In the last few years, the industry electronic money largely unregulated have provided great money making opportunities for the crowd of enthusiasts. However, it also causes significant losses for those who put too much into cryptocurrencies, putting their savings at risk.
Buying Bitcoins and cryptocurrency has become relatively easy over the past few years and it is no longer a significant barrier to its use as an investment. News aboutETF, retirement packages and financial institutions generally welcome cryptocurrencies ininvestment portfolio them with profitable investments.However, when is the right time to sell crypto?
Many people believe that selling can be more difficult than buying an investment property. Some causes can interfere, such as psychologicalafraid to miss (FOMO). When an asset rises in price, an investor may feel that the asset may continue to appreciate. If the price drops suddenly, they may not be able to sell.
Dot.com bubble lesson
People still remember the infamous dot-com bubble in the stock market, caused by excessive speculation by internet-related companies in the late 1990s. Investors can sell when the value is high. of those businesses increased by 400%, which can generate life-changing profits. However, many people are still waiting because they believe they can go higher. Those people lost up to 80% of their investment when the market crashed in October 2002.
Many believe that cryptocurrencies have nothing to do with the dot-com bubble and that it will always exist. However, the high volatility and speculative nature of the industry makes any asset extremely risky.
Four rules of investing
In addition to having a specific plan, over the years the most honest investors have identified some key rules to follow when applying joint investments. These rules also apply to cryptocurrencies:
Buy only what you can afford to lose. Specifically, invest only 5-10% of your total savings;
Understand what you are investing. The key is not to chase assets that are inflated, but rather invest in what you believe has good fundamentals, such as technological potential;
If you are not an experienced trader, just hold an asset likeBitcoin several years (your financial advisor will usually tell you at least 5 years) is enough to give you some good returns;
Set up a plan that clearly defines your goals, both buy and sell goals, and stick to it.
However, it's often easier said than done, isn't it?
As investors, at some point, we all have a mentalityfear of missing out: we all put too much of our savings into risky investments thinking they will make us rich; but in the end, we all lose some money.
Knowing theBasic knowledge of trading can help those who don't want to sit and wait for their profits as assets grow. However, even if we are simplyhodl and wait, when is the right time to sell them?
'Hodling', as an investment strategy, gained more traction and popularity with industry validation, now valued at almost $2 billion. Technological advancements have made cryptocurrencies strong despite constant volatility, and Bitcoin has reached the status of a gold-like store of value.
What is the best strategy for new crypto investors?
Thesebitcoiner rigidly swear that they will never sell BTC, as it will eventually become the new global monetary system. All you have to do is accumulate as much as you can during the runbear market and make sure you have enough money in the long term to pass it on to your family and heirs.
Another popular strategy for Bitcoin and other cryptocurrencies isdollar cost averaging (DCA). Small amounts can go directly to your crypto wallet daily, weekly or monthly. Vendors and exchanges likeCoinbase makes it easy to set up the DCA service so that money regularly goes out of your fiat bank account and into your crypto wallet.
If you are not a hardcore bitcoiner, you might consider keeping the top cryptocurrencies, another coin, ortoken for a long time but expand your sales as the property increases in value.
Bitcoin Savings Plan
In 2013,Jameson Race, who is known for advocating privacy and Bitcoin, co-founder and CTO of Casa, launchedBitcoin savings plan to help investors shape strategies based on their circumstances and calculate returns on the potential future price of Bitcoin.
Based(SSS) - a Sane and Simple bitcoin savings plan by rpietila on BitcoinTalk, the scheme is intended to help Bitcoin investors avoid important mistakes like buying at the beginning of the cycle and selling at the end of the cycle. By 2013, many investors had made life-changing profits by selling Bitcoin; however, others also lose money by selling too soon.
As mentioned on the page, the goal of this plan is to 'Learn to Stop Worrying and Love Volatility' and facilitate setting goals and targets to achieve trades profit by selling Bitcoin.
Starting with the initial investment, you can then determine the number of cycles or price classes you expect before selling at the ideal price.
With the initial investment, you will set up the initial exchange rate at which you bought Bitcoin, the cycle multiplier - for example, will double or triple your initial investment - ending in setting the rate of return you want to achieve.
We recommend you try and find out if it helps you to set your targets based on the potential price Bitcoin could reach in the future.
When should you sell crypto?
Although many analysts believe that4-year cycle related to Bitcoin's halving event broke last year, but it still seems to define a bear market andbull market meaningful. Trends are never just up or down. Therefore, if you know when to buy, you can plan when to sell.
The entire cryptocurrency market has always depended heavily on the movement of Bitcoin.Bitcoin Domination still more than 40%. ETH accounts for 20%. The rest consists of a multitude of cryptocurrencies that will likely disappear over the next few months or years.
The first step would be to have a clear goal, and perhaps this little strategy will help you work towards something. Whether the goal is to pay off debt, save for a big purchase like a house or your children's education, it's always important to have a specific purpose for your investment to work for. good idea and will give you the right motivation to pursue your plan.
You might consider selling your property — or a piece of it — if its value has doubled or tripled its purchase price, even if you've been using the cryptocurrency for a long time. In that case, you can sell for the same amount as the original investment or 5-10% of the total amount you own.
Another scenario where you should consider selling your property is when its fundamentals are no longer valid, little or no development has taken place, or you have lost confidence in the project. . In that case, the stop loss should be your primary concern, and you should try to sell at a reasonable price.
Beware of Research & Development (P&D) programs
Every day, you have new crypto opportunities. We dare say that most of those opportunities are very risky. You can lose all your money, because many startups arepump and dump plans (P&D), which can reduce their value by up to 90% from the original value. However, if you invest in solid projects and keep in mind rule #1 that you should only invest what you can afford to lose, this can help you prevent any losses. any significant loss.
It is essential that you keep an eye on the overall crypto market, going beyond and understanding the macro external influences, such as impending war, pandemic, etc., that can affect the price. value your property. In that case, the price collapse will be significantly different from the price drop due to the project failure. This is an essential point to remember to avoid a panic sell-off that you may later regret.
Personal circumstances, market circumstances, and underlying circumstances can all play a role in your decision to sell cryptocurrencies. However, if you choose robust projects, don't risk your savings, and build up some patience, you could end up making unexpected money in the long run. Sometimes, holding the right investments and doing nothing for a few years is the best strategy.