Posts

Managing expectations when investing in crypto

avatar of @curamax
25
@curamax
·
·
0 views
·
3 min read

Many of the newly onboarded crypto enthusiasts have learned about this space through mainstream social media. Some of you have may have watched a video of one of the crypto influencers and were convinced that crypto could make you rich instantly. I get this vibe whenever I talk to a friend about crypto. It feels like they are getting the wrong idea about crypto. As a result, I feel the need to correct their misconceptions about it.

In my opinion, that's a scary thought to have when investing in crypto.

Although there are people who literally made themselves wealthy from crypto investing or trading, I'm afraid that it isn't necessarily true for everyone.

The truth about crypto investing is that whenever someone wins the other one loses.

Crypto is a Zero-Sum Game

source

One person's gain is another person's loss. That's especially true when trading crypto. There are people who tend to become sentimental when it comes to investing or trading. These people tend to lose focus when holding a certain coin.

I heard stories about crypto newbies that do sell-off when the coin that they invested in is subjected to a 10% correction. They easily panic and sell at a loss.

And that is exactly how you are going to lose in this space.

FUD is real and it bites hard.

The only way to avoid this scenario is to invest in crypto projects that have a strong fundamental to support the utility of the coin itself. I always hear this from others saying "Do Your Own Research!". And I couldn't;t agree more with that. It is very important that you are aware of the fundamentals of the project and make assessments on the feasibility of the use-case. Take note, many of the crypto projects are built from an idea and many of them will fail to deliver. There are many reasons for that and some of them are lack of funding, unrealistic goals, and lack of motivation from the founders.

By learning more about the project and its potentials you will be able to understand what could be the future of the crypto project. Also, you will be able to gauge how much risk would you want to expose yourself to. You don't just jump to a conclusion and invest a ton of your money even if the project is merely a landing page and there isn't a working product yet.

Nowadays, a legitimate crypto project will conduct a series of testnets and audits before they deploy the main product.

At this point, you will be able to gauge the proficiency of the team that is involved in the project.

Personally, I'm geared towards investing in a project that has a credible team that is working on it. It doesn't matter how big or small the team because the most important thing to know is whether they can deliver based on their commitment.

If ever I invest in projects like this I'm in it for the long term and not just to make a quick buck. I feel that this kind of crypto project will do great as the development progress. This is the kind of investment that I would expect higher returns, a potential 10x or even 100x is a realistic expectation for projects like this.

While for projects that don't have a credible team and community, I will only expect minimal returns and exit as fast as I can get 30% or even 50% return from it.

In my opinion, it's not wise to park my money on projects that don't have a solid foundation and lacks a strong community that's backing them.

Final Thoughts

There is no specific rule about crypto investing and there are no authorities that completely regulate the whole space. When you dive into the crypto-verse and started investing then you just make sure that you only invest the money that you are willing to lose.

Posted Using LeoFinance Beta