I believe that the old adage “time in the market beats timing the market” suits the crypto market so perfectly even though crypto also has the highest concentration of people who try to time the market. Whether it’s over-trading, getting blown up using leverage, averaging losers or just holding onto an asset for far too long – most people will actually lose a lot of the money they make and will also severely under-perform a benchmark index asset like ETH.
I think that the crypto markets have warped many people’s sense of investing and convinced them that it’s an easy endeavor when in fact it’s incredibly hard to be a good investor. And I mean – who can blame them – during really bullish periods you can throw money at just about anything and make a gain of some kind. Though it’s always the comedown that gets people – the long, slow bleed of their portfolio as the asset that everyone once thought was the holy grail turned out to be nothing more than over-hyped and overbought. This is really where most people lose their money – holding onto a position for far too long that bleeds out against USD (or any other fiat) and bleeds out even harder against something like ETH or BTC. I personally know people who have held assets for years that are now down 95%+ against ETH and they are still convinced that they will get “one last pump” to exit their positions – this is obviously very dangerous thinking.
I personally benchmark my investments against ETH because if I’m not outperforming ETH over the long-run (being 1 year at the very least), then what was even the point of entering into a position of a much riskier asset. On top of this, my taxes are denominated in fiat (AUD) so to outperform ETH with other assets I have to factor in taxes into the equation which just makes it even harder. Couple that with the fact that most crypto-assets are tied to projects that will fail (as most startups do), it becomes even harder to outperform ETH. Of course, this isn’t to say you can’t outperform ETH by speculating on other assets, but being conscious of when to take profits is what gives you a much better chance of winning.
The reason most people never actually net out positively from actively trading is because they are unable to keep their emotions and biases in check. They let fear & greed dictate trades, allow biases to cloud their judgement and get big egos if they hit one big lucky trade which just results in them over-trading. Many people also blow themselves up with leverage since basically every exchange out there offers these services to brand-new investors who have absolutely no business leverage trading. Though this is the nature of the beast – one giant global casino with the professionals feeding on the fresh meat of retail until they bleed out and the cycle ends for a period of time and the market enters a downtrend.
I’ve made plenty of mistakes over the years – falling for pump & dumps, buying into borderline scams, holding onto assets for too long – but how I survived was learning from these mistakes and being conscious of when I’m feeling fear and when I’m feeling greedy. These 2 emotions are probably responsible for most of the losses that people incur in crypto and you can see this playing out whenever there’s a big liquidation event – lots of over-leveraged people just getting wiped out because of their greed. On the flip side, lots of people will “panic sell” when prices are falling rapidly which just confluences with the greed to create those scary dumps we all know too well.
Now, everything I’ve said above isn’t to be taken as investment advice, but this commentary is the result of my own journey with investing in crypto and it took many years for me to optimize my strategy so that I could actually keep the profits I made. It’s also helped me to not throw away any of my precious ETH and also stack more of it through some targeted investments in other assets. I hope that you can learn something from these lessons and apply them to your own strategies – after all, your worst enemy and best friend in investing is yourself.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.
source https://d0llars.com/proof-of-profit-the-daily-gwei-396/
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