If you have a bad case of Fear of Losing (FOMO) when it comes to Bitcoin (CRYPTO: BTC) And Ethereum (CRYPTO: ETH), you are not alone.
It is true that the cryptocurrency market has been volatile throughout the year, providing investors with plenty of opportunities to buy dips. But it is easier said than done when prices are collapsing around you with no end in sight.
Now that we’re in an uptrend, people are rushing to not buy at lower prices. Here are five things you can do right now to ease your FOMO in a calm, collected way.
1. Select the perfect cryptocurrency allocation
in his book, the psychology of moneyMorgan Housel discusses the importance of knowing the game you’re playing. Although we may buy the same stocks or cryptocurrencies, we all have different investment goals. Some people want to grow their fortune over time, while others want to trade day for a quick profit. Then there is everyone in between.
Knowing what you want to get from an investment can help set the tone for a reasonable amount of exposure to cryptocurrencies that fits your risk appetite.
2. Decide which cryptocurrency makes the most sense for you
After deciding how much you want to invest, it’s time to figure out which cryptocurrency is right for you.
For example, risk-averse retirees may benefit from the higher interest rates available from stablecoins. Bitcoin serves as a springboard for new investors. Ethereum is adding more risk, with more upside potential. And bigger like digital currencies Cardano or Solana (or smaller altcoins like ribbed or Cosmos) offer a high-risk, high-return option for risk-bearing investors.
No matter what you’re buying, understanding what you own and why you own it can help separate investing from reckless gambling.
3. Consider buying a small part now
Whether it’s $10 or $10,000, having an in-game appearance will immediately help alleviate some crypto fears. It is also an opportunity to get a feel for the differences between a cryptocurrency exchange and a brokerage account. One of the reasons I bought my first cryptocurrency in May was because I wanted to know more. Having a stake in something provides one more reason to stay on top of the market and increase your understanding of why Bitcoin and Ethereum can be good investments.
4. Average dollar cost over time
One of the least stressful ways to invest in cryptocurrency is simply to average the dollar cost of a position over time. The theory is simple: instead of trying to time the market or waiting for a drop, allocating a portion of your income to cryptocurrencies and buying automatically in stages instead of buying all at once is a good way to build a position.
Queen Piece (NASDAQ: currency) It allows its users to get the average cost in dollars in any of the dozens of cryptocurrencies offered on its platform. On Coinbase, you can allocate the dollar amount and frequency of purchase. For example, you can set up a plan to buy $10 of bitcoins daily, weekly, on the 1st and 15th of the month, or monthly.
If the encryption goes off, you’ll benefit. If the crypto goes down, don’t mind because now you can buy more with the same amount of money. It’s a win-win scenario that helps you sleep at night.
5. Be prepared for upcoming sales
So far this year, every intense sale has been followed by a spike, which most impressively occurred in October. In less than a month, the price of Bitcoin rose by $25,000, which is a 50% increase. The cherry on top had an all-time high of around $67,000 on October 20.
In the past six months alone, there have been two major drops in the price of Bitcoin and Ethereum.
From late May to late July, Bitcoin and Ethereum both lost more than half of their value before rebounding in August. In September, a smaller correction sent the price of Ethereum down 17%, and Bitcoin lost 12% of its value. Bitcoin and Ethereum may be hovering around all-time highs at the moment, but it is important to remember that they have spent nearly half of the past six months in a downtrend.
All of this means that both cryptocurrencies are subject to a lot of speculation and sudden and big moves up and down. Patience and courage to buy when prices are crashing are two qualities that have paid off a lot of time. Instead of throwing a chunk of money into crypto now in the hope that it will work, investors can allocate a portion of the savings to be used in Bitcoin or Ethereum if the price drops 10%, 20%, 30%, etc. The investor can either wait for this to happen or simply set up a limit order at the desired price through applications such as Coinbase Pro.
There is plenty of time to get on the plane
The good news is that the advent of cryptocurrency is probably still in its infancy. In the past year alone, we’ve seen an increase in institutional adoption, investor protection, and innovation. The sheer scale and scope of the projects taking place on the Ethereum and Solana blockchain are nothing short of incredible. Ten years from now, it wouldn’t be surprising that crypto plays a role in so many of our lives – whether through investment or application – in ways we can’t imagine now.
As mentioned earlier, one of the reasons for the volatility of the cryptocurrency markets is that many participants focus only on short-term moves. They are playing a different and riskier game of long-term investors, a game that cares more about where prices are headed in 10 days than they do in 10 years. The 24/7 crypto market is feeling fast, but it’s important to keep in mind that it’s only as fast as you do. Zoom out, the charts on Bitcoin and Ethereum speak for themselves. Zoom in for three months or less, and you won’t tell us what you’ll find. A slow and steady approach to your investment provides the best way to capture the long-term upside.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.