The cryptocurrency market has seen a sharp correction over the past few weeks, making investors anxious and jittery. Calm is most needed during a time such as now. However, it is often in a sliding market that investors make ill-advised moves and end up paying a very heavy price. Here are a few common mistakes that cryptocurrency investors should avoid in this situation.
Getting Anchored
Most cryptocurrency investors anchor their virtual assets holding to the buying price, the highest price touched by the cryptocurrency ever or in the recent past. As a result, they hold on to the currencies longer than it should in a falling market. The driving force is the hope that falling prices will revert to whatever they have anchored to, sell favorable to avoid loses. However, you should determine the real cause of a freefall before disposing of your virtual assets, maybe the cause is remediable in the very near future.
Buying More
We all make mistakes, and sometimes we compound them by making more mistakes instead of trying to correct the existing ones. If the Bitcoin (BTC), Ether (ETH), or any other cryptocurrency you invested in falls in value, do not buy more to lower your buying price (getting a lower average). The best thing to do is keep what you have and try to manage it the best you can during hard times.
Falling for Confirmation Bias
Right now there are all sorts of analysis, research, and conclusions being made about cryptocurrencies. Always know that confirmation bias works overtime when the market is falling. Do not allow this distort your judgment of the current situation and result in poor decisionmaking. Only look for information that supports your beliefs and try to ignore the rest. After all, it's your investment and you are the final decision maker.
Altering Financial Plan
Significant crypto market drops tend to generate an extreme level of fear that leads many to freak out and change their financial plans. While some will hold, far too many dispose of everything they have. You should never base any of your investment portfolio, or decisions related to it, solely on the prevailing cryptocurrency exchange situation. The future course might change to your favor or it could ruin you.
Source: https://hadeplatform.com/articles/2018/03/23/4-mistakes-to-avoid-in-falling-crypto-market
