Fooled by the Dips: The Role of Risk in Cryptocurrency Investing

The price of most cryptocurrencies have recently fluctuated more towards the negative, following the nice bull market we had from May to mid June. This brings risk to the foreground, as now is when the market's participants are tested by facing loss or reduced profit.

For many, the marginal price reduction is enough to convince them to liquidate altcoin holdings, and in some cases sell off their bitcoin as well. However, for long term investors in the cryptocurrency space, these can be great opportunities to buy at a discount in preparation for the next bull run.

Every token carries the risk of continuing bearish tendency, but when gains are made, they come in extravagant fashion. The market has been in a continuous uptrend, despite its frequent dips and fluctuations.

Cryptocurrency, like many other investments and sources of value, requires patience and sense for the bigger picture of price movements. Micromanaging each of your holdings, and looking at gains and losses on a daily basis can become an emotional nag to sell and secure your profit, even if just a little bit. Securing a tangible gain is a satisfying feeling, but the feeling should not be what drives a sale.

Our goal as investors is to buy assets at the lowest possible point that we can, and sell at the highest opportunity that comes to us during our time of ownership. A selloff should not occur unless you find it impossible that the price climbs any higher according to the fundamental value of the asset. Cryptocurrencies in particular have enormous fundamental value to society and growth potential given the expansion of wifi and smartphone technology.

Cryptocurrency will only gain more participants from here on out, causing more and more widespread adoption. With adoption comes innovation, and more convenience for consumers, which leads to market clearing. In my personal opinion, I do not believe that cryptocurrencies have reached their saturation point. In fact, I believe we are far from it.

With this information in mind, putting money into cryptocurrency during times of distress doesn't feel like risk given the potential for this technology to grow. For example, crypto's exposure has mainly been limited to more modernized nations like the U.S., Europe, China, and other parts of Asia. As smartphone technology and wifi become more widely available in emerging markets, cryptocurrencies will see increased usage for its convenience.

When prices are low, and the candle chart reads all red, don't panic. Think of how to make the best of your losses, and figure out what's worth accumulating in the dismal state of the market. The coins that survive and outperform during times of stress and strain are a clear indicator of both fundamental support, and market trends.

At the end of the day mistakes are for learning! Even if they do cost you real money. At least get as much out of the things you've risked in hopes of profit, whether it is time or money.

Don't invest more than you can lose - this applies to every trade, too. Investing more than 5% in a single trade will give you anxiety and get you to make bad decisions
Don't panic sell - prices go up and down. That means even if they go down, they will rebound back at some point, even if not at the point you purchased the coin at - just be patient.
Don't chase hype. Greed or fear of missing out is a great way to lose on most of your trades, even if you get lucky every now and then.
Anticipate price rises. Even if you can't read charts, at least follow the sentiment for a given coin. When everyone is negative about it, give it a little more time for things to stabilize, and then buy that coin. Because it's probable the coin has reached its bottom by then, which is a great opportunity to buy.
Save some money in Tether/FIAT (20%-50% at all times), so you're always able to buy the dips.

I've written a whole guide on successful cryptocurrency trading for beginners, which contains more details, there. Feel free to check it out. - @jarexx