We REALLY need to talk about the two biggest MYTHS being repeated in crypto....because they can absolutely cost you a ton of money.....
First... let's tackle the "You don't lose unless you sell" myth.
This is 100% factually inaccurate.
If you own $100 in bitcoin and a month later that same amount of bitcoin is worth $50, then you have lost value. You've lost 50%. Whether you keep that $50 of value in Bitcoin, or sell it for $50 worth of USD, Yen, Pounds or Euro.... you've still lost $50 of value from a month ago.
Some are making the distinction that it's not a "realized loss" until you sell. So what. How does that matter? Do you feel better knowing that you've had a floating loss and not a realized loss? These are two accounting terms that do nothing more than describe the TYPE of loss (or profit) you've got. It does NOT mean you didn't actually incur the loss. You did.
So, if your asset goes down in value, you took a loss.... full stop. There is no debate. If you feel better saying "I didn't 'realize' any loss", then ok. But a floating loss is still a bad thing...and you had one.
Second myth - NEVER sell a losing crypto.
This is literal insanity. It's always the same people putting these two together as well. "you don't have a loss until you sell, so never sell until it goes back up".
The reason people falsely connect to this idea is the principal of "sunken cost". Yes, you bought a coin and it went down in value. But that's already happened and there is NOTHING you can do now about it. So...that is a sunken cost. The value is gone. sure, you still have the same QUANTITY of that crupto...but its value is much less.
Of course, that value may return one day. We all hope it will. And if you believe that the coin you currently own is the best vehicle to recoup that value, then sure...hold it and hope for some recovery.
BUT.... if you're holding a losing investment simply because it has lost value, then you are doing yourself a disservice. If I own Bitcoin at a loss, but I think Ethereum has a much better chance to go up in value....why would I keep the bitcoin??? The only person would would keep bitcoin while believing Ethereum is a better investment at this very moment is someone who's bought into the "don't sell at a loss" myth.
It's sunken costs. The value you once had is gone. The logical choice NOW is to take the value you have and put it where your LOGIC believes will give you the best return.
Now...I'm not advocating selling off emotion. Nor do I advocate selling a project you want to support. Nor do I advocate ALWAYS doing anything. I'm simply pointing out that you DO take a loss whether you sell or not and that holding a coin just because you bought it previously is 100% illogical. There are valid reasons you may want to hold a losing coin....and thats fine.
You'll also hear people tell you that you should hold "if you care about crypto". I'd counter that argument by pointing out that you can do a LOT more good in the crypto space by increasing your crypto holdings. If you can sell before a dump and buy in double, now you have more crypto power with which to do more good for the community.
The reason I'm kinda passionate about these two crypto fallacies is that many of you are suffering due to them being repeated as mantras....almost like religions. You fail to do what you feel you should do because people keep screaming at you to HODL. And keep wrongly professing that you've not lost anything unless you sell.
So... hold if you want. Sell at a loss if you want. Do what you think is best for your finances. There is no "rule". Just don't react emotionally as that will almost always cost you a lot of money. Nothing wrong with holding thru a down cycle.... but if you can do better than that, there's nothing wrong with that either.
