3 Simple Rules To Crypto Investing
While the majority of the population shy away from cryptocurrencies in this uncertain bear market, brave (or greedy) investors are doubling down on their bets. To the undiscerning eye, these people are gambling with the next “financial bubble” and buying something “without fundamentals”.
The general rules of investing still applies — invest only what you can lose, manage your risk, be emotionless. Here, I am assuming you already know the concepts of blockchain and cryptocurrency, and have some basic concepts of investing, so I will be jumping into some simple guidelines specific to the crypto market.
1. The Market Is Manipulated. Period.
Market manipulation is illegal in traditional markets but there are no rules here. One moment you may think that you are up, the next moment you realise that you are caught in a pump-and-dump.
Everyone knows to “buy the rumour, sell the news”. Have you considered that the rumourmongers already made their moves before they spread the rumours?
You may be winning but never get ahead of yourself. This is the wild wild west. The market is manipulated; keep repeating that.
2. Volatility Is King
They say the bulls and bears are undecided, that the market is range-bound or stagnant. Get that clear, the market is volatile AF.
Sure, the range-bound volatility offers great opportunities to the traders, but if they are not careful with their stop losses or take profits, they can still be wiped out in an instant.
The market is still not matured and manipulation is still rampant, which means it will stay volatile. Trade with caution.
3. Stop Asking “When Moon?” Or “When Lambo?”
As the bear market extends into Q4 2018, you still hear many people claiming that “the market has bottomed” or “this is the start of the bull run”, which are usually followed with more despair.
Development in the blockchain and cryptocurrency space moves fast, and prices move even faster. However, product development do not happen overnight. Chill, and stop asking “when moon” or “when lambo”.
If you are an investor, be patient. If impatience gets to you, start following some crypto projects and support their progress, and it can be as simple as being a user and giving feedback.
If you are a trader… Well, traders would not ask these questions because they appreciate both up and down movements.
Takeaways
Investing is unlike trading. Investing is meant to serve a longer time frame. We are looking at periods of a few years rather than hours or days, because that is the time needed for the technology to mature and for cryptocurrencies to be widely adopted.
Short-term price fluctuations are inevitable, so try not to be misled or affected by these. As long as you have a clear investing goal in mind, you will do fine.
If you are interested in crypto investing, check out my book, Rolling In Crypto, which contains a chapter on crypto market specifics (like this article) and another on curating a diversified portfolio.
Or you can follow me for more of such articles. I am charting and trading BTC and ETH daily and will document what I am learning in due time.
