Cryptocurrency Investing Tips: When Bitcoin Drops

Picture that your favorite crypto asset, it doesn’t even have to be Bitcoin, starts continuously rising. The newsfeed is full of headlines that declare the bull market is back. You couldn’t be happier as you’ve stocked up earlier and are finally well-prepared. Now you know that timing is the key, that’s why you wait until the price goes a little higher before selling. Maybe even buy some more while waiting, whispering to yourself that big risks lead to big profits. And then, before you know it, your asset drops dramatically, leaving you wondering how you could have missed it again and what to do now.

First of all, let it go. We’ve all been there and, in all likelihood, not even once. If you’ve entered the business some time ago, you might have noticed that it gets easier every time as you become wiser. However, the loss is a loss and nobody can be happy about it no matter how experienced they are. You’ve entered a highly volatile market, and the best thing you can do is stay calm. The ability to read the room will save you a lot of money. And for crypto-traders, it is often about how much they get to keep, not how much they gain.

But what to do when bitcoin drops? We have a few universal cryptocurrency investment tips for you, but at the end of the day, it is up to you to work out a solid strategy that will benefit you the most.

Keep Your Cool

That might be the last thing that you want to hear right now, but you have to chill out and not panic. Panic has never done any good for anyone in the past, and chances are it’s not going to benefit you this time either. Do you know what the difference between a gambler and a trader is? Gamblers have no self-control and can gamble away their future in one night. Traders treat their assets in a better manner and never let themselves spend more than they have planned. Tough-minded traders always make a plan and stick to it.

Here’s another piece of crypto investment advice: determine exactly how much funds you’re going to invest and prepare to lose it all.

Back Down When Necessary

First, you panic. Then, you start thinking about buying some more since the price dropped. Now, that can be a mistake. It happens that drops are going to continue for a while. That’s why if you entered a market that drops too early, it is important to stay humble. Admit your mistake, quit the market, and move on.

Don’t Chase the Bottom

Ever heard of catching the falling knife? That’s what you do when you try to sell at that very moment when your asset hits its rock bottom. Now, in theory, this is a great idea. Except that it hardly ever works out. In reality, you will spend a lot of time, nerves, and often money waiting for the perfect moment. Sometimes, it’s better to settle for the next best thing, which in your case is ‘close to the bottom’.

If you’re not tired of our crypto investment recommendation s yet, then here’s another one for you to digest: in trading, negative thinking often saves money. So if you think it’s doesn’t look right, most probably you’re right.

Think Twice Before Selling

When one asset falls, there’s always another that is rising. A lot of traders get an immediate idea to sell your underperforming coin and invest in the one that is currently doing. Although it may seem like a great plan B, don’t let FOMO trick you into it. Chasing the ‘good’ coin is as harmful (if not more) as chasing the bottom.

There will always be an asset that is performing better at the moment. But that doesn’t mean that when you sell your coins and stock for the ‘good’ one instead, it will keep rising. As a matter of fact, it’s common that the ‘good’ coin falls and the one that you just sold suddenly skyrockets.

Work on Your Timing

Although it’s nothing new, we need to say it anyway: in trading, it’s all about timing. Not buying when you have the sudden urge, not selling despite everyone else saying you should. You have to figure out your timing yourself.

Keep in mind, there is no such thing as perfect timing, and your goal should be to get close to perfect. This skill comes with experience, and you’re going to need all your patience and dedication in order to develop it.

Live a Little

Last but not least, be kind to yourself and have a rest from that screen. Spending hours watching a trading chart is not healthy. It makes you agitated and worn out while contributing nothing at all. And you know what angry and tired people do? They make bad choices!

Of course, you need to learn to analyze the charts, but that doesn’t mean you have to spend all day doing it. Don’t be an overachiever, enjoy your free time and use it to reload your system. A night of a decent 8-hour sleep will benefit you a lot more than the long restless hours you’ve spent next to your laptop obsessing over the Bitcoin charts.

Conclusion

It is to be noted that giving crypto investing advice is one complicated task. Usually, people tend to learn better from their own mistakes and try changing a few approaches. With enough determination and self-discipline, you’ll certainly figure out a good investing strategy.

Just tell yourself that the next time the market drops and everyone else starts panicking, you are going to stay cool, not try to catch the bottom, work on your timing, make thoughtful decisions, and quit when you know you have to.

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Originally published at https://blog.lumiwallet.com on August 2, 2019.