It’s been a big year for cryptocurrencies, with the total market cap for crypto jumping 6x since January 1st – from $18B to over $111B.
The FOMO (fear of missing out) is real. New money is entering the market at a staggering rate – to the degree that many exchanges have had problems on-boarding and verifying their new customers to keep up with demand.
These new investors are coming in droves after hearing about sky-high returns from a friend or friend’s friend or a friend of a friend’s friend.
Once they’ve gotten through the verification process on Coinbase or Gemini or Kraken, they execute their first market order and the rush of the cryptocraze washes over them. To the MOON!
Then price drops by 10%, our new investor freaks out, convinces themselves that they’re hardly ever right, that ETH or BTC is going to $0 and that they should just cut their losses. They panic sell, adding fuel to the micro-bear run and the price continues to drop. Whew, that was close. Got out just in time.
A short time later, they see that the price is not only retracing back toward their entry price, soon they’ll realize that it will exceed it. They just bought high and sold low. They leave the market.
We’ve seen this play out a number of times this year, and as investors ourselves, we too get concerned when the price of ETH & BTC begin a FOMO trend. We’ve seen the value of our CryptoGraph portfolio drop by 20–50% in hours.
However, in order to counteract FOMO and any knee-jerk panic selling reaction we recommend doing two things:
First, I’ve taken my coins off of the exchanges. This prevents me from having my finger on the trigger and selling in any sell-off or panic. I suggest you do the same, even if only for the security of storing your coins in a wallet to which you alone own the private key.
Second, I’ve quantified what I think Ether and Bitcoin will be worth in 2020. This personal thesis keeps me confident of the longer term state of crypto and in my investment. I’m not here to day trade, I’m here for the long term — and this helps me weather the storms. I’m not even saying I’m right, but it changes my long term perspective and makes be a more patient investor.