The painful lessons of investing in cryptocurrencies
Getting to know FOMO
So last year in December I was looking for some ways to diversify my financial portfolio. As a young-adult I had been putting some money in traditional index funds, but as that % became too high in comparison to my savings, I wanted to explore new ways to invest some money. I had heard of crypto currencies before, but in December they suddenly got discussed on national TV and radio and so I decided to look it up and do some research.
I quickly stumbled on Coinmarketcap and started learning about Bitcoin and Ethereum. I researched the technology, read the whitepapers and learned a bit about the history of the coins. I knew what a Bitcoin was beforehand, but the things I read about Ethereum blew my mind. Smart contracts, ICO's, a platform on which new Dapps could be built, Vitalik Buterin and his amazing viewpoints on crypto's... My interest was immediately triggered and I widened my research to the top-10 coins. I made a short summary for each of them, trying to find out which projects I wanted to throw my money at. At that point I was blown away by the endless possibilities of crypto currencies.
I started to realize that this was another technological and financial revolution in the making, and that it was much bigger than I could ever think of before. I was looking at the birth of the new internet, the new financial system, the new way of doing things. I got passionate about crypto currencies. I started looking up TA and I kept reading about the diverse projects and tried to find an exchange which would accept my money (almost all the exchanges in December had a registration pause).
So I transferred some money to the exchange, and the waiting game started. At this point the bullrun was going full force and I was feeling a bit frustrated of missing out on potential profits since the money transfer took almost two weeks. But at the same time I've read so much good things about crypto's that the surge in price would continue anyways. I shouldn't worry.
Around the 20th of December the money got through, I bought my BTC at 17k and put them into my wallet. A lot of transaction costs later, I built my portfolio and I was a happy man. Sad to say that euphoria was short-lived. Exactly the day after I bought in the market started to crash and in less than a week time I've lost 30% of my portfolio. I didn't really panic though, since I knew the fundamentals of the crypto hadn't changed. The market was reacting emotional. In the beginning of January the prices were going up again and I felt reassured that I had made a brilliant choice. I would at least triple my investment by March. That's where I also bought in on one lowcap coins which was making great profits. I was going for the big bucks.
I kept on increasing my portfolio in the following weeks. BTC at 15k? What a sale! Can't let this one pass. BTC at 13k? Are they going mad? Let me buy some! BTC at 11k? I'm in! And then January 28th happened where I was sitting in front of my PC while BTC was diving below 7k. The internet exploded and for the first time I got out of my "pink cloud". I still hadn't sold anything and was a firm believer that BTC would go above 17k again at one point, but it was at that moment that I realized that 17k could be a long end away from us. I knew I was in this for the long-term, but the term to get some profits (in my case) could be a very long one.
The lowcap coin I invested in completely crashed. I felt like an idiot. I thought I was a very rational player in the market, but when I reflected on it during the crash I had fallen for the FOMO without even realizing it. I got on the hypetrain of lowcap altcoins and got punished hard. As a new, young player in this market that's a valuable lesson learnt. After the crash I didn't stop investing, but I started to put my money in projects like ETH and BTC which have a bit more security to them. This market is going to be brutal at times, and at volatile times like past months, I'd rather have my money in projects that have already proven themselves to withstand the test of time. Even though I really believed in the lowcap project, it's just too risky at this point to further add to my positions there.
The crash has lost me a significant amount of money, but that's okay. It's money I don't miss and it doesn't force me to think twice about it. In that sense I'm glad that I always kept a clear head about my maximum sum I wanted to invest. But instead of feeling bad about it, I'm glad that I got to experience this crash and the volatility of this market at these early stages. I got immediately put back on the ground with both feet and I now know what to be careful for if we get in a bull market again. I'm sure we will get to new all time highs somewhere in the future, but the future can be far away from now... Anyways, I'm fine with that and I will try enjoy this roller coaster as long as I'm invested with the same passion and ideology I've had since I learned about crypto's. Bring it on!
Thanks for reading,
See you next time
Did you sell any coins? You haven't really lost if you still have the coins as the market will only rise. My experience in discovering ETC was very similar to yours. I went on to discover EOS and Stellar...
No, I haven't sold any coins yet, as I believe the market will reach some new all time high's at some point... So as long as I believe that it's ultimately all about patience :)
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cryptos have no "fundamentals". They are tulips without even the tulip bulbs. However as long as our stupid governments keep making money management a chore , they will have a use and a value.
We've all been there! I am confident by the end of the year we will return to previous highs, at which point you will be experienced on how to navigate the market while new investors will be the ones FOMOing make rash decisions.