcoin bull run and the subsequent ICO (Initial Coin Offering) boom. People take out loans and spend their life savings Bitcoin, Dogecoin and other cryptocurrencies, only lost the most during a bear market. Many of these mistakes are due to not understanding the irrationality of cryptocurrency, not having an exit strategy, and not knowing how to DYOR (“Do Your Research“) before spending the children’s college funds on a celebrity sponsored crypto projects. People new to crypto should familiarize themselves with the Wojak Jabomb meme before speculating in crypto, because it is almost guaranteed that prices will crash after buying, pump after selling and move sideways while holding, a phenomenon humorously described by Bizonacci’s YouTube videos.
Don’t Risk What You Can’t Lose, And Never Time The Market
Cryptocurrency is riskier than other markets due to a combination of shallow order books, retail speculation, market manipulation, regulatory uncertainty and a lack of real demand for the asset. Most retail ‘investors’ experience the same rollercoaster ride as everyone else: go all-in during the hype, sell everything at the ‘top,’ buy back when prices continue to rise, claim to be HODLing for the long term when prices crash below the entry price, and finally lose everything when the bull market capitulates into a bear market. The biggest mistake is not taking profits when they are on the table, because most people will greedily continue, hoping to sell the top right, only to miss and sell at a loss later.
Retail investors should know the honest reasons for buying crypto before making any decision, whether jumping on the hype rocket to make money quickly or because they want to invest in blockchain technology for the long-term future (or need to use crypto for some reason) . For long-term investors, cryptocurrencies that everyone is the best asset for long-term accumulation, with Gas token ether Ethereum (ETH) price live chart be the best example. Long-term investors use the Dollar Cost Averaging (DCA) strategy, which involves buying a fixed dollar amount of an asset at regular time intervals regardless of price action. This is the most profitable investment strategy over the years. On the other hand, successful short-term traders are happy speculative altcoins and meme coins and pay attention to price chart formations, news stories, market sentiment, and token pre-sales, and should actively manage positions and take profits while they are on the table.
Going all-in during a hype wave is the easiest way to go broke, and trying to time the top or bottom to maximize profits will never work. Gaining leverage by taking out a loan or using your life savings is also not a good idea. The single most effective strategy to avoid crashes in crypto is not to buy crypto in the first place, but those who want to try it may consider a long-term DCA strategy to accumulate high utility tokens (mainly token to pay blockchain gas fees) or treat cryptocurrency the market is like a casino and only uses disposable income.