The enthusiasm of December has given way to the depression of January. Now cryptocurrency traders and investors are facing a market where the current trend is downward.
So, how big of an issue is the downward spike? For anyone who bought at ATH prices in December, the reduction since then is a slap in the face. For long-term, patient cryptocurrency investors the current situation is a mere correction that represents a typical pullback and a buying opportunity.
There’s no separating market dynamics from human emotion. In December, there was a TON of hype that set people into a frenzy about purchasing Bitcoin and the leading alts. Now, greed has given way to fear, and the selling has been fierce. All markets know this phenomenon. In fact, Benjamin Graham, the famous inventor of “value investing” in the stock market used the metaphor of Mr. Market to describe the wild price swings. The crypto scene certainly has many elements that would make Mr. Market proud. The wild swings from abject pessimism to overblown enthusiasm are on display now in all their glory.
Make Rational Decisions in an Irrational Market
The takeaway for Graham that was since the market was essentially nuts, the ups and downs would present many opportunities for savvy investors to buy low and sell high. He, and famous disciples like Warren Buffet, would steel themselves psychologically against the vagaries of the day to day ups and down. Instead, they stay rational and use the irrationality of the market to serve them. They will not let the market (and current sentiment) guide them. Instead, they always use it to their advantage. Perhaps most importantly, they never feel like they have to make a move simply because of current market sentiment.
Although it’s never easy to keep emotions in check, that philosophy makes a lot of sense now. With so many cryptocurrencies down right now, a methodical bargain-hunting approach is possible. However, with crypto, it’s not always easy to define which coins are bargains. Many of the top projects are still very high in comparison to a year ago. To some, they still may represent being overpriced due to irrational exuberance. However, with enough research and effort, now is a fantastic time to dig through the wreckage and put money down on the eventual big winners. It will require patience and guts to maintain courage in your convictions, but that’s where the significant, long-term gains are possible.
Ethereum Stands Tall
It’s worth pointing out that Ethereum is still standing tall. ETH is not taking the same beating that some of its contemporaries are, indicating that sentiment remains positive. Ethereum has a ton of use cases and endless development. Those factors are insulating it from a beatdown. For new cryptocurrencies that hope to join the ranks of top coins, that should be a lesson. Establish enough utility so that your project gets a lot of use and you may be able to insulate from the manic-depressive nature of Mr. Market, at least for a short while.
What “bargain” coins are you finding?