This is a winter that is starting to last a little too long. The “crypto winter” (annual period of sharp decline in crypto) drags on, much to the chagrin of investors.
Bitcoin is collapsing, Ethereum is struggling and these two behemoths are taking the entire market with them. For some, it’s a bit of a cold shower. But in such a situation it is necessary to take some distance and go back to basics.
To get through this crisis without panicking, here’s 5 essential tips when investing in cryptocurrencies.
do not panic
This is necessarily rule number 1. When the curves fall, we tend to want to resell to limit the break. If this reaction seems natural, it is based on an emotion. And when it comes to investing, emotions often lead to wrong decisions.
Keep in mind that as long as you have not converted your cryptocurrency into euros or dollars, you have not yet lost your investment. Think long term. This downward curve that scares you may just be a small slump over a 10, 15, or 20 year investment.
Only invest what you are willing to lose
This is the basic rule of investing, be it in cryptocurrencies or stocks. When investing in high-risk stocks, it’s best to Only invest what you are willing to lose.
When we see the fortunes that some have won, we are tempted to put all our savings in crypto. This is a big mistake. Like all high volatility stocks, investing in crypto requires taking a step back from the get-go.
You should always look first at what you can lose rather than what you can gain. Given the worst remains the most serene way to invest. And it’s not just for crypto.
Trading is a profession, not a hobby
Just like in the heyday of stock trading, some small investors took some pretty good pictures when the crypto market was born. This does not mean that they are traders.
Trading is a profession and way of investing that is not recommended for the general public. Trading is broadly investing in the short or medium term. This requires expertise and, above all, colossal amounts of money to influence market volatility or adapt quickly.
For the general public, we recommend investing over several years. Always amounts we are willing to lose (as explained above), a bit like saving. Except that these savings may pay off or collapse.
By investing over several years, you are not exposed to sudden market fluctuations. It is therefore better to invest 50 euros every month for 15 to 20 years in one or two cryptos than to improvise as a trader by putting all your savings in cryptos. Humility remains a fundamental value in investing.
Don’t invest in exotic cryptos
The crypto market today has hundreds of values. And just like in the stock market, not all are created equal. Some projects are even based on questionable schemes, including Ponzi schemes that ultimately only enrich their creators.
We therefore recommend invest in known currencies, maximum three or four to spread the risk a bit. Bitcoin and Ethereum are must-haves. You can also add a token to your wallet as well as a stablecoin to provide some security in the event of a crisis.
It is better to avoid exotic cryptos. If you’re not a professional, you don’t have to take any big risks. You can already get a good return on your investment with safer stocks.
In general, it is advisable to diversify your portfolio with a little crypto, a little stock, etc.
Don’t follow the advice of “gurus”
They are increasingly visible on the internet and social networks. Pseudo experts, crypto influencers, financial gurus: many of these content creators promise you mountains and wonders.
If someone knew how to become a millionaire by putting 300 euros a month in a cryptocurrency, he would not reveal his secret. Avoid all this risky advice.
Usually these profiles play more with your money than with their money. Trust yourself, be informed and base yourself on the fundamentals of investing: only bet what you are willing to lose, on certain values and for several years.
By following these few pillars, you should endure crises calmer and reap the fruits of your wisdom in years to come. Don’t we say that caution is the mother of safety?