Why speculative investment is wrong

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Many people have it all wrong and really for the most part when investing into a project they invest based off of pure speculation which is really wrong, some who invest in a crypto asset you would think they had done proper research whereas in reality they have not and for the most part they are actually following some hype instead.

Some maybe they see a social media influencer talk about a coin on how great it is or some tweet about a coin or maybe they fear that they would miss out as some have profited from a similar stuff before and for that reason when they see the next coin they believe would do so without any real basis they venture into it while hoping for a fairy tale ending.

Now there are alot of things wrong with this mindset and why we shouldn't invest in cryptocurrency based off of mere speculation or hype as this constitute everything wrong when it comes to investment and could cause us to regret it later.

Today I will be writing on the problems associated or linked with speculative investment.

Problems associated with this form of investment

One of the major problem associated with speculative investment has to do with the fact that this investment is done with little or no background knowledge of the project which is wrong for the most part and merely involve just investing in a coin due to believe that it would continue going up or because market condition is good you feel it will also do great.

Those who engage in speculative investment do so without any fundamental analysis and without proper grounding on the particular asset like knowing what usecase the asset has, it's team and if they are actively working on it or the technology behind it trying to understand and if there is any improvement the team is planning or any real solid plans for the future of the project, they do none of this just jump in and hope to make Lambo money which is wrong.

One problem therefore associated with this kind of investment is due to the fact it is done without fundamental analysis of the asset in question.

Another problem associated with speculative investment which this investors don't fathom at first is that with these type of investment there is even more risk of loss there are chance of rewards, speculative investment offers quiet high risk of losses.

Ofcourse what else would one expect who enters the market based off of pre expectation of, they invest their money in an asset because they expect it to go up nothing more, just like maybe a market is going up and you feel the market is bullish and just buy in on a coin hoping it would go even more up so you will see profit off your invested funds.

The problem here is that most times instead of seeing them profits we suffer significant loss from this mindset that drives us to invest which is why speculative investment is wrong as it could lead to substantial loss of funds.

Infact this type of market investment is not only wrong for the investor but for the whole market, speculative investment often lead to extreme market volatility which could be bad for other investors even, how so?

Normally we invest in a coin after proper analysis or some form of research and the more value a coin provides they likely the increments of it's investors but what happens when people pour money into an asset out of mere speculation with little or no regard to its value this could place an asset so high above it's value making it well primed for a catastrophic dump and this could really affect not just these speculative investors but as well as the investors who did their due diligence as it leads to increase market volatility.

Speculative investment is so wrong because it creates a bubble in the market or in an asset when everyone is buying off speculation it's only a matter of time before they realize that this project has no value and when they decide to sell off leaving the coin return to its true value the crash that will come with that will hurt many people financially as speculative investment creates a bubble which is another reason why it's wrong or bad.

Speculative investment is also wrong due to the fact that this form of investment comes with a short term focus, the traders who do this don't really believe in the longevity of the project but on making quick gains leaving the future of that cryptocurrency asset in serious jeopardy.

When almost all the investors are speculative investors they would only care about their own profit and are short sighted and what happens is that whenever they feel they have gotten what they want they pull their money out without any consideration for the project and this could even stop the growth of a project or make it stagnant, ofcourse no project would want speculative investors driving up the price of their token only to leave them hanging dry in a short while.

Indeed speculative investment is bad business for any asset and should be avoided really by true cryptocurrency believers as it harms both the investor largely, the market and the asset and has great ethic implications.

Conclusion

Really before we invest in a coin let's try out proper research on that coin, fundamental, technical analysis and any other background information that would help us verify the authenticity of that project, doing so would help us avoid eincuring losses.