crypto investor

Why Do Crypto Investors Suffer Through Bad Market Periods?

Are you a crypto hodler? Did you pretend not to listen when your family asked about your Bitcoin investment this Thanksgiving dinner? The crypto markets have been witnessing bloodbath with most of the digital currencies in red. At the time of writing Bitcoin was trading at a mere USD 4,276.60. If you have been holding on to your beloved cryptocurrency through bad market phases, then ‘it is likely that your investment strategy is based on the emotional decision rather than logical analysis.’ This is as per the claim made by the author of the bestselling book ‘I Will Teach You to Be Rich’, Ramit Sethi.

According to Sethi, the act of investing in crypto has become more than a rational investment decision. He is of the view that many hodlers are willing to suffer through the worst market phases because investment in crypto has become a part of their image. Sethi is of the view that holding a long position rather than exiting the market when Bitcoin is underperforming is ‘not a rational decision.’

2008 has not been an easy year for crypto hodlers, neither for the short terms investors who are in the game to make quick profits. The bear market in 2018 has continued to exert downward pressure on prices of most of the cryptocurrencies despite the optimistic predictions made by experts. Sethi says that a lot of the crypto investors have not made any real money from investing in digital assets. He is of the view that holding on to the long position despite the evidence that points in the other direction is a ‘mistake.’

Sethi references the ‘buying the dip’ crypto market theory to highlight this point. Sethi says that investing in a bear market that has no potential of recovering soon is a sign that the investors are not making rational decisions. According to Sethi, at such a point the decision-making process of the crypto investor is entirely emotional, and it is due to the status of the cryptocurrency becoming a part of the investor’s identity.