How to mentally and emotionally cope with Crypto Market Volatility

If we have been investing in the crypto market, then we are aware of the big retracement and corrections Bitcoin and ALT coins experience.

Some of these retracements and drops could be of over 20% some even bigger.

For longer term investors this is just white noise, another yo-yo day, but most importantly an opportunity to buy great coins at discounted price.

As even if we are getting used to buy lower and lower dips, and are asking ourselves, “when are these dips going to end?” all we are really doing, in a downtrend, is dollar cost averaging on the way down.

In the long term, in 6 months to 4 years, (or where we are in the bull or bear market cycle) we will be so glad we did purchase at all these lower levels.

As mentioned in a previous post, we have to focus on the amount of coins we have rather than the unrealized loss on the screen. This mind set change help me keep my sanity during the 2018 bear market when my portfolio value dropped from $256K to $37K, as most of my portfolio was in ALT coins and I was not aware at the time of the 4 year cycle, and its phases.

In the end 1 bitcoin, is still 1 bitcoin, and if we believe eventually with time that it will go up, then it becomes not a question of IF you’ll make great profits, but of WHEN. This is why, not only did I not sell during that last downturned (2018) but I kept using my crypto wallet as a saving account collecting more and more coins. I know a lot more about the 4 year cycle now, and I would use a hybrid strategy today, but we are all here to learn, and that for me was a big learning experience.

We know of course, that Bitcoin and the crypto market does not follow a set schedule, it does not look at a calendar and say: “Oh well is that time of the year, in the 4 year cycle, and I better start moving up!”; but we do know for certain is that once 210,000 blocks are mined in Bitcoin a new halving happens, which comes around every 4 years. This has helped many investors in having a better understanding about the different phases in the market.

Many that have entered the crypto space looking for a get rich quick opportunity are learning that it’s not all sunshine and rainbows, but at times a hazardous terrain, full of unexpected surprises, a forging of the self and even if at times tough, a great learning experience. The winners in the end are the one that can take the hits, and still stand up and weather the storms of life.

The reason why downtrend corrections are easier to predict, is because FEAR is easier to manipulate than GREED. When the market is in an extended downtrend the market becomes over sensitive, with low confidence and much fear.

In this circumstances is hard to decide what to sell or what to buy.

When I am in doubt I either wait for a confirmation or sell half and keep half, so that if I am right or wrong, I have not liquidated all of my potential profits and not risked all of my potential funds.

As a long term hodler, you can also make the choice of just staying put, as the number of your coins has not changed. And time will heal all wounds and soften any hard experiences.

Of course none of this is financial advice. Just my way of dealing with the crypto market.

If you are still in doubt, then I will ask you the same questions I often ask myself :

• Are you playing the long term investment strategy… or the short term game? (As this will change the choices you will make)
• Do you believe in the long term use/adoption of Bitcoin and Crypto Currency? Yes or No?
• Do you believe that there is more chance in 3 to 4 years’ time, that the price of Bitcoin will be over $100K or do you believe that it will be below $10K?
• Do you believe that your account balance in 3 to 4 years’ time will be smaller, the same, or 10 to 20 times or more what it is now, if you played the long term game and did focus on the coin amount rather than your account balance?

You see when we are scared, when we are anxious, stressed or terrified, we start to see only the tree and forget the forest, the bigger picture. We need to look at the tree in front of us (current risks) but also have an idea where we are heading, or our long term goals (the forest).

So for now, review your strategy, think about what is right for you, for your risk profile, for your mental state and balance and for your long term financial goals.

I wish you all the best.

Much Light

Paolo