[Please Note: These are my personal thoughts - nothing in this post should be considered financial advice].
“What is your personal crusher number?…what do you think is the numbers that these institutions will finally go ‘okay, that's enough - we’re buying up the dip’".
The above questions were recently asked by one of my favourite Youtube*. I was going to just leave a comment on Youtube and be done with it - then for some reason I thought to write a more in-depth article (maybe it was him mentioning the possible suicide of a professor that might be related to the latest crypto bear-market which motivated me to finally act and write something/'carpe diem'?). So, here is my long-winded answer to something that was two short questions.
My personal 'crusher number'
For me - there is not a ‘crusher number’. It does not exist. There is no fiat value that will get me to panic sell my crypto, especially in any bear market (key words here are ‘panic sell’). You might think that this is a stupid and/or arrogant statement - and you may or may not be right (everyone has their own values and reasons for doing things). Everyone is entitled to their opinion and truth, and this is mine. This does not mean I will never sell a portion of any crypto I may or may not own. I would be will to sell crypto, but only a portion of it (usually when selling x % is equal to my total initial investment) and this would only happen in a bull market. Also - I am more likely to sell my crypto for something other than fiat i.e. to pay for an academic course, or to buy some jewellery as a gift for the wife, etc (although taking some profits in fiat is always an option if the rewards are right - but fundamentally this is not what I am about).
Only Invest that which you are willing to Lose
The main reason I will not panic sell/sell in a bear market is that I really follow the meaning and spirit of the phrase "Only invest that which you are willing to lose". This is something I have heard many people say they do - but there are truly a very few people that I genuinely observed doing this. When I invest, I do so with the knowledge I might lose it all. Whilst I hope (based on research and instinct) that I have invested wisely** - I am also always telling myself that this could all turn out to be a bad financial investment in to (what becomes) a defunct technology or movement (in which case it’s value is £0 financially). It’s my crypto equivalent of an Auriga telling his master ‘you are only a human’ - this is my telling myself that I am human and I make mistakes and that my investments, until they pay off are all worth nothing financially (more about other means of valuing my investments, other than financially, later in this post).
Why did I get involved in crypto the first place?
Another important reason why I will not be selling any crypto investments (anytime soon) is because I truly believe in cryptos utility and vision for a better future away from existing corrupted institutions (yes, I realise you might initially see a contradiction to the above paragraph - but do bear with me - the above is based on finances, the next point is based on utility, and on political and social potential).
In my world view, existing financial and political institutions can adopt crypto and change their practices for the good of many, or they can be replaced by such crypto and a new wave of people and businesses looking to replace them - the choice is for them to make. I don't see this decentralised and public accountability vision failing. It may take time to happen, with many battles, and it may have many iterations - but this Pandora's box has been opened. And it is, for this reason, I have no short-term plans to sell (particularly, if in my mind I can afford to lose all my investments in any case).
I believe in the idea that blockchain technology can be a force for good. It can be used not just for and by businesses, but also by social movements, governments - and importantly its people - to make sure public funds are spent where they are supposed to. Blockchain can be used to stop wrong-doing (anti-political and financial corruption within governments) whilst be used to do good also (i.e.crowdfundingg and sending money or purchasing emergency items for direct delivery to disaster-hit areas/communities of the world***).
Why did you get involved in crypto? Importantly, what was your strategy?
So - now that I have justified why I will not be selling any crypto any time soon (especially a bear-market), let me discuss what I say to people who are, in my opinion, are panicking about their own crypto investment (let me also be clear - they are coming to me, I generally prefer not to discuss such matters****). When people I know who purchased cryptos and repeatedly say any of the below:
- ‘lost x % in fiat value of their investment’
- or that BTC/cryptos are 'has been a fad/ tulip mania version 2.0, etc…
- or they are just generally spreading what I view to be FUD
I wonder: why did they get into crypto?', 'did they do any research?', 'did they have a strategy when they got involved?', 'do they have a strategy now?', etc...
I then might feel the need to ask them some questions (if I do actually like the person, and if they are willing to listen to my questions).
The questions I ask generally are:
-
A) Did they invest more then they were willing to lose?
B) Did they confuse investment with trading? Do they know the difference?
C) What, in their eyes, had changed negatively between the ‘product’/crypto they bought and what they have now (other than the cryptos fiat value)?
- Is it the cryptos features(is it worse)?
- It's vision (has it changed)?
- It's security (been involved in 51% attack)?
- The team behind it (infighting/not working/changed)?
- Other issues?
Or is it that the persons (the investors) own financial circumstances have changed?
