For over some weeks now, the crypto space has experienced some uncertainties and have seen the price dropped. Many coins have seen an all time low (ATL) during this period and it has left people wondering what will become of such coins. However, many others have seen the fall in price as opportunity to buy the deep and to fill their bags with coins at really cheap price. Yes, this may be from the intentions to maximise profit when the price appreciates. However, there are points you may need to consider before buying the dip and we will take a look at some of them.
1. Understand the market and invest with common sense
You need to know that the crypto market is very volatile and as such, cannot be predicted. This is the reason you have to be cautious with investing. If a coin or project promises outrageously high ROI that is too good to be true, then you have to be cautious because it might not be so. Imagine a project founder promising the potential investors that his coin will do 1000x, how does he hope to achieve it? Does he control the market or he is planning to manipulate it to favour his coin?
Some of the troubles that people fall into in crypto investment can be avoided if they applied common sense to it. For example, if a coin founder has been known to have engaged in a scammy deal in the past and now he is floating another coin, common sense should tell you that history will be repeated again, so you need to stay clear of such investment.
More so, when investing in the crypto space, you should also apply these very important rules: Firstly, do not borrow funds to invest in cryptocurrency. Obviously, you cannot predict the market. So what if the investment goes south, how will you repay the debt? Now you will have a much bigger problem to face; the fact that you lost your investment and the fact that you have a debt to repay. Secondly, do not invest with your emergency funds, always use the one that you are willing to lose. This fact cannot be overemphasized. I heard a story about how someone used his school fees to invest in a scammy coin. Now the coin is gone and the school fees are also gone. This would have been avoided by common sense.
2. Invest in coins with solid project and use-case
The hard truth is that some coins may not survive through this dip especially the ones without any use-case, and by the time the moon arrives, the investors would have lost totally. This is why, if you want to invest, you have to conduct adequate research - about the coin, project founders, teammates, use-case, etc. Do not invest simply because a coin is hyped or because it is recommended. What if the hype goes, what will sustain the coin?
In this era where any token can be created, one needs to research well before investing. Consider the roadmap, the content of the whitepaper, what the token will be used for, etc. This will keep your decisions well informed when investing. Remember, do not invest because a coin sounds good to you but because it is actually good.
3. Timing
In crypto investment, timing is very important. It does not stop at having a good coin to invest in but knowing when to invest and when to take profit. As a matter of fact, some people have incurred losses simply because of wrong timing. A friend narrated his experience with me. He bought a particular coin and it was doing pretty well. His $50 had already turned to $250 which is very okay, but he did not take profits, with the hopes that the coin will still do more "wonders." Now it has dumped massively (below $7). If he had taken his profit, it would not have dumped on him.
When investing, you need to consider the "when" factor. Even with a solid coin, you can still buy the top and it will dip, so you should be cautious and avoid FOMOing on coins. Also know when to sell a coin. It is worthy to note that not all coins are for long term hodl. Some are just to take profit for short term and move on. A friend once made this statement and I will conclude with it. He said and I paraphrase:
Learn to take profits, you're not the parent of the Dev.
Thanks for reading
