Welcome crypto enthusiasts! So, we are still stuck in what appears to be a never-ending bear market. Since the peak in December there have been (by my count) five rallies where the Bitcoin bulls have attempted to regroup and push the price up to new all-time highs. Unfortunately for the bulls each one of these rallies has failed and each one has failed at a progressively lower price. As a matter of fact, as I am writing this the price of Bitcoin is making another push higher since reversing about a week ago, but I expect this rally to fail just as the others have once again disappointing the bulls.
So, the reason I am writing this and the reason for the question “Do you have crypto depression?” is mainly due to a tweet that was shared to me by a friend. In the tweet you can really feel the persons frustration over what the price of Litecoin has done over the months since it peaked. As we all know what it has done is basically sink lower and lower every month just as pretty much the whole crypto market has done. The other thing that stuck out to me was how this person said that they were not interested in buying Litecoin again unless it basically returns to it’s all-time high and then stays there for a year.
So, my interpretation of this tweet is that this person most likely bought Litecoin near the peak and either still holds it today, staring at an investment that has shrunk substantially or they sold it on the way down for a substantial loss. I would also say that to me it appears that this person most likely has very little experience investing in anything let alone cryptocurrencies which as we know are extremely volatile. Having said all of that I can fully understand the frustration and possibly even depression people feel during this portion of the market cycle we are all experiencing right now. I am very sure that this person is not alone by any means, without a doubt the mania of last fall sucked in countless numbers of people who were jumping in right near the top, and I can imagine it’s possible that many of these people also had never invested in anything before but were overcome by FOMO (fear of missing out). So, the feelings of frustration and disappointment shared by the tweeter are most likely felt by many other people.
I can also relate to these feelings, because I have been there before. Early on in my investing/trading journey I was one of the people buying at exactly the wrong time. More times than I care to remember I was overcome by FOMO and bought at the worst time. Even today, with all the experience I have gained I still have investments or trades that go against me. The main difference is today I only enter investments or trades that are planned out ahead of time where I feel the probabilities of success are in my favor. Anyway, my point is not to try and portray myself as the best investor/trader in the world which believe me would be far from the truth.
What I am trying to get across is that with experience you gain a different perspective, early on in my investing/trading journey I would have been one of the people buying Bitcoin up near $20,000. Today I can recognize when price action is unsustainable just as Bitcoin’s was last December where you should be selling instead of buying. Whether it has something to do with herd mentality or it is just FOMO for some reason many people (at one point me included) tend to buy high and then panic and sell low. So, when the tweeter says they won’t buy Litecoin again until it once again reaches $400, I would say that in my opinion that would be the wrong time to buy it.
If I was going to give this tweeter or anyone who is in the same position some advice it would be to do the research on Litecoin and if you really believe it has a real-world purpose that one day could make the price appreciate, then I would start accumulating it today. I would start accumulating slowly because we obviously do not know if Litecoin has bottomed yet, but I would at least start accumulating here. Then if by chance Litecoin ever does make it back up to $400 instead of just thinking about starting to buy you would already be sitting on a substantial gain. Also, the tweeter needs to realize that the whole crypto market is in a very deep bear market right now, so it is not just Litecoin that has seen a substantial drop in its price.
Some additional advice would be to never ever risk a penny of your hard-earned money until you have educated yourself about what you are planning on investing in and always above everything else mitigate your risk (protect your capital), before investing create a plan just in case the investment or trade goes against you. Never invest more money than you can afford to lose, if you find yourself feeling anxious about your investments or trades then that is a good sign you are risking too much money. Also, don’t get tunnel vision, pay attention to what the broader markets are doing and study the past price history of what you are thinking of investing in.
Using Bitcoin as an example we can see that it has been through many boom and correction cycles in its history. I am pretty sure that people who bought near the peak of the 2013 boom most likely also felt frustrated and maybe even depressed during much of 2014 and 2015, but as we now know if they held through all of that they were greatly rewarded. Obviously, there are no guarantees that Bitcoin will ever make a new all-time high, but in my opinion this boom and correction cycle we are experiencing right now will eventually work itself out and become just another in its history as Bitcoin moves to new all-time highs.
So, if you are feeling frustrated or depressed about this seemingly never-ending bear market realize that you are not alone. I would add that you also need to realize that there may be more pain to come before things get better. I would also prepare myself for the possibility that this correction cycle may go on for a very long time, from Bitcoin’s peak in the 2013 it was almost 2 years before the start of the next bull market. There obviously is no way to know how long this one will go on, but I prefer to be ready for the long haul and use this time to slowly accumulate in preparation for the next bull market.
Until the next blog post, Take care!
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