Over the past couple days, cryptocurrency prices have plummeted. This isn't the first time we've seen a steep drop like this and probably not the last. A few things happen when crypto prices fall:
- Loyal cryptocurrency advocates call drops like this "temporary" and "expected." These are the HODLers ("Hold On for Dear Life") and remain faithful that the price will rise.
- Amateur cryptocurrency investors become stressed, maybe sell - maybe HODL, but don't really know what they're doing. These people desperately cling on to any hope they can. They are the ones googling "When will Ethereum rise?" and choose to fuel their affirmation bias by reading articles like this one: 'Analyst Believes Ethereum Will Rise Again'
- Non crypto investors use things drops like this to fuel their own affirmation bias that cryptocurrencies aren't a good investment or that they are all a big scam.
Obviously, there are plenty of people in other categories, but you get the gist. The main point I'm making is that cryptocurrencies are bigger than most people internalize. Blockchain technology has spurred innovation in almost every sector. People are trying to harness the power of Blockchain for social entrepreneurship and redefine supply chain management to make traditionally hidden systems (e.g. our food system) more transparent and equitable.
So, as you watch your crypto portfolios drop in value, try not to get stressed. You are part of a movement, which is bigger than your investments. Remember that the technology will live on. You will make out in the long run as long as you're investing in innovation, not just a currency.
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Only those that buy on leverage will lose money. Buying on dollar cost averaging is the best investment strategy.