Everyone Loves A Price Spike: But What It Really Means In Crypto
Whenever the price of Bitcoin and the broader crypto market experiences a significant pump, it is always met by excitement and gratitude. However, the only group that should really be getting excited here is the traders. They are the only group that will realize any gain from such a pump. It is also worth noting that many crypto traders allocate only a fraction of their portfolios to crypto. In my case, it does not exceed 20% unless my trading allocation increases in value relative to the rest of my portfolio.
What this, in essence, reveals is that most people involved in crypto are HODLers. Medium to long-term investors are, in essence, HODLers. This means that whatever happens this week or next month does not really have any bearing on their investments. The funny thing here is that most don’t really realize this. It is really inconsequential whether you intend to realize profits within a year or two, or even longer. This is how fear and “chatter” can literally blind people as to what is really important and factual.
The more disciplined and weathered investor understands this and simply increases holdings when severe corrections take place. Newer and inexperienced investors don’t realize that, in real terms, their portfolio isn’t at risk unless the market completely dumps or goes sideways for years on end. This has unfortunately happened regarding the altcoin market.
Signs You Actually Have A Crypto Strategy (Not Just Luck)
Unless you intend to hold your investment indefinitely, you need a clear exit point mapped out. You need to have decided that when BTC hits this price, you will start offloading or even sell all. These exit points can be revisited, but only under very extreme conditions. Something really significant would need to be happening to justify raising the exit point. This is for obvious reasons; otherwise, you will simply continue to delay taking your profit.
One of the most difficult trades to make for both new and seasoned investors is to press that “SELL” button when prices are still going up. The important thing to remember is to set a predetermined price you are happy with and simply follow through on it, without emotion. I know, it is easier said than done.
The Reality Of Bitcoin Price Action: What’s Really Happening
If your timeframe or price target is off by some margin, then what happens on a day-to-day basis is completely irrelevant. Take a step back and let Bitcoin do what it does best: increase in value over extended periods. If current price action isn’t very important, it shouldn’t concern you much. It is pretty much as simple as that!
Where To Focus On Bitcoin: Long-Term Strategy Explained
When Bitcoin is not doing much or even slipping, it is important to keep your focus on what you can control. For example, building even more passive crypto income streams and producing content. This keeps you busy and distracted from what’s happening in the charts. It is also producing more crypto for you, which, if also HODLed, will ultimately increase your portfolio even more over time.
When it comes to crypto and finances, you want to be taking advantage of the compounding effect as much as possible. Get your assets staking and farming to take advantage of compounding growth. Even though staking is not nearly as risky as DeFi, I would still advise setting aside a percentage of your portfolio, preferably in cold storage, such as a Trezor hardware wallet. A portion that remains at basically zero risk of loss, though not guaranteed. Hacks can still take place, and crypto investors need to always remember that.
Are You Trading Or Investing? The Psychology Behind Bitcoin Price Obsession
One of the most prevalent issues in the world of Bitcoin investing is the confusion and lack of clarity among market participants. I say this because many consider themselves investors. However, they behave like traders. Furthermore, some behave in ways contrary to sound investment and trading principles; they panic-sell, buy at the top, and sell at the bottom. Their strategies are not strategies.
What is actually occurring here is that emotional responses override existing, and sometimes even structured, investment strategies. When you have a long-term plan, short-term corrections are not only not an issue but also an opportunity. Any investor worth his salt has already factored in his responses to a future market correction, and even a crash. Investors who obsess over price are actually speculating.
The short-term movements in Bitcoin’s price should be of very little concern to the long-term Bitcoin investor. The only time a long-term investor should worry is when the underlying fundamentals have changed or when an event occurs that can alter the trajectory of an investment vehicle, such as regulatory issues. Outside of extreme cases, it should be business as usual.
Final Thoughts
To those who understand the timeframe of investing in BTC, keep doing what you are doing! To those who are overly concerned with Bitcoin’s price, perhaps you should dedicate some time and attention to generating more BTC. You have no control over the Bitcoin price, so commit your expectations to the future and get busy with what you can control in the here and now. Even in an unexpected turn of events, time is a friend to BTC, more so than any other asset.
Obsessing over short-term volatility is inconsequential for long-term Bitcoin investors because their strategies include and account for market dips. This is where they dollar-cost average further into the market. The long-term picture doesn’t change with current market behavior; rather, it is reinforced by further accumulation. Thanks for stopping by, see you soon!