Sometimes doing nothing in crypto best. In this article we’re going to talk about strategies which has minted many successful investors in crypto.
Crypto and any market for that matter can really suck the life out of a person if they let it. Extended bearish periods often have investors compulsively looking at charts worrying about if an extended bear market is coming that will crash their investments to a 90% recession like in the previous crypto bear market of 2017.
However, compulsively staring at charts can often not work in one’s favor. Let’s not forget that technical analysis in crypto is based on the candlestick chart which attempts to predict an outcome out of a fear and greed index. So, if one compulsively checks charts they are liable to make an emotional decision that can cost them a fortune.
This is why fundamental analysis in crypto is so important. Fundamental analysis in crypto means analyzing a blockchain company for their value proposition or utility. Usually this entails reading a white paper and investigating a company’s social media to find good news such as technological developments, exchange listings, and partnerships.
Many times the most successful investors in any market are the ones who believe through and through in their investments. They have no doubt that the company has a strong value proposition that is unlike any other company out there. So, if proper fundamental analysis is done, an investor is unlikely to let some general FUD (Fear, Uncertainty, Doubt) make them panic sell their holdings. A good trader believes in the company which they are investing in. An ignorant trader moves from investment to another solely based on hype trends without ever doing quality research. Which is why…
Sometimes the best thing to do is nothing
Investing is not for impatient people looking for a quick dollar. Even though crypto is known to give massive amounts of gains in short amounts of time, it doesn’t come that easy for most investors. The most successful investors are the ones who hold their investments with strong fundamentals through the times of boring price action. It takes good research, strong believe in your investment decision and most important: Patience.
The importance of fundamental analysis is not to discount the value of technical analysis. In fact as the market becomes more and more manipulated by whales and big institutions, technical analysis will become more important to know for traders as they will have to think smart in order to be a step ahead of the whales. We’ll talk more about the difference between technical analysis and fundamental analysis in another article soon.
If you enjoyed this article, you might also want to check out Avoid These Mistakes In Crypto.
This article is not financial advice. Please do your own research and buy/hold cryptocurrency at your own risk.
Aaron is passionate about blockchain and has been an investor in cryptocurrencies for the past years. He enjoys engaging with other people in the cryptocurrency community online, particularly on Telegram, and learning from experts.