What word describes cryptocurrency most accurately? Volatility. In other words – variability and impermanence. If you decide to devote your life to working on the cryptomarket, or at least occasionally come into contact with this sphere, then you probably know that to achieve success you need both a keen eye and iron nerves.
Any operations in finance are stressful. And operations with cryptocurrencies are a double, no, even a triple stress. In fact, you are constantly under pressure, and not everyone is able to endure a trial of this sort. Today we will tell you what threats a crypto-investor may encounter and how to avoid them.
Bears and bulls
We have repeatedly written about bearish (descending) and bullish (ascending) trends. There are definitely certain patterns, and they are somewhat predictable. But only to a certain extent. The fact is that the cryptocurrency market is not simply unstable, it is also insufficiently studied due to its novelty. Therefore, no expert is capable of saying with accuracy what the future holds for a particular cryptocurrency.
Let's say you invested money in Bitcoin several years ago. How many times has your heart jumped with joy and was paralyzed with fear? It's the same with Ether - for example, you can buy it at a certain price in the spring, and by the fall it will drop to half the number. How can you keep your sanity? The main advice is: invest exactly as much as you are willing to lose. No, of course, risk is a noble cause, but mental health is priceless.
Surely you've heard of FoMO (Fear of missing out), or the loss of profit syndrome. It is an obsessive state in which a person is in constant fear of missing an opportunity. You may encounter this state if you invest in cryptocurrencies.
If you approach investing and feel that you’re facing this syndrome, then you will never be satisfied. Imagine you decide to buy Bitcoin. As of now, it costs about $7,000, but it literally cost $4,000 in March. Even if you make this decision, you will feel uncomfortable for not having made it earlier. And this will continue to haunt you until Bitcoin begins to grow. And if it doesn’t? What if it plummets? Double, triple stress.
Even if you have made a competent investment, your assets are growing and you’re making a profit, there is yet another fear – that of being hacked. No one can guarantee complete security, because you are the only owner of all keys. In addition, history knows plenty of examples when, with seemingly comprehensive protection, hackers still managed to crack crypto wallets.
Of course, if you are not the Winklevoss brothers or Vitaly Buterin, your fears are unlikely to be confirmed. But it won’t make you any less nervous. If your whole life is in your crypto wallet, you just cannot sleep well.
Protect your nerves!
Believe me, there’s only one piece of advice that works here – one articulated above. Unless you are entirely sure that your nervous system is made of first-grade titanium and you can dry seven sheets on your body in the mountains without moving, then do not invest all your savings.
Imagine that this money will disappear. Will you survive? That's great. Just forget about these investments and think of them as an abstract concept. This will allow you to save your nerves, keep your cool and preserve your finances. And maybe even multiply them.
Protect your mind!