Are you freaking out? Confused? Depressed? Not sleeping at night because of the crypto market?
Looks like you got the crypto winter blues. It probably means you exposed yourself to risks you couldn’t handle and spent what you couldn’t afford to lose. No worries you are not alone…
Volatility is the main issue in the cryptocurrency market. It is well able to give users huge sudden profits or losses within a 24 hour period.
It causes a lot of tumult within the crypto communities and social media, turning true believers into non-believers real quick.
A great percentage of these traders are millennials, who up until cryptos showed up had never invested in anything. These are mostly new inexperienced traders and investors adding to the commotion of volatility.
Not knowing your investor´s profile could have ruined you (Just kidding, you´re not ruined.)
One of the reasons so many people freak out in the crypto industry is most likely because they invest without being familiar with their investor (risk) profile, which means they have no idea how to invest suitably according to their risk tolerance.
Knowing your risk profile, can prevent you from investing in projects that will keep you awake at night, it will help you to invest in the right projects for you. By investing suitably, you will tend to lose less money.
In the stock market industry, no one is allowed to invest without first going through a suitability test to find out their profile. Why? Because it tells them what kind of investor they are, and whether or not they can handle high-risk investments and that way they can invest wisely and in a way they can sleep at night.
With that said, in the crypto realm, we can see a clear division, two separate groups of traders and investors, one group relies on regularly taking in profits, and the other trusts in hodling hard.
There are traders aware of the market´s volatility and make good use of the rollercoaster, they are comfortable with the risks.
Meanwhile, conservative users display emotional instability and do not appreciate risks, or losing money. Not that there´s anyone who likes it, but some just deal with loss better than others.
No matter what the case is, no one invests in cryptos hoping to lose money, everyone has a common interest in making money somehow, and some are just more patient and tolerant than others.
The cryptocurrency market is a high-risk market, therefore, the more aggressive traders and investors end up with higher profits, because they have a high tolerance during volatile times.
If you cannot be patient or handle extreme drops and waves, cryptos are not for you yet, wait until it stabilizes.
“The stock market is a device for transferring money from the impatient to the patient” — Warren Buffett -The same goes for the crypto market.
Is there more money to be made in trading or hodling?
Especially during winter times, there are divided opinions about how hodling is more profitable than trading and vice versa. Truth is you can make money with both as long as you know how and when.
It´s really about a matter of preference, and again your risk profile!
The difference between trading and investing is in the time applied. Traders desire to make profits in the short term they buy when it’s low, and they sell when it’s high in a matter of hours or a couple of days; they can even make money when the market is on a downturn.
Now investors are in for the long run, they buy when it´s low and hold for longer periods of time until the market matures and reaches its full potential, but for that, you must be very tolerant of risks, and “cold-blooded” to watch the cryptocurrency rollercoaster without losing it.
When should I choose to trade, hodl, or both?
In the crypto world, you must watch projects very closely; understand their markets and how they flow. You can then decide on whether to trade or hodl according to the fluctuation, liquidity, use cases of the market.
Some traders will advise you to only hodl mainstream cryptos but do not take this as an absolute rule since there are great startup altcoin projects trying to survive the crypto winter and therefore if you find one you believe in you should indeed hodl.
Markets like BTC are open for day trading because there is liquidity, there is much use case. And money can be made through it´s volatility.
But this is not to say you shouldn’t HODL BTC, as a matter of fact, you should and you can. Because it is a more consolidated coin you can be flexible, trade some and/or hodl some. Its flexibility allows you to manage the risks.
Risk managemente is very important during winter times.
People trust bitcoin (mainstream crypto) will only go up, so wouldn’t it make sense to hodl? It would. But the truth is the market is unpredictable. So, while you could make money trading BTC right now, you could also spread the risks by hodling partially and profit in the future as well.
Same principles apply to altcoins; buy when it’s low sell when it’s high, hodl, or both!
And just a bonus trading strategy: sell when it’s high and buy back the same coins when it’s low. This way you are strategizing to make some cash while still sticking to, or hodling per se, the same coins.
The explanations are blunt with the intention of explaining some tendencies within the crypto world, but there are no absolutes. That is the point.
A big mistake we see in the crypto industry is that people always understand SELL, HODL, BUY as if it meant all or nothing. This mindset is not only risky but adds to the anxiety.
“If you sell it must be everything, if you buy a token it must be all of your money (and don’t you dare to invest in 10 other tokens), if you hodl it must be everything.”
No, you must learn to diversify, divide, and strategize to survive the seasons accordingly.
Selling, Buying, and Hodling are not all or nothing, this is, but a rookie´s mistake.
You can always distribute your coins (to sell or hodl) as you desire. Manage the risks as you feel comfortable, so in case you lose some money you don’t lose it all.
Note: If you do not manage your emotions, none of this is possible.
You might want to Read “Are you hodling wrong?”
It is vital to manage the risks to try to reduce them. Therefore, as we often say, never invest any amount unless you are entirely comfortable with it. And by comfortable, I mean enough so you can sleep at night.
Only invest what you can stand to lose.
To manage your crypto winter blues, you should study trading and investing strategies. So, that you can perform appropriately during these winters as well as during high peak seasons.
Crypto winter is buying season, at least that is what aggressive-experienced-traders would say, and if you feel far from that, learning the market should help you to handle it. Do your best and do not to freak out.
- Try staying away from mainstream media; they are not always right or true; learn to filter.
- Do not rely on the community or experts alone,
- Although communities are very important, you must learn to research projects on your own. If your positions are freaking you out and learn to step away.
- Take a chill pill, do not despair, be patient.
- Do not follow the masses.
- And I repeat, only invest what you can afford to lose.
“Be fearful when others are greedy and greedy only when others are fearful” — Warren Buffett
You might want to watch later: “Are you in a Crypto Winter?”
Are we in too much of a hurry?
Cryptocurrency is an exciting technology, and people from all sorts of industries became quickly fascinated with this technology, yet, it´s understandable that even the greatest believers may feel a little uncomfortable during this crypto winter, but could we be expecting too much too fast from a technology?
How does every new technology behave in the market until it is stable? Until it finds it’s perfect fitting amongst communities around the world?
Did you know it took about 25 years for the internet to consolidate?
Did you know AI took 50 years to be what it is today?
The same thing can be presumed for cryptocurrencies today, we may not know how long it will take to strengthen, but we can anticipate that it will take time to develop as it should just as any other technology did, it takes time.
Stay warm during this winter guys and just wait for CRYPTO summer to rock your world #BeConfident
Let us know your thoughts in the comments, and share because sharing is caring ❤
Disclaimer: Our team works hard to bring you the best content in the cryptocurrency market, but it is only our point of view and not legal advice, and may be divergent from other opinions, so please do not make any decisions without concluding studies of your own to understand the profit possibilities and uncertainties involved at your own risk.