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Oh man, this had been some rough weeks for crypto holders. This is not the first crypto crash I am experiencing personally but I have to admit that it is still not easy to handle.
Nevertheless, these bear market events can teach you some valuable lessons about the psychology of investing. Understanding the psychology of investing is more important than intelligence. If you understand the psychology of investing and if you have the correct mindset then you will get rich by investing in cryptocurrencies, especially during bear markets.
Here are my most important learnings.
Lesson 1: Pay The Price Of Volatility
Investing in cryptocurrencies is not for free. It comes with a price. The possibilities in cryptocurrencies are huge for investors but the price you have to pay is the extreme volatility. It is important to have a strong mindset to handle these extreme price swings. The higher the returns of your investments the higher this fee of volatility usually is.
Lesson 2: Bear Markets Don't Last Forever
Crypto goes up and down in cycles and bear markets don't last forever. Bitcoin is may go down in its price during a bear market but it is not going to die. Cryptocurrency markets always go back up after a bear market and are always higher than the last All-time-highs.
This will happen but no one knows exactly when. It can happen overnight, or it can take weeks or months. In some cases, it can take two years.
Lesson 3: Time of Opportunities
No one likes bear markets but this is what everyone should wish for, especially new cryptocurrency investors. The truth is that big fortunes are made in bear markets and not in bull markets. The time to get rich is now during the bear market.
As an investor, you always have to look out for opportunities, always, in bull markets as well as in bear markets.
Lesson 4: Build A Reserve
Bear and bull markets come and go. It is important that you prepare yourself for the next bear market during a bull market. Build up a reserve to survive a bear market. When you have a cash reserve in a bear market then you don't have to sell your crypto at bad prices. You can even use some of your cash reserves to buy cryptos at discount prices.
Lesson 5: Don't FOMO
Many new cryptocurrency traders FOMOed in when Bitcoin was at its all-time high of $68k and are now panic selling with loss during the bear market.
is an important term in the crypto space and means “Fear Of Missing Out.” This feeling is especially prevalent when a cryptocurrency rises in its value significantly over a relatively short time. It can be described as a feeling of anxiety that other people are getting rich while you are missing out. That?s the point where the Degen can?t help himself and he FOMOs in.
The problem with FOMO is that your investment decisions are based upon pure emotion instead of logic and reasoning. It can often lead to a situation where trades are made for an asset that is totally overpriced, incurring much greater risks of financial losses.
Lesson 6: Don't believe the FUD
There had always been FUD in the cryptocurrency space and there always will be, especially during bear markets. FUD is short for fear, uncertainty, and doubt.
According to the definition from the CoinGecko glossaryrefers to the movement to influence the perception of certain cryptocurrencies or the cryptocurrency market in general by spreading negative, misleading, or false information. FUD is not unique to the cryptocurrency markets - it exists in traditional markets as well where unscrupulous players release negative or false news to drive fear and uncertainty in the market in order to profit from it.
FUD is mostly a part of market manipulations. Luckily, you can learn "How To Protect Your Hard-Earned Bitcoins By Spotting Crypto Market Manipulations
Lesson 7: Think Long-Term
It is important to think long-term and not short-term. Long-term thinking always beats short-term thinking. This applies to many areas of your life but especially to investing.
Not everyone is made for trading but buying Bitcoin and holding it for the long term is something that everybody, really everybody can do.
Lesson 8: Master Your Emotions
In the end, it is all about managing and mastering your emotions. Emotions are not rational and when your emotions take over, you are going to make bad investment decisions. Everything else is just Degen Trading
My Final Words
So, I hope I could provide you with some interesting and useful information about the most important lessons that I have learned from cryptocurrency bear markets.
Did I miss anything and what are the timeless lessons that you have learned from investing in cryptocurrencies? It would be awesome f you would leave a comment below.
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