A saying that springs so much symbolical meaning and operation behind it. What does that saying even mean?
The term can be expressed and attended to differently in the cryptocurrency market. You sometimes ask, why does the market correct, and why at this rate? How can a coin go from $3 dollars to barely surfacing $1? What happened I thought everything was great and we were all set to moon no? What do I do? Well yes and no…
Market Correction on January 14th – 17th 2018
To start with the first piece of the pie, let’s introduce our man “Sam Red” as an example who got in at bitcoin at only $2000 dollars.
Sam Red was so happy buying into crypto for his first time early May. The price was crazy, it had already shot up from $350 and he was watching it all along and decided to venture then. As time passes new coins came along and Sam knew some money was to be made in alts, his BTC was also growing, so he jumped straight to it and bought some alt coins. He then realized ICOs exist and even more money could be made so he started investing his money there too. Eventually everything was growing and Sam was happy, BTC was now at $18,000 and his investments never looked better. One day he decides to check, Sam finds out all markets are crashing, but why? It was so great, what was this FUD that ruined it?
Because Sam got in when BTC was at $2000, he could afford to “Hoddle” he thought i’ll hold my coins until BTC falls to at least $8,000 then ill sell to fiat so that I don’t lose profit money I made and this would be a waste of time.
Sam Red has leeway to take him to the level of Hoddling at that amount of loss but what about Peter Green? He got in when BTC was at $15,000 with minimal knowledge on alternative coins and how he should invest so he carries minimal hyped ones, should he have hoddled in that situation?
Peter is a firm believer of XRP and RippleNet mainly because the majority of the news talks about it and how you can make big money investing now. The price of XRP was at $2.10 when he got in and it was great. He had to buy some BTC to get xrp but he didn’t keep some BTC, he was told Ripple was the way to go. XRP got more news, more attention and flew passing $3. Peter was so happy he thought he should “hoddle” the coins for as long as possible as he has seen early returns already. Several days pass and XRP isn’t doing so well, on a day XRP falls ground hitting the $1 mark again. Its not jumping up, where’s the news? It usually kicks up when someone famous talks about it, why aren’t they saying anything yet, are they not losing?
Because Peter got in late in BTC and XRP, as the correction took place, he lost 50% of his original investment because he was told to hoddle. He has not spread his portfolio yet so his loss is fairly larger than Sam Red, he’s losing profit money not his original fiat investments like Peter.
In the above two examples, and it does not matter if you are a trader or hoddler, the decision of keeping coins while they are losing value is not sound, especially at a market correction. Sam Red had more leeway to go and room for thinking before making a decison, Peter Green had to act much faster. So what should have they done?
Well, for one, when the market is drastically correcting (with a rate of 17+%) at a decline for instance, the one thing you might want to do is sell (before or while there’s a dip) and buy back at a lower price. What does this do? You get more coins that way, how? Let’s give an example:
Let’s assume the worse and say you bought 1 BTC at $16,000.
Let’s also assume it sits at $14,000 now, yes you already lost but there’s a way to stop it and the math plays nicely for you when the coin gets it’s value back.
If you sell let’s say 0.25 BTC (You hoddle some because you don’t know when it will spike back up and don’t want to risk losing all your Satoshis) for the $14,000 you would get $3,500 in fiat. Now let’s say BTC kept going till about $10,000 and you noticed that the decline is slowing down. You decide to buy BTC again at the price of $11,000 (because you missed the optimum point of the dip, it’s normal…) using your $3500 which was once 0.25 BTC. You come to realize you can now get 0.31 BTC. Now stop there for a minute and think about all the previous corrections you hoddled in. When people tell you to sell they might not mean sell for good…now imagine Peter Green forgot about that hype completely and stuck with no love for coins and did what was right…when xrp hits the $3 mark again, he would’ve carried more XRP.
There is no need for anyone to be losing money or value of their profits during a correction no matter how much crypto moolah you carry today; this strategy applies for everyone. If you have a stable portfolio with coins in a balanced mix of industries you’re keen on following and are easy to handle in times of hard corrections, then you should be fine. If you carry 3 coins only and 2 of them are fairly new then we need to talk, especially if one of them is a centralized token…
Till next time…
