Not too long ago I was surfing through my newsfeed on Facebook and came across a story in a crypto fb group where the admin was talking about someone who approached him for advice on how to recover from some of the losses from investing during the FOMO rally of December-Jan.
In this case it seemed as though the person had not only invested their life savings but also mortgaged their house and was in a debt of over $28,500 equivalent in INR. Suffice to say that's a lot of money, not only in India but elsewhere! Seeing as they are invested neck deep in red, and 80% losses the person was close to giving up on everything.
I'm not sure what happened after that as there wasn't any further update. Consider we're anything but close to the ATH of January, it's unlikely that person will recover from the losses anytime to get back their initial investment.
Hindsight is 20/20.
This situation has resulted due to many reasons and it's easy to guess why. Greed, FOMO, Lure of crazy overnight profits and peer pressure pushed several people into investing in Bitcoin. Many others were scammed with Bitconnect, Gatbitcoin and other ponzi scams but that's another story altogether.
It's important we exercise caution before investing in any kind of speculative asset. Any asset whose price is subject to a constant change or extreme volatility needs to be considered very carefully.
Jumping on the bandwagon is a surefire way of burning a lot more than your fingers. It's important we understand how this market works. Most of it is purely hype. We're far from judging cryptos based on actual fundamentals.
The unregulated state of the market and low liquidity compared to Fiat currencies means that we're likely to see big movements in values of these digital assets on a regular basis. However, there's a lot that can be done correctly to avoid losses. Some basic money management and investing principles can help avoid losing most of your investment.
Value of any speculative asset never remains constant, it always moves up or down. However, as small players in the market, we are not the market movers. Hence, we need to be doubly careful when trading in cryptocurrencies or any speculative asset subject to high volatility.
How has your experience been investing in cryptocurrencies. Have you had any major losses. Would you consider speculating in cryptocurrencies even if you faced a loss as a first time investor?
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