D) What is making them want to sell at this moment in time? Is it because everyone is saying 'there is blood on the streets’ and this is the end so it is best to ’save’ what they can before it is too late? Or is it because they need some fiat funds asap and this is the only or best way?
(NB: If the answer to point C and/or D indicated that it is their circumstances that have changed - I start reflecting, in my own mind, how they answered to point A and B. I am hoping they are doing the same also).
I don’t ask these questions because I am expecting answers from these people (I understand that they are genuinely worried/disheartened/angry/lost etc). I hope they will just think about my questions, maybe not now, but later (also hope they stop spreading FUD). If however, they do feel the need to give me answers - then we might discuss their answers and the crypto markets in general (depending on what our relationship is like).
The reason I ask these questions is that I want people to actually reflect on the choices they might have made (sure others control the directions of cryptos, but they control their own initial investment and risk tolerance). I want them to ponder on these questions and come up with their own answers (and hopefully use what they have found from self-examination to aid them going forward). *****
Examine what others are doing and/or what they are not doing [Analysis and Research]
If an individual, having listened to my questions and thought about them, insist on getting my advice/opinion of what is happening in the current bear markets (and what I am doing) - then I ask them to first just stop and observe what is happening in the market in a holistic fashion. There is no point in them trying to do what I will do if they don't know what (I think) I know.
I advise that they should (in no particular order) first do the below to begin to understand my perspective on things:
- To examine what is everyone in the mainstream media and alternative media is saying and doing? Is it consistent? Does it appear coordinated?
- If you can identify them, observe what those who might be coordinating FUD and panics are doing and not doing? What is their motivation?
- What are those with money and/or power (and importantly influence) doing when everyone else is still wondering what to do (again observe mainstream and non-mainstream news, but also importantly read specialist news/information sources - read what they read). Note: These people or institutions might not yet be in the crypto market or have any ‘skin in the game’ at the moment.
(Admittedly, the hardest thing I find is to identifying influential but hidden people/institutions as they try to keep a low profile.) - Question why are they (the power-players) doing what they are doing? (both those in Crypto already and those just looking in for now). (Again, I emphasise here, try to read what they are reading)
- Question how dependant on ’news’ the actual performance and (importantly) the direction of your particular project that you are invested in is - over the short, medium, and long-term? How does this relate to your investment strategy?
Take ownership of your own strategy and decisions
Given my above point on how/what they should be carrying out research on - how a person interpret other people's behaviour is up to them. How they choose to use this interpretation is again up to them (this is not financial advice). Just like I am not telling people what to invest in (or to invest at all), similarly, I prefer not to tell people how to behave at different stages of a markets lifecycle.
The advise I would give is for people to do their own due-diligence, investigations and have a strategy (I am an analyst - not a financial advisor). ‘No pain, no gain’. No research, no strategy = fewer chances of success.******
As you might have guessed - I don’t like to give people ‘answers’ - once bitten twice shy. I prefer people do there own research and make up their own minds. I will, if asked, give people areas they might want to look into and research - what they do with this is their own business. This is not financial advice. I am not a financial advisor.
How I don’t let market movements impact my physical and mental health (my coping mechanism and how I view my investment in Crypto).
Finally, if it helps and is of any benefit to anyone reading this post - the below 5 points are just some of the ways how I am able to not let short to medium term market behaviour impact my physical and mental health (I have been around since before Mt Gox - so I have some personal experience). I realise it might be seen by others that I am deliberately tricking myself or my brain - that might be the case - but hey, it works for me!
First and foremost - I am thankful for what I have outside of my investments. I have a loving family and group of friends without whom life really would not be as enjoyable or happy. I have my health (although I should do more to look after it). I was lucky to be born in, and still live in, a first world country that offers me many opportunities and facilities not available to others throughout the world. I have educational and learned/practical knowledge and skills that no one can take away from me. I have many things that I am thankful for, that far outweigh any ‘damage’ financial hardship can inflict on me.
As mentioned earlier, I live by the saying 'Only invest what you are willing to lose'. Once I have converted my fiat into my desired crypto (or any other investment) - in my mind it's financial/fiat value is lost/equivalent of £0. I have a timeframe in mind for when I hope it will be £X in value, but if it not then it was £0 to start with, so no loss. Because of point 1 above, I know to only invest that which I am willing to lose - to invest more would put an unnecessary strain on how I can provide not just for those I love, but also for myself. I understand the value of opportunity cost - I don’t let my opportunity cost of investment take away from any opportunity costs that would benefit anything mentioned in point 1 above (it’s about priorities).
I viewed any money or time I do spend on crypto in the same way as that I have spent on good causes and volunteering - money/time spent well and with good intentions and in the hope that it leads to a better tomorrow (for myself and others).
