Volatility in cryptocurrency market
Many people in my network ask me how to deal with the fear of the rather very high volatility in the crypto market we observed in the last couple of weeks. It seems that there is a general euphoria when the markets are at all-time high and fear and frustration when they are down in the red. People tend to sell off their holdings at the first sight of market decline and buy in masses when they begin to rise. Though this is a natural response to market moves, it is often a very dangerous one- a signpost that distinguishes investors from traders. Allowing fear to take over our decisions is both unproductive and unwise.
A good strategy before delving into the world of trading (be it stock trading or crypto trading) is to identify the goals. One has to have a clear idea about whether they are following a short-term gain (trading) or buying good assets and holding till their price gets high enough for sale (investment). A good balance between trading and investment can also work if the assets to be used for each purpose are clearly identified. In both cases, a really good discipline is needed to decide how much profit is enough before leaving the market and to stick with the decision despite the temptation.
Going ahead, we should expect even more volatility in the market and should position ourselves accordingly.
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