Mauled by the Bear (An Investors Panic Guide)

Hi All,

Wow the last few weeks in cryptocurrency has certainly been an emotional rollercoaster. As cryptocurrency valuations have risen significantly over the course of this year there has been a significant influx of crypto newbies into the market (including myself). With the recent fall in cryptocurrency pricing I thought it would be a fantastic opportunity to write an article about panic selling and things you may wish to consider before pulling the trigger. Having recently been a victim of this myself I’d like to share my experience to hopefully provide some peace of mind to any potential emotional investors. I hope my thoughts will provide some comfort and strategy for any existing or future investors in the market.

This article will reflect on some the I mistakes I believe I’ve made which I hope will help others in making more rational decisions.

First some back story.

I entered the market early June 2017 after hearing so much about the space for years. For years I guess you could say I was a non-believer, often brushing off bitcoin in the news as a scam. I had no idea of the technology behind bitcoin or the potential opportunities it held to improve the world we live in. After hearing about the rise of Ethereum I was curious to learn more and came across some articles explaining blockchain technology. After deciding to invest in the market I was amazed at how quickly my portfolio was increasing and after diversifying my portfolio into other coins and projects I felt had genuine value, I began entering a phase of complacency. Given the geographic constraints and being a new person to the market I learnt that selling cryptocurrency was a lot more difficult than buying with all reputable exchanges at the time not offering to sell in my country.

After the mammoth increase in prices during mid 2017 the market began to enter a decline, however I was still confident in the technology I invested in. Fast forward two weeks and the market was in free-fall descending as quick as it had ascended. In this time of panic, I found a way to start selling my cryptocurrency. Unfortunately, any unrealised profits I had made had been reduced to dust and I was quickly beginning to loss some of my initial investment. After holding on for dear life for what felt like was eternity I reached a point where I was starting to feel the pain of the decline after buying in at somewhat high price. It mentally and physically pained me to watch as my portfolio value quickly approached 50% and then decline even further. To protect my investment, I decided to sell some of my cryptocurrency at a loss and wait for the market to stabilise. I attempted multiple times to call the market decline to recoup some of my losses (what I saw as losses at the time), however these attempts were usually met with minor periods of stabilisation in the market sometimes tempting me to buy back in at an additional loss. As the market continued to deteriorate I started to become more and more irrational in my behaviour.

I finally cracked on the final night of the market decline before some significant improvements selling everything and stomaching a rather significant loss. I had lost a significant part of my investment and faced losing more. This was a particularly challenging period which I’d probably compare to watching your property burn down. At times, my life felt rather like a cartoon I had seen where a dog is sitting at the table drinking coffee while his/her house was up in flames except ......... everything was not fine.

I thought of all the days of hard work I had just lost, all the savings I had put aside and all the sacrifices I’d made so I could take a chance to invest. In that moment of weakness, I said enough was enough and decided to sell everything. I had completely forgotten about my long-term investment strategy plan or faith in blockchain technology.

The next morning the market had recovered significantly. It was at this point that I realised after weeks of taking a beating, I had cracked within the last few hours of the what has been the most significant decline in the market (at the time of writing). Given what I perceived as significant negative pressure still on the market I decided to hold off buying back in at an additional loss. Little did I know that the market would rally further the next day and the next. Reflecting on my long-term strategy I decided to buy back what I could and let things run their course. I bought in at the cheapest price I could find that day which was still significantly more expensive than the previous day. I’ve had a few days to process my actions and realised I’ve fallen victim to being an emotional investor.

How do you know if you are an emotional investor or if you are too emotionally invested? Some of the symptoms may include racing out of bed in the morning to check the price of your favourite coin or consistently think about the price of your coins and how much it’s falling or rising when perhaps you should be focusing on other things i.e. life. If this sounds like you then perhaps you may be too emotionally invested or you are probably more of a trader. For those who choose to invest rather than trade I’ve outlined a few steps which may give you comfort in future times of need.

The following is not advice but merely some additional food for thought which I hope will help you in the future should you find yourself in a similar situation. Take it with a grain of salt and remember you are responsible for your own actions.

1. Do not forget your investment Strategy - For me I had decided to invest long term initially in blockchain, however my emotions got the better of me and I acted completely irrationally selling at a significant loss.
2. Research and always have a backup strategy. Make sure you know how to hedge your funds, particularly if you’ve bought in at a high price. Assess the risk and scenarios of hedging before or after loss and whether you are comfortable with these risks.
3. Only invest what you are prepared to lose. – This varies from person to person so ask yourself this question and answer truthfully. Once you invest, anything can happen.
4. Don’t panic!!! Breath - Take a couple moments to assess the situation. As people say you haven’t lost until you sell. If you really believe in what you invest in (or fear doesn’t make you completely forget) then you should have no reason to sell unless you are selling for greed. Do not be an emotional investor!!! Step away from the market and talk to someone before doing anything brash. This may be of assistance as another person may be in a better mind frame to make a rational decision at the time.
5. Ask yourself what would you be doing with your investment. Would you prefer to keep it in a bank account earning close to zero percent interest or take a chance and invest?

By asking yourself these questions hopefully you will find some comfort in your day to day life and when the bears come charging. As I said previously this is merely my experience and something that has provided me with comfort when the market is falling, allowing me to focus on the more important things in life.

I hope this article is of some use to someone in the future. In my opinion, blockchain technology will continue to be embraced by society now and in the future. Blockchain is truly revolutionary with profound applications yet to be fully explored. In my opinion, it is a technology that has the potential to improve the world we live in and hopefully provide greater equality for people in less fortunate circumstances. To me that’s something worth investing in.

If this has been helpful and you would like to help me recover from my mistake I’d greatly appreciate it if you could please upvote this post.

Alternatively, if you would like the donate I’d be greatly appreciative. Thanks, and happy investing!!!

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