How to stop worrying about the Bitcoin pullback
Bitcoin panic is notorious. People are terrified by the idea that Bitcoin can go in a bearish direction. As soon as Bitcoin abandons its trend in a bull market, panic picks up. The bloodbath after 2018 has still left its scars on many Bitcoiners. Therefore, it is a common sight to people selling out of panic because everyone is doing so too. Many have lost a lot of gains or money because they sold in the trend, few have held on to their coins in 2018, but those are the ones with good profits now in 2021. But how can we actually stop worrying about something sure to come? How can we make money from our Bitcoins if we bought the top?
(Side note: Never invest more than you can afford to lose)
Cancel the short-term, focus on long-term
Investing Bitcoins means that you shift your time preference. This suggests that you understand that you will not see a direct return on your investment. But if you have the patience to stay for long, you will almost always make gains in the long run. Coiners who bought the high in 2018 held on to their coins until 2021 have good profits today. A friend of mine (one of the coiners that held on) made a 75% gain on that investment in 2 years. This is still a far better return on investment than if you threw your money at the stock market for the same amount of time. Short-term news only distracts from your long-term goal. Do not be distracted and focus long-term.
There is no such thing as negative PR
Negative PR (public relations) often backlash and give the subject more attention. More attention when it comes to Bitcoin means more demand, ultimately resulting in a price increase. Negative news will maybe affect price in the short-term, but negative news is a positive thing for us since we are not focusing on that. Negative news will bring more attention to Bitcoin. Awareness is excellent because people will try to understand what Bitcoin is once they have read about it. By reading about Bitcoin, many will become exposed to the ideas and the concept of Bitcoin, which will surely convince one or two to buy it.
Average and diversify
The best strategy to invest in Bitcoin is to buy the same amount of Bitcoin over a year. Let us say you want to buy 10'000$ worth of Bitcoin. You would actually better handle the volatility if you bought 500$ Worth of Bitcoin every two or three weeks. This would help you avoid buying high and selling low. You would just average your entries out. Using this strategy reduces your risk dramatically but could increase your gains just as much if done right. Just keep on holding your entries
Diversifying into other cryptocurrencies or assets always makes sense. Reducing the risk of losing money through buying other investments like stocks or other cryptocurrencies. If Bitcoin takes a dip, you could still have the gains from the different markets. Since many of them are not related, you could expect others to stay stable while Bitcoin goes the other direction.
Do your due diligence carefully. Always be sure to invest where you want to invest. Never buy or sell something out of hype or an emotional decision.
Fight analysis paralysis
Checking the charts every 2 minutes will only expose you to the short-term actions on the market and might panic you into a decision that could be regretted. I have been there, checking the charts will not make you any money. Your behavior and decision-making are of more importance here. Do not be distracted by short-term price action or news. Keep your strategy in mind and focus on the long-term. It is enough if you check the charts once every day. But there is no need for more if you are only investing.
Learn about the market
Learning about the market is far better than being distracted and blinded by the news. Use your spare time to study the market you have chosen to invest in. Find profitable opportunities and stick to your strategy while looking for them. Doing so will take away fear and your need to listen to all the analysts making big noise out there. Knowledge is the best weapon against fear, so be sure to make fair use of it.
The Bitcoin pullback is always linked to people panicking, but those who keep a cool head and focus on the long-term are the ones making good money. By understanding that Bitcoin is designed to move in the way it moves, you will realize that you need a different market approach. By using these steps, you will surely do well in dealing with volatility. If you need more content or tips on investing or trading, be sure to check out my website for more content and leave me a follow to stay up-to-date.
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Originally published at http://yvestalksbitcoin.com on January 26, 2021.