It has been talked about very often and is one of the main reasons why people nowadays do not take an interest in the crypto market, this may not be a shocker for almost anyone who has even the slightest of knowledge about cryptocurrency; but right there in bold capitalized words it’s written, “CRYPTOCURRENCY IS VERY… VERY VOLATILE”. What do you mean by volatile?
Well, cryptocurrency is known for having a very slim grip on the term “stable”. The prices change drastically over a very short period of time and this is a very common sight for those who are regular swimmers in the crypto pool but can be a very big red flag for people trying to start a relationship with Bitcoin and others. People have lost a lot of money to this volatile nature of these digital currencies but on the bright side, you could be the one who gains double of their life’s savings by investing early into a coin that is about to blow up.
Cryptocurrency volatility is nothing new, and you should be comfortable with this if you decide to invest.
For new investors, day-to-day swings can seem frightening. But if you’ve invested with a buy-and-hold strategy, dips are nothing to panic about, says Humphrey Yang the personal finance expert behind Humphrey Talks. Yang recommends a simple solution: don’t look at your investment.
By not looking at your investment every chance you get, you take your mind off the dips or raises in your portfolio. This helps you control your emotions so that you don’t let them control you and eventually drive you into making rash and not to mention, stupid decisions. “Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” says Yang. The last thing investors want is to see their “ex” portfolio enjoying a solid boom and getting the feeling of instant regret for letting it go. This is the traditional “set it and forget it” advice that many traditional long-term investors follow. “The most important thing any investor can do, whether they are investing in Bitcoin or stocks, is not just to have a plan in place, but to also have a plan they can stick with,” says Douglas Boneparth, a CFP and the president of Bone Fide Wealth. “While buying the dip might be attractive, especially with an asset that you really like, it might not always be the best idea at the moment.”
It should not be ignored that performing thorough market research before dipping your toes into not just the crypto lake, but also any market that involves you putting your trust and hard-earned money into, is extremely important.