Volatility is the spike in the value of an asset when it rises or falls and occurs very quickly. The term is very closely related to the price of crypto or Bitcoin, which has high volatility.
Volatility conditions are pretty standard, especially for new financial instruments, but they can be scary for novice investors.
Therefore, various tips can be applied for Bitcoin or crypto investors to deal with high price volatility and move in an uncertain direction.
Remember Asset Fundamentals
One way to stay calm in high market volatility is to remember the fundamentals of the purchased crypto asset.
Volatility or fluctuation is a natural thing and is always present in any financial asset, so there is no need to worry.
To calm down, the best way is to convince yourself that the asset you are buying is good.
The right way is to look at the fundamentals of the asset because investors will be calm if the fundamentals are good.
This calm arises because investors believe in the assets purchased. This belief comes from the fundamentals that the asset is a good asset.
So, it must be ensured that the investor believes and considers the asset a good crypto asset when buying.
The way to ensure a good crypto asset is to look at its use, technology, creator, the entire ecosystem and the nature of the crypto or token economics.
Another way is to look at the relevance of crypto to market conditions, adoption, and the news and schedule of future updates and events related to that crypto.
Finally, to ensure confidence, investors can ask themselves the following question,
“If this asset drops significantly, for example 30% to 50%, is this decline considered a big loss or is it considered a buying opportunity again?” The answers to these statements can help determine an investor’s confidence in the asset and aid investment decisions.
Don’t Follow FOMO and FUD
Next, it is necessary to ensure that investors do not buy or sell these assets based on FOMO or Fear of Missing Out, especially with many superpower policies such as the United States, which often affect asset movements.
So, this needs to be avoided by researching and educating yourself before buying.
This FOMO condition can make investors buy or sell because they are worried about being left behind in the best conditions.
Frequently, FOMO can result in the loss of following other people, leading to out-of-plan or initial financial management.
So often, this FOMO comes from listening too much to other people, which is also related to FUD.
FUD or Fear, Uncertainty, and Doubt should also be avoided, especially in conditions of correction and high volatility.
FUD comes from negative news with unclear sources, such as news ending in “-Sources” whose origin is not clear.
In addition, FUD often arises due to old negative news being brought back up.
Generally, this reappointment often occurs if the price is high enough.
Therefore, when seeing negative news, investors need to research and re-examine it so that they are not manipulated and end up experiencing losses.
View Asset Movement Data
Also, the best way to stay calm is to see asset movement through actual data.
By looking at the data, investors will be more confident in the natural movements in the crypto market. Thus, investors are not easily led by FUD or FOMO opinions.
Investors can know what is going on by looking at the data directly.
Investors can compare current and worse conditions if they know what happened.
The goal is to see how bad the current state is relative to the previous bad state.
The best data that can be seen is on-chain data or data that comes directly from the blockchain. Crypto research institutes generally provide this data.
Corporate institutions such as Glassnode, Ark Invest, OnchainFX, TheBlock, Messari, and others are good sources for searching on-chain.
Other data can be seen in data from sources such as the Fear and Greed and the Inflow and Outflow from the stock exchange.
In addition, data from the derivatives market can also be a guide to see crypto movements such as futures premium data, Open Interest, and Funding rates. All this data can help you see fundamental movements and sentiment around the crypto market so you can be more aware and calmer about volatility.
Don’t Monitor Assets Too Often
Finally, the best way is not to monitor the movement of assets purchased for investment too often.
Volatility and price fluctuations often prevent maximum profits due to the influence of psychological conditions.
By not seeing the movement of assets often, the psychological condition becomes calmer and indicates that investors have confidence in the investment.
Keep in mind that investing is one way to achieve financial freedom and passive income.
So if investors continue to pay attention to the movement of the assets invested, this activity is no longer a passive thing and eliminates the purpose of financial freedom.
In addition, the possibility of selling and buying impulsively is reduced by not always paying attention to the movement of the purchased asset.
The less impulsiveness, the more disciplined investors will be in their financial management, which can generate maximum profits.
In addition, keep in mind that the money used for these investments is “cold” money.
So if you are willing to pay for the money, psychological factors will no longer play a significant role that can make you more disciplined.
Therefore, as the money used is “cold” money and is aimed at passive income, the asset does not have to be monitored all the time. If you already have a plan and proper financial management, investors should let the money work for them and not worry about volatility.
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