We have all been told that the cryptocurrency industry is one of the riskiest and most volatile markets that you can invest in. That there is a real possibility that you could wake up tomorrow and lose everything. The truth is that there is no guarantee that this market will be successful, or even survive in the long run. Those are the risks we must be willing to accept in order to participate in this market and have the chance to change our lives forever financially. However, many of us become blind to this risk over time or even view that scenario as nearly impossible.
But today, let’s imagine that the worst scenario did play out. That you woke up tomorrow and crypto did go to zero. How would that affect you? And would you ever be able to recover from this financially?
Never Invest More than You Can Afford to Lose
There is a famous piece of investing advice, especially for risk markets, “never invest more than you can afford to lose.” This means that everything you are investing in Bitcoin, Ethereum, and crypto should be expendable income that you could afford to lose. While no one would ever wish this event on themselves. However, if it did happen, they would be able to survive it. With all of that said, this is a temptation that many find hard to balance, myself included. The reason for that is we believe so strongly that this market is the future, that prices will soar immensely, and that this market will cause the largest transfer of wealth the world has ever seen. This causes us to feel FOMO. The feeling that we need to accumulate as much as we possibly can before the rest of the world finally learn the secret that we already know, resulting in prices going parabolic.
This becomes even harder when the bull cycle begins and the FOMO in the market is turned up 5 notches. When everyone is talking about becoming rich, buying Lamborghinis or houses. That is the time when you need to be extra careful.
The Pain
There is no way to sugarcoat it, if Bitcoin and crypto went to zero tomorrow the pain in the market would be unimaginable. The only events that we can really compare it to would be Luna/UST became worthless in 2022, or BitConnect before it. For one reason or another people had real trust in these projects and believed they were the key to them finally getting ahead in life. And so they invested heavily. Then in mere hours, they went to zero, resulting in some of these people losing their life savings.
In one moment they were dreaming of riches, and potentially being able to retire. A few hours later that dream had been shattered, and their life had completely changed. There was depression with people feeling absolutely distraught. Unfortunately, this pain and hopelessness even caused some of them to commit suicide. The people who lost big on these projects had forgotten about the risk and forgotten about balancing their wealth. Those events were horrible, but if all of crypto would go to zero the pain would be 1,000x what we saw before.
If it happened to you, would you be able to handle it emotionally?
The Solution
Assuming that the cryptocurrency market did go to zero there are things you can do to minimize the long-lasting effect on you. The first we already talked about, not investing more than you can afford to lose. While the initial pain and loss we would have are unavoidable, this could help to minimize it becoming even larger.
However, the way that you would be able to recover from this event is by using all of the skills that you have learned while investing in Bitcoin and crypto. For many of us, investing in this industry has taught us life skills about money that we had never known before. Skills that can help us become successful no matter the situation. How to live a minimalist life, saving more than you spend and investing as much as you possibly can. Putting your money to work by earning a passive income and the importance of owning assets. Paying attention to the financial markets, inflation, and macro news. While we all enter the cryptocurrency industry with hopes of becoming rich. However, the real reward the crypto market has given us is that it made us much more financially savvy. Because the market can be so volatile, with days of extreme gains and also days of losses. It helped prepare us for the hardships of life. Not every day will be perfect. But, if we continue getting back up and use the skills and knowledge we have learned along the way. There is no doubt in my mind that each of us could become successful again even if the crypto market went to zero.
How about you? Would you be able to survive crypto going to zero?
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