It is important to learn from crashes and corrections in the cryptocurrency market.
@CoinTribune Important Thoughts for Crypto Trading/Holding 2/7/18
I have been fortunate enough to learn many lessons early on, thus preparing me more for the what has transpired in the past few months. Listed below are several important mindsets and strategies that I think are noteworthy in cryptocurrency as a whole.
Selling on the way down and buying back in lower is harder than it seems -
We all know the feeling. Seeing your crypto holdings/prices go down in price, and thus feeling the insatiable urge to sell everything while you are still in profit… with the mindset to “just buy back more quantity at a lower price”. So you may say, “what the heck, why not”. You finally work up the courage to sell your stack. You then watch the price of the crypto asset continue a few percent lower. You feel good about yourself, thinking, “I made a great decision… its going a lot further down”. Then before you know it, all of a sudden, the price is already back above where you sold… You FOMO back in, only to have less of your crypto asset than you started with. You did it. You sold the bottom. And then bought back in higher. The opposite of what you wanted to achieve. In this case you would have been better off holding instead of panic selling.
The above mentioned is very common in trading and investing in crypto. It can often happen when emotion affects decision making. It often gives a much better result to refrain from letting emotion dictate choices, and instead, simply hold. This also leads into making a plan for progress and sticking to it. It can bring strong results if a person makes a plan for buying and selling based on technical analysis, market information, etc, and stick to it. Sure there are points and events that cause someone to reevaluate the situation and decisions. But, more often than not, it seems that emotionally driven trades and decisions do not produce desirable outcomes.
Strong picks for long term holds/majority percentage of holdings -
It would seem that whenever the cryptocurrency market crashes or corrects, that the strong, brand name, larger cryptocurrencies hold their value better and recover faster. What I mean by this, is that a coin such as Ethereum, would seemingly lose value more slowly… and even if it does make a dramatic crash, during a marketwide crash, it would likely recover faster. A project like Omiesego may get hit harder with a crash, and take a longer time to recover its value. For this reason, it may often be a smart play to have a persons large holdings in some of these larger coins like BTC, ETH, LTC, Etc. This does not necessarily mean any coin or token in the top 10 on coinmarketcap applies to this category. There are many top 10 coins that will rotate in and out. I mean that a person should do their research on some of these main top coins/tokens, and then decide whether they think the project has long term value. The coins/tokens I am referring to are ones that have a strong brand, (like BTC, ETH, etc) a strong use case, and demand, as well as strong tech. If your long term, larger holdings have these aspects, then it may also be easier to hold them in a time of a downturn because of the person believes in the project, the future, and all of the aforementioned.
This does not mean to refrain from making trades or so on and so forth. A person may need to reevaluate their portfolio many times, as well as possibly trade some of that value to other projects for shorter term gain. But in times of uncertainty, it may prove to be effective to already have a large percent of holdings in said larger projects.
Platform coins -
Platform coins are coins such as Ethereum, Neo, Cardano, EOS, Etc. These projects are looking to be a framework for Dapps, so to speak. ETH, currently the most popular/proven in this category, has the majority of ICO being built on the Ethereum blockchain. There are more and more projects being built on the NEO platform as well. I expect the same to be true of the newer platform coins, such as ADA and EOS. The newer projects often aim to provide scalability issues of the previous generation of platform projects. All of the above are beneficial, in that while ETH may not currently have the best scalability at the moment, it is a proven solution, with a great brand, and a strong team. Many people are looking for “the next Ethereum”. In my opinion, there may not be one platform project that has a monopoly in the future. Why could we not have many platform coins that each have their strengths? For these reasons, platform coins can make great longer term holds or trades.
Situations and the market are always changing -
I find myself always reevaluating my portfolio and the current state of crypto. It can be beneficial to adjust one’s holdings and trades based on what is going on in the world of crypto, the crypto adoption process, etc.
Many alt coins have initially hype and then seemingly die off -
I have seen this several times. Projects take off, have a lot of success and hype for a month or two, and then die off and are forgotten. Examples of this include OMG, LINK, TenX. These projects were what everyone was hyping about late summer and fall of 2017. But they are now seemingly on the back burner to newer projects. I am not saying these projects are not strong projects, with top tier potential. I am saying that it really depends on how much people believe in those projects and support them. It is important not to forget that this market seems to be very hype driven. Another thought process that may be beneficial, is to realize how fast this market moves. There are new ICO and projects almost constantly. In my opinion, many projects will be forgotten because they get over taken with better options that come out later down the line. There are obviously exceptions to the above stated as well.
DYOR (Do your own research) -
At the end of the day, readers need to decide what they think the future will be for their investments and trades, and develop their own views, styles, plans, and the like. More research may be required, but hopefully I have given some awareness and some mindsets to think about when involving oneself in cryptocurrency.
(**Everything written, said, tweeted, etc. is based on my personal opinion, my interpretation of the data/material, and is not financial or investment advice whatsoever. I do not claim to be an expert.)