So you’ve invested in cryptocurrency. Now, you’re probably asking questions like “How often should I monitor my currencies?” How do I know when is the right time to buy or sell? Is it too much if I check the prices all the time?These are all valid questions to ask when you’re starting to invest. Although some people only use an exchange like Binance or Coinbase to follow prices and variations in the market, others go further and analyze the blockchain using block explorers .
These are Google-style applications that navigate the Google blockchain network and extract information about fees, transactions and variations in each cryptocurrency. Each crypto has its own explorer, and the most popular currencies have third-party applications that fulfill the same function. Each blockchain can generate an enormous amount of data. For example, Bitcoin’s data weighs in at over 477 GB in May 2023 and it’s growing constantly.
What you need to consider
The sheer volume of information can be overwhelming for some and interesting for others. Depending on your profile, you may feel a greater or lesser need to monitor cryptocurrencies. However, there are a few variables that you should take into account to define the amount of attention that meets your needs and doesn’t lose you money.
The first thing to consider is the risk profile. It’s important to know how volatile your particular crypto is and to research its characteristics. While some cryptocurrencies are relatively stable, others rise and fall constantly in a way that can be difficult to predict. If you have invested in one of these, you’ll probably want to spend more time monitoring it than you would one of the more stable coins. The second factor to bear in mind is your own investment objective. If your goal is holding, keeping your crypto for the long term, it’s not necessary for you to check the market every day.
The negative side of monitoring
The danger of watching the market daily is that you can fall prey to FOMO and FUD. FOMO stands for Fear of Missing Out, and this feeling can cause people to invest without thinking things through or conducting the necessary research.
FUD, meanwhile, stands for “Fear, Doubt and Uncertainty”, which can also be bad counsel when it comes to making investment decisions. A classic example is when you see your crypto is slipping in value so you race to sell it, losing money in the process. FUD can be caused by a movement in the market but it’s also often stirred up by the media and by speculation.
The difference between those who succumb to this kind of pressure and those who don't also has a name in crypto. Those who hold their investments without giving in to fear are known as “diamond hands” while those who drop their crypto at the hint of increased risk are called “paper hands”.
The most recommendable cause of action is to be cautious and identify when is the right moment to buy and sell according to what you want to achieve with your investment. It can take time, but building your confidence as an investor also means investing in yourself long-term.
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