When the price of cryptocurrency plummets, you feel anxious and want to sell.
Conversely, when the price skyrockets, you panic, thinking, “If I don’t buy now, I’ll miss out!”
In the crypto asset market, these emotions can influence your investment decisions.
However, what is important for continuing to invest for a long time is not to perfectly predict every price movement.
Not being swayed by emotions and having your own criteria for judgment.
In this article, we will introduce 5 iron rules that beginners should keep in mind to continue investing while protecting their assets in cryptocurrency.
1. Stay calm, especially during a crash
When the price of cryptocurrency plummets, don’t you ever feel like this?
“What if it goes down even further…”
“I want to sell it right now”
“I should have sold it sooner”
It is painful to watch your precious money decrease.
However, if you decide to buy or sell based solely on anxiety, you may regret it later.
During a crash, first try checking the following three things.
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Is your living capital affected?
Check if you have invested money that is needed for rent, food, or sudden expenses. -
Has the reason for your investment changed?
Look not only at the price drop but also at the project’s status and market environment. -
Are you being swayed by information on social media?
Continuing to look at posts that incite anxiety can make it difficult to make calm judgments.
Of course, doing nothing during a crash is not always the correct answer.
If the reason for your investment has collapsed or if your living capital is affected, you may need to review your holdings.
The important thing is to check the situation before making a decision, rather than acting in a panic.
2. Do not judge based solely on short-term prices
If you are holding cryptocurrency for the long term, you should pay attention not only to daily price fluctuations but also to the technology and utility that the project possesses.
For example, when researching Bitcoin (BTC) or Ethereum (ETH), it is important not just to look at the price, but to understand the underlying mechanisms and usage status.
There are three points you should check:
1. What kind of problems does it solve?
For what purpose was that technology created?
2. Is it actually being used?
Try checking the number of users, development activity, and network usage status.
3. How is it different from its competitors?
What features does it have compared to similar services or technologies?
However, just because a technology is superior does not mean its price will necessarily rise.
Long-term investment does not mean holding onto assets without thinking; it also means checking information periodically and reviewing your decisions as necessary.
3. Do not concentrate too much on a single asset
In the world of cryptocurrency, new coins appear one after another.
When you see assets trending on social media, you might think, “Maybe I should buy this too.”
On the other hand, concentrating your funds into a single asset in pursuit of large profits is also a behavior to be cautious of.
Beginners should keep the following two points in mind:
Understand the differences between BTC, ETH, and altcoins
When considering your cryptocurrency portfolio, you can organize the characteristics by classifying them as follows, for example:
Type Main Characteristics Bitcoin (BTC) Representative cryptocurrency asset. Has price volatility risk Ethereum (ETH) Cryptocurrency asset that serves as the foundation for smart contracts, etc. Altcoins Have diverse uses and characteristics. Risks vary by asset
Even with BTC or ETH, there is a possibility that prices could drop significantly. Also, among altcoins, there are some tokens with low liquidity that are difficult to buy or sell.
Therefore, rather than considering a specific ratio as the correct answer for everyone, it is important to think about fund allocation according to your investment experience, financial situation, and risk tolerance.
And, keep living expenses and money needed for emergencies separate from your investment funds.
To continue investing for a long time, you need not only to aim for profits but also a system that ensures your life is not made difficult by large losses.
4. If you feel FOMO, stop for a moment
A term to remember in cryptocurrency investment is FOMO.
FOMO is an abbreviation for “Fear Of Missing Out,” which simply refers to the fear that “I might be the only one missing out on an opportunity.”
For example, seeing a certain coin surge, do you ever feel:
“I should have bought it yesterday!” “If I don’t buy it now, it will go up even more.” “Everyone else is buying it, so I have to buy it too.”
Do you ever feel this way?
When you are pulled by this psychology, you may end up purchasing without checking sufficient information.
Therefore, when you feel FOMO, try the following three steps.
Step 1: Investigate why it is rising
Check official announcements, news, and trading data.
Step 2: If there is no basis for purchasing, pass on it
There is no need to buy just in anticipation of a price increase without understanding the reason.
Step 3: Consider the risks before buying
Check if the amount is one that would not affect your life even if it drops significantly after purchase.
Just because it has surged does not mean the price will necessarily go down.
However, there is also no guarantee that it will go up further.
The feeling of ‘not wanting to miss out’ and the ‘reason to buy now’ are two different things.
Just being aware of this difference can be a trigger to reduce impulsive trading.
5. Do not take information at face value
SNS is overflowing with various information regarding cryptocurrency.
‘This coin will go up 100x!’
‘You should buy it right now!’
‘A major crash is coming soon!’
When you see such stimulating information, you get curious, don’t you?
However, just because it is posted with strong language does not mean it is correct information.
When checking information, try to be conscious of the following three points.
1. Is the basis shown?
Check whether there is concrete data or an official announcement, or if it is merely an individual’s prediction.
2. Who benefits from this information?
There is a possibility that the sender holds a specific coin or receives compensation through referrals.
Be aware of whether there is a conflict of interest.
3. Can it be confirmed by multiple sources?
Cross-reference official websites, announcements from developers, and reliable news reports.
However, even if there are multiple sites reposting the same information, it does not necessarily mean they are independent verifications.
It is important not just to look at the number of sources, but whether each one has verified it independently.
You do not need to chase every piece of information.
Rather than gathering a lot of information, focus on discerning reliable information.
This leads to calm investment decisions.
Summary | Make Decisions Based on Your Own Rules, Not Emotions
Let’s review the five iron rules to keep in mind for long-term cryptocurrency investing.
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During a crash, first organize the situation
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Check not only short-term prices but also technology and use cases
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Do not concentrate too much on a single asset
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If you feel FOMO, stop and take a step back
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Verify the basis, the source, and multiple information channels for any news
Predicting the future of the market perfectly is not easy, even for experienced investors.
That is why it is important to have your own rules rather than being swayed by price fluctuations.
What to do during a crash?
What kind of assets to choose?
How much money can you afford to invest?
If you think about these things in advance, it will be easier to maintain your decision-making foundation when the market moves significantly.
Before chasing profits, first protect your assets.
Let’s engage with crypto assets at a pace that suits you, without rushing or overextending.
What do you value in your investments?
Please share in the comments what you are conscious of, such as how you handle crashes, how you choose assets, or how you gather information.
For those who are just starting to learn about cryptocurrency, various experiences and perspectives will surely be helpful.
Disclaimer
This article is for informational and educational purposes only and does not recommend the purchase or sale of any specific crypto asset. Crypto assets have high price volatility and carry risks such as loss of principal. Please make investment decisions based on your own financial situation and risk tolerance after confirming sufficient information.
Thank you for reading until the end.
