Should You Buy Bitcoin When the Economy is in Crisis?
Whenever you start investing in crypto, soon you’ll have to deal with sudden price boosts and recessions. That’s just simple. You won’t be gaining profits on a regular basis, this is not how it works. The best thing you can do about market crashes is accept them.
I’ve been a part of the crypto space for a while and nevertheless, every time Bitcoin goes up or down I’m struggling with whether I should buy, sell, or hold. At first, I used to seek advice from my friend who is a professional crypto trader but crystal gazing (some call it technical analysis) is not the most useful insight. At the end of the day, I always go back to the undeniable truth — buy low, sell high.
Buy Low, Sell High
According to the so-called trader’s bible “Reminiscences of a Stock Operator”, the market consists of professional traders and… us.
When a crisis happens, there’s always a certain amount of people who panic, sell, and end up losing money.
I don’t want to lose money, do you?
The ‘buy low, sell high’ logic is simple. Instead of letting emotions get out of control, forward-thinking investors know that the low price of the asset means opportunity. It’s time to stock up on some assets! Later on, when the asset price goes above the regular market price (and it will go up eventually, it always does!) they sell it and get a bigger profit.
Yesterday the Bitcoin price was nearly 10k, and today it’s 50% off. It’s like a seasonal sale! Except you can resell Bitcoin later when the price is back to normal or higher.
Make a Plan and Follow It
As Antoine de Saint-Exupéry once said, a goal without a plan is just a wish.
1. Decide who you want to be — a trader or investor.
At times of crisis, investors and traders may act differently. There are ways to make money, even on the falling prices, and speculative traders know all about it and even more. But speculative trading is not an easy skill to unlock, you’ll have to spend a lot of time learning. Investing is a lot more straightforward and you don’t need to be a pro to start. I learned down the line.
2. Think long-term
Planning out your strategy in advance will save you from panic attacks. Decide how much you want to invest every month and stick to it, crisis or not. I am absolutely sure that having a solid 6 months investing plan has saved me from a couple of reckless actions.
Don’t Panic
When I started with crypto, keeping calm was my biggest struggle. I wanted to quit every time the price was going down and felt ecstatic when it went up. With time, the panic and euphoria almost disappeared.
Volatility is inevitable. Panic is harmful. I learned that the best thing you can do when you’re stressed is to sleep on it.
Invest Only What You Can Afford to Lose
Another golden rule of making money is to invest only what you can afford to lose. It’s that simple. Traders also set their limits. We don’t go into full gambling mode. We don’t loan to invest. It makes no sense.
Final Thoughts
It’s not the first and it won’t be the last economic crisis, but there is no need to panic. Besides, crypto is volatile so prepare for the bumpy ride. Buy low, sell high, keep calm, plan your strategy in advance, and don’t gamble your money.
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Originally published at https://blog.lumiwallet.com on April 1, 2020.
