Waking up to see just about every cryptocurrency in the red (and in significant amounts) can seem like the WORST way to start your day. Point in case, this past Monday saw just about every cryptocurrency taking a nose dive, and that included all the top coins like Bitcoin, Ethereum, & Litecoin. This is when the inexperienced investor starts to panic and feel that Fear, Uncertainty, & Doubt (aka the FUD!) take a hold of them and they start to sell. What??? Don't SELL, when you should really be BUYING!!!
When The Chips Are Down, Buy More Chips
If you have already done any investing in the cryptocurrency markets, you know that volatility is a part of daily life. This is a fact you simply must accept if you are going to trade in cryptocurrency. Now that you have swallowed that huge horse pill (ugh!), stop panicking and start buying! Don't look at that Bitcoin you bought at $4500 and get stressed out that it is now at $4100, it WILL bounce back and all you need to do is just hold onto it for a short period of time. Bitcoin (and most cryptocurrencies) have continually gone up in value and their very nature seems to support this in the long run. Of course, there will always be downturns and corrections, but when the chips are down you have to look at it as an opportunity to increase your wealth. Now you can get this same coin you already believe in for much cheaper and you know it will eventually be on the rise again. When you see red that is the time to strike and make your buys, don't sell for a loss!
I Was Born To Ride The Wave
In general just riding the volatility waves out works just as well. I am VERY partial to the long term holding strategy (especially for the top coins), and so far it has paid off for me personally every time. Riding the volatility waves is a whole other story and is far trickier to understand and to master. I will cover some of this in a future article, but for now I only buy the dips. My personal strategy is to keep USD ready and waiting (I keep it in my USD Wallet on Coinbase, read this article I did on the best way to do this), and when the market is a blood bath I strike like a crypto ninja in the night and try to get the best deal I can. I am trying to increase my overall portfolio is a very basic, but fairly safe kinda way. I could of course buy those dips and then wait for some good indicators to sell at the top, but that takes a lot more work!!!
Buy What You Believe
No matter what your strategy is when the market is down, I always suggest that you only invest in something that you truly believe in. I am not even saying that you fully understand every aspect of it, but that you truly believe based on your OWN research. I will share a quick story about this to illustrate this super important point.
Two days before there was a complete bloodbath( term for most cryptos being in the red), that Litecoin FOMO got me! I had been wanting to get in on Litecoin for a while and I just kept sleeping on it (partially due to lack of funds, but there were other reasons too). That Fear Of Mission Out finally go to me and I purchased a few Litecoin at $78 (pretty much the top of the market), as I thought it was on a run. Well a day later and it fell back to the low $60 support level and you know what I did?? I just held on to it.... No panic sell, no trying to cut my losses. I held onto my Litecoin because fundamentally I truly believe in the coin and its future potential. Will I be right in 2 months from now? No one, including myself, knows for sure. What I do know is that the tech is solid, Litecoin has some great features just released and planned for the future, and it has been a top coin forever.
Taking Your Own Advice
As you can see, I did not take my own advice of waiting patiently for that dip and then buying for a low price and holding. Instead, I bought at the top of the market because that FOMO got to me. I went against my strategy and panicked so I lost out on some small gains I could have had. It is important to have limits when you invest and to not break them (unless there is OVERWHELMING evidence to do so). Set your goals and be ready for when the crypto reaper comes a-calling for your favorite coin, it could be the best opportunity you have to steadily increase your holdings without massive risk.