31- And crowds
Well-known shills tend to cause crowds to follow their footsteps. If they are influencers with thousands of followers, then you will see groups of individuals talking about a coin in unison.
This can result in Facebook threads, Twitter threads, and Bitcointalk threads being created with everyone shilling one coin as a crowd.
Do not follow them blindly. Hear the noise, but do your own research about the coin.
• If you find out the coin is indeed promising, I’m sorry for you because - you likely missed the opportunity.
• On the other hand, if you believe there’s nothing new under the sun, stay confident, because the coin’s price will surely drop soon.
Take a cryptocurrency called ICON as one example. Lots of people bought in, and there was a lot of traction on major forums and social media outlets.
12 months later, after the crowd hype phased away, the price was down by ~98%.
Follow this advice: when everyone’s talking about a cryptocurrency, it’s time to sell it.
32- You Enter Positions You Can’t Exit
If you hold a coin, but no one wants to buy it, then you are in an illiquid market.
Liquidity refers to the amount of ease with which an asset can be bought or sold in a market. You can check how liquid a coin is by checking its trade volumes on CoinMarketCap.
Liquidity is essential in cryptocurrency:
• What if you think cryptocurrency is going to collapse?
• What if you think one cryptocurrency is going to skyrocket and you need funds to get in?
• What if you need money for a personal situation?
For any of those scenarios, you’ll need to be able to sell off your position quickly. If the coin you need to sell has low liquidity, you might have to sell it at a lower price to find buyers.
Even worse: if your cryptocurrencies are illiquid, you might have to say goodbye to your money for good.
The less liquid a cryptocurrency, the riskier it is.
If you’re a beginner, don’t even waste your time considering buying a cryptocurrency that has a low daily trading volume.
Do You Use Coinmarketcap Effectively?
33- You FOMO
FOMO, or fear of missing out, is a common behavior in the crypto space.
FOMO is when investors feel they are going to miss out on something big, and as a result, will immaturely buy an asset to hop on the bandwagon.
Examples of such persuasion can be project owners or investors tweeting things like: “Huge announcement released next week” or “Big partnership with a major bank to be announced soon.”
Many shills will also take advantage of FOMO by explaining to their audience that a particular cryptocurrency is the next big thing, how the price is soaring, and if they don’t get in now, then they will regret it forever. They persuade investors to buy irrationally - hence FOMO.
Ignore the noise, analyze facts. Your investment decisions should be based on logic, and NOT on emotion.
34- You Fall for FUD
Contrary to FOMO, FUD is short for fear, uncertainty, and doubt. The goal of FUD is to get you to sell, not buy.
So, if the shiller(s) wants to buy into a coin at a lower price, he will start spreading bad news about security vulnerabilities, hackings, team changes, or anything else to cause people to panic sell and lose faith in the project.
Once again - use logic. Understand their motives and don’t act on impulse.
35- You Panic Sell
Besides FUD, another simple reason people sell is that the price drops quickly. But it doesn’t mean it is going to drop more.
Don’t sell in a rush. Have a cup of coffee, discuss with your friends who also invest in cryptocurrencies.
All in all, “control your emotions” and think your decision twice. Don’t forget this is a volatile market and you should be ready to stomach significant losses.
36- You Fall for Media Propaganda
Major news sites will sometimes release very negative, and often, threatening news.
The news may be about a country banning the use of cryptocurrencies, or about how Wall Street doesn’t want to get in. Deceiving headlines are the foundation for propaganda.
A lot of these news articles are intended to generate clicks, controversies, and sometimes even FUD. It’s often very exaggerated.
One more style of content that can negatively persuade you is sponsored content. Websites and media you trust will promote a product not because they use it and like it, but because they’ve been paid to promote it.
Sponsored content is fine as long as it is clearly noted that the content is paid for. Many times, sponsored content looks just like non-sponsored content, which can be deceiving.
The most effective change you can make to improve your long term cryptocurrency investment strategy is to read these articles - not just the headlines - and cross-reference opinions. Stay calm and remain skeptical at all times.
37- You Are Emotionally Attached to Your Coins
Many investors become attached to their investments at an emotional level. They put lots of faith into their investments, and hate the thought of selling before the next pump.
I have met several crypto investors who have been down 95% on an investment. They read that the project has been abandoned by the team or delisted from exchanges, but they still won’t sell because they irrationally believe it will come back.
This goes along with our personal biases we mentioned earlier - humans don’t want to admit they are wrong.
Don’t get emotionally attached to your coins. Always invest based on logic.
38- You Lack Patience
Be patient - because the sophisticated, wealthy investors are.
You may feel desperate to find the next big investment opportunity, but “whales” have enough capital to sit on the sidelines for two or more years waiting for the right time to strike. They can easily stay in a bear market, with losses, for years.
In other words, wealthy investors can afford to be in losses for multiple years to shake out weak HODLers. If you lack the patience and knowledge of this, then you will always be buying on the wrong side of the market.
If you are patient enough to wait even an entire year to buy in a bear run or HODL until the next bull run, then you will benefit greatly.
39- You Don’t Stay Clear Headed
Remember to stay calm and relax.
You should have invested an amount you are comfortable losing, so have fun with it. Don’t let the negative press or big news sway you.
If you do let negativity get to you, then you are more likely to make poor decisions.
Disconnect from crypto from time to time to stay clear-headed.
40- You Don’t Understand the Market Dynamics
Bitcoin only makes up about 40-50% of the market’s liquidity. There are thousands of altcoins, and they work in correlation with Bitcoin.
Not understanding these correlations can lead to poor and costly investment decisions. Those who make money trading crypto understand these dynamics like the back of their hand.
There are three situations for how Bitcoin and altcoins affect one another:
• The whole market crashes. In such a case, Bitcoin will often be more resilient than the other coins. We witnessed this firsthand in 2018: Altcoins dropped ~95%, while Bitcoin dropped ~80%.
• Bitcoin’s dominance increase. Bitcoin’s price increases sharply, but altcoins remain stable or go down. We witnessed this in September 2017 - November 2017.
• Bitcoin’s dominance decrease. Bitcoin rises gradually, and altcoins increase in price substantially. We witnessed this in December of 2017.
All of these time frames can be viewed using coinmarketcap.com. Take your time and look at different historical time frames to help you better predict the future market!
Takeaway: if you think the market is ready for a bull run, then add more altcoins to your portfolio. On the other hand, if you believe the market is going down, sell your altcoins for Bitcoin, or even better, for fiat or stable coins.
