Why Staying Committed In Crypto Is So Difficult (And How To Manage It)
When life doesn’t quite turn out the way you were expecting, it can become a little difficult to remain positive. I think this is pretty much where we all find ourselves in the crypto space right now. Even those who were not that bullish in 2022 were at least expecting a modest and continuous grind higher. Even though the market is down significantly, it’s not really that bad. Hovering around $38K, or even $40K, still doesn’t look too bad when viewed on the larger time frames. What we want to see, at least for now, is higher lows.
It will be great to see a move above $40K, but I think the market is a bit spooked at the moment, or perhaps just uncertain. Recent activity in Canada has been good for crypto in the long run. However, many don’t understand the limitations of government, and so much is initially misinterpreted. The US and the world at large are awaiting President Biden’s executive order on crypto regulation, which is likely to be interpreted negatively.
In essence, there is a lot of uncertainty at the moment, and with uncertainty being the central cog of FUD, it’s not surprising to see it begin to manifest! The effect of Fear, Uncertainty, and Doubt should never be underestimated, as the majority will unfortunately always yield to it. Check out this article regarding the effects of FUD and how to avoid it. This is often where emotional intelligence comes into play, helping navigate difficult market conditions.
Why Maintaining Focus Is Key To Crypto Success
This is a discipline that should always be exercised regardless of the economic or political climate. However, it does become more of a necessity in times like these. Maintaining focus also helps keep productivity high, ultimately diverting attention from the negativity that arises during bearish seasons. Instead of being concerned about negative price action, celebrate your past victories.
In so doing, you will most likely realize that many successful past moves were actually born in downturns and bear markets. This will only serve to encourage further commitment and dedication to build and prepare for the next wave. Regardless of the market’s state, it continues to operate in waves, meaning setbacks are temporary and bullish price action will resume at the opportune time.
Understanding Why Markets Move In Cycles And Waves
This is especially true and is clearly evident in Elliot Wave Theory technical analysis. Markets push higher and grind lower; they also experience sharp ascents and deep descents. A move down is only interpreted as the end by inexperienced market participants. A move down, in essence, is actually a blessing, allowing you the opportunity to prepare for the next wave up. This is where the majority lose big time! Being unable to interpret market cycles correctly causes many to abandon their investment goals.
You cannot escape a market slump, but you can hedge and be proactive in reducing losses. You need to face the storm head-on with as much wisdom and strategic action as possible. Learning from past victories also provides great assistance in confronting a fresh challenge. For some of us, the past victories have removed the possibility of loss, as we have recouped our initial investment many times over. This is the most powerful reward of early adoption.
What About The Newcomers?
If you are new to this market, then you will most likely not have any big wins to look back on for encouragement for the road ahead. This is why you have to, at some point, endure a bear market, so as to develop resilience and experience. There is no preparation for a bear market that matches enduring a season of bloodshed. This is where you will “get your stripes” and resurface with a keener and more realistic view of this market.
On the upside, there is a strong likelihood that this winter will not be as cold as previous winters. There is a lot of opportunity in a bear market, and I will repeat what I mentioned earlier: money is made in bear markets and realized in bull markets. For some reason, this escapes many, even the learned. This is how you make money in financial markets. You have to be busy when the blood is flowing down the streets, even if the blood is your own!
What Failures Can Teach You In Crypto Investing
This could very well be the dawn of a new opportunity to build what will later become a tremendous victory. Past victories become encouragement and future motivation for the next challenge. Persisting through difficult market conditions will always prove beneficial. Even if you invested in a dead-end project, the lesson learned will be of great value when considering future investments.
At the end of the day, everybody needs to pay their “school fees”. This may need additional context, as any newcomer to the crypto space will experience some degree of initial failure and defeat. This market is incredibly volatile and is extremely dangerous for the inexperienced. In other words, don’t be too discouraged by some level of failure, as everyone experiences it, even the more seasoned investor.
The Psychological Benefits Of Acknowledging Small Successes
Conviction is one of the key elements of remaining active and focused in crypto markets. This is usually acquired via extensive research. However, securing a victory, even a small one, also helps build conviction. Celebrating victories not only feels rewarding but also supports long-term growth! This is particularly true regarding the “builder” in the crypto space.
If you have spent time developing and setting up systems that are beginning to produce fruit, successes are an endorsement of your strategy. Acknowledging victory will encourage you to take your strategy to the next level. Celebrating successes encourages growth and increased dedication. A celebrated success will also provide insight into why a particular strategy is successful.
Reinvesting Wins Through Dollar-Cost Averaging
A crucial aspect of reinvesting crypto wins that can make all the difference is strategy. Profits can be deployed into both blue-chip projects and potential future winners, such as micro-caps and other smaller projects. Depending on your risk profile, allocations will vary. One could also opt for a simple 50/50 split. By deploying capital at staggered intervals, risk is mitigated, and perfect timing is less critical.
Furthermore, staggered allocation provides an opportunity to identify additional, or even better, candidates. Capital allocation and deployment strategies can often be way more effective than simply going all in on a particular investment or group of investments. Markets have a way of testing any investment thesis. The gradual deployment of capital also helps protect against overexposure.
This approach helps promote sound investment psychology. Most inexperienced investors ultimately lose because they become overly emotional when they win. As a result, little to no thought goes into the next move, and an emotional, unresearched investment idea often wipes out gains. This strategy minimizes such behavior by default.
Conclusion
Try to find the positives in a negative market, aim to build for tomorrow, and you will be in a better position than many of your counterparts. Dedication and consistency will pay off in time, and unfortunately, consistency means remaining engaged when the economic climate is dark and cloudy. Also, remember to diversify your focus, as not everything in the formative stages of a new technology survives.