The value I get from thinking of crypto investment in such a fashion lies in the feel-good factor of trying to help and knowledge that I have learned something. It's an intangible value in this sense, but valuable none-the-less.I view my purchase of crypto like other tech products I own - phone, computers, etc - good to use at the time but might be worthless and become outdated in the future. If I am lucky/smart - the tech I have bought will be a 'classic' model that will not lose value long term but appreciate and be upgradable (therefore stay relevant). I see BTC and a few cryptos as such classics. Here the initial value derived from my investment is in utility - actually using crypto. Additionally, there is added value is being the 'cool' kid with the latest technology (and knowledge) and the bragging rights that go with this. Yes, I acknowledge, when there are bear markets you might look like the fool too many average people. However, to those in ‘higher’ positions in everyday life and work - those people that are the real power-players in the world or work and society (or those people you might metal networking events or in private clubs etc) - you will stand out. And it better to stand out than be part of the crowd (in most situations). You stand out because you are the one willing to embrace new things/try to implement change/ take risks etc. To influential people, you are a go-getter, the type of person who can think independently, likely to do something with yourself. You are more employable/investable. This ability to stand out has an intangible value I think is important to at least acknowledge and not overlook. (Think different)
I also think of certain cryptos and the crypto environment, as young but fine wines or whiskeys. They might be ok now - but they will get better with age.
In a ‘bear-market', if cryptos are a wine or whiskey then I suggest that you might want to think of the wine/whiskey has been given to you to drink in a paper cup as opposed to a fine crystal glass (bull market). Whilst the experience of drinking the drink from a paper cup might be less enjoyable (and therefore the drink might appear to be different if it was in a crystal glass), essentially it is the same drink (albeit still a little young) that you might have had little earlier in the crystal glass (in the 'good times’/bull-market).
The point is to know what you are drinking/have and look at the long-term trajectory After the right amount of time: the drink is aged and properly mature and ready to drink. Also, there will hopefully be more drinkers of wine/whiskey (more people to enjoy and party with) and these people are more mature/education of what makes good wine.
By thinking of crypto as wine or whiskey I learn:
a) the importance of examination and finding out what I have/looking into,
b) patience - knowing that what I have right now is not perfect, but with time it will be,
c) if I do ‘a’ and ‘b’ right then I am less likely to give away or sell my young, immature, but potentially profitable drink/crypto.
The main value in this method of viewing crypto investment is patience and long-term vision with greater personal and community rewards (leading to greater profit - financial and in intangible ways).
That's all folk
That is all from me for this post. Firstly thank you to anyone who has stuck with it - I understand it would have been a challenge. Finally, apologies for it being so long, and no doubt willed with a grammatical error, missed words, spelling mistakes (if you want to tell me where I went wrong, so I can correct the mentioned mistake - please do drop me a message).
Thank you once again.
Sarb
Footnotes (I have still to figure out how to add them correctly in Steemit):
*Crypto Zombie - episode 'Crypto Market MELTDOWN!!! Is Anyone Alive Out There…?' - on 07th December 2018 - 10min 19seconds into the episode)
** So that the investment might give me some future returns (in direct and indirect ways- i.e direct crypto purchasing power for goods, fiat returns, influence within the technology community, etc
*Please note, whilst the questions above, and how I am listing them, might seem a bit clinical - I always try to be mindful and empathetic to the person I am talking to (which is why I try to stick to asking them questions instead of giving outright opinions). Should any of you be reading this for solutions or advice on how to fix an existing issue (particularly that of being over leveraged into crypto) for yourself or a friend - you may be disappointed, I will not be giving you any answers.
***Send funds directly to those impacted instead of the current norm, where these donated funds are being funnelled through charities whose chairpersons and senior staff may be getting paid large wages (whilst the majority of its workforce work for free) and who withhold the funds until they see fit to release them.
**** I am not a financial expert, and this is not financial advice. I am not a psychiatrist, and this not emotional and self-help advise you have to follow. I am just someone who has been in crypto, and who has witnessed a few bear-markets in my time.
***** I will be brutally honest - most of the times I think I know the answer already (but I am just assuming and could be wrong). If I like them I will try and talk things through with them, help them work things out themselves. Continuing to be honest, if I don’t like them then I don’t want to hear the answers. I will just ask the questions and then drop the mic/walk away. I don’t have the time or energy to give to these people. (Did I mention I have a busy home and work life?)
****** Honestly, if I do I like a person and I think our relationship can take it, I tell them my opinion and investment at that moment in time. I would also emphases that just because I am doing a certain thing this does not mean they should do the same. I have different risk tolerance levels to them.
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