It is surprising to see the number of influencers who are bullish over every other cryptocurrency. While Bitcoin will surpass $100,000 in valuation someday, every other so-called influencer deems that day to be tomorrow (figuratively)!
Crypto investors are mostly young men and women finding their way in the investment world. They are not well-informed and are learning on the go. I believe the market will be educated in years to come but we must learn from past failures and successes to cement the foundations of crypto investing.
Only when we follow the right sources, support fruitful projects, and follow our mind, not our heart, will the market gain relative stability and not fall victim to gross volatility. Here is what you can learn from the 2018 crash.
Learnings from the 2018 crypto crash
Read on to learn all you need to know:
Believe in the long-term future of a project and invest accordingly
The key contributors to the crash were China’s ban on cryptocurrencies, speculation that the US may follow suit, and the launch of ICOs (which was and is a good thing) – many of which promised much and delivered less.
In 2018, cryptocurrencies had limited use cases. China’s crypto ban was seen as a potential global threat to the very existence of cryptocurrencies. What followed was an 80+% drop in Bitcoin’s value and a similarly drastic drop in altcoin values.
Belief in the long-term future of a project is key. In 2021, China announced that they will take legal action against crypto transaction providers in the country. While the market did suffer following China’s announcement, it recovered quickly and Bitcoin and altcoins are currently thriving
Crypto crashes are normal
The truth is that cryptocurrencies cannot always rise in value and will eventually fall. Believe in the potential of a crypto asset during a crash and do not panic!
In fact, smart investors invest when crypto-assets hit (relative) floor levels. The project behind a cryptocurrency will continue to develop and you must trust the process.
Invest in proven cryptocurrencies to be on the safe side
You may wake up to see a crypto asset having gained 1000% overnight. While you may be tempted to join the party, be careful. Perform your due diligence and invest accordingly. Many people invested in unknowns in 2018 and have not been able to recover losses.
Nothing can beat research. Look at a project’s roadmap, see if they have met their goals, follow them on social media and invest according to what is right, not what feels right. Crypto crashes are a feature and trusting the process is key to having a fulfilling trading career and yes, do not follow the social-media herd.