For new crypto investors, handling the sometimes stomach-churning volatility common to the crypto market must be incredibly difficult. The market is constructed to take as much money from as many investors as possible, and therefore watching your crypto investment surge to the heavens and then come crashing down in a short period of time has led many to sell and leave. What should these investors bear in mind before investing in crypto?
Is this cycle different?
One major factor to bear in mind for all new investors to the crypto space is that this cycle may be quite different to those of the past. What generally used to happen is that once Bitcoin had reached its next local top, the money would flow out and into Ethereum and the other big layer 1s. From there, it would enter the mid-caps, and finally flow into the small-caps.
If the observant trader/investor made the right moves, getting into the big movers, especially among the small-caps, they were sometimes able to make several multiples of their original outlay.
Bitcoin dominance just keeps going up
Source: TradingView
This time, at least up to now, it has been Bitcoin that has hogged the market focus. Bitcoin Dominance, a chart of Bitcoin measured against the rest of the crypto market, has been climbing in Bitcoin’s favour since September 2022, which is longer than the entire bull market so far
Many new retail investors are here for the big gains
However, many investors entering into this bull market cycle are here for the big money. They no doubt heard the stories of past bull markets and are here for that potential 100x.
While the 100x gains might still be a possibility, they are likely to be very few and far between now. To be honest, a 2x or 3x gain is a fantastic return for an investor in these times when the best performing money market return of 6% or 7% is the norm.
Stomach-churning volatility wrecks minds
That said, even to get some kind of return on altcoin positions, investors have to experience sometimes extreme volatility, where their position might be up 50% in the morning, and end the day at -25%, with the next day bringing a huge 80% swing to the upside. The likelihood of an investor rage-quitting exactly at the deepest point of the correction is often quite high.
Therefore, having a longer term time horizon may be the way to go. The emotional rollercoaster of the sharp ups and downs, or having to look at your altcoin losing value day after day cannot be healthy for anyone.
Buying a position when things look at their worst is generally accepted as the best time to get in, rather than trying to jump onto a speeding rocket only to find that you’ve just bought the top. Of course, your altcoin needs to be fundamentally sound, and it must also be borne in mind that even if you’ve done all the right research, it might just be that the market is not ready for the upside move that could help to buoy your altcoin higher
Take your memecoin gains off the table (if you get them)
Finally, if you are in the crypto space for the memecoins, this certainly is where some big money can be made. That said, most will end up losing, simply because they do not know how to play the game correctly. One of the biggest pieces of advice here is to take your initial investment out as soon as you can, then you are playing with the house’s money
Also, take profits regularly. If you have made a 10x, take the money. Yes, it could be that your memecoin might go another 10x, but the chances are that it will plummet and head to zero as soon as the market turns. Happy investing!
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
Can Crypto Investors Handle Extreme Market Volatility? Insights for 2025
For new crypto investors, handling the sometimes stomach-churning volatility common to the crypto market must be incredibly difficult. The market is constructed to take as much money from as many investors as possible, and therefore watching your crypto investment surge to the heavens and then come crashing down in a short period of time has led many to sell and leave. What should these investors bear in mind before investing in crypto?
Is this cycle different?
One major factor to bear in mind for all new investors to the crypto space is that this cycle may be quite different to those of the past. What generally used to happen is that once Bitcoin had reached its next local top, the money would flow out and into Ethereum and the other big layer 1s. From there, it would enter the mid-caps, and finally flow into the small-caps.
If the observant trader/investor made the right moves, getting into the big movers, especially among the small-caps, they were sometimes able to make several multiples of their original outlay.
Bitcoin dominance just keeps going up
Source: TradingView
This time, at least up to now, it has been Bitcoin that has hogged the market focus. Bitcoin Dominance, a chart of Bitcoin measured against the rest of the crypto market, has been climbing in Bitcoin’s favour since September 2022, which is longer than the entire bull market so far
Many new retail investors are here for the big gains
However, many investors entering into this bull market cycle are here for the big money. They no doubt heard the stories of past bull markets and are here for that potential 100x.
While the 100x gains might still be a possibility, they are likely to be very few and far between now. To be honest, a 2x or 3x gain is a fantastic return for an investor in these times when the best performing money market return of 6% or 7% is the norm.
Stomach-churning volatility wrecks minds
That said, even to get some kind of return on altcoin positions, investors have to experience sometimes extreme volatility, where their position might be up 50% in the morning, and end the day at -25%, with the next day bringing a huge 80% swing to the upside. The likelihood of an investor rage-quitting exactly at the deepest point of the correction is often quite high.
Therefore, having a longer term time horizon may be the way to go. The emotional rollercoaster of the sharp ups and downs, or having to look at your altcoin losing value day after day cannot be healthy for anyone.
Buying a position when things look at their worst is generally accepted as the best time to get in, rather than trying to jump onto a speeding rocket only to find that you’ve just bought the top. Of course, your altcoin needs to be fundamentally sound, and it must also be borne in mind that even if you’ve done all the right research, it might just be that the market is not ready for the upside move that could help to buoy your altcoin higher
Take your memecoin gains off the table (if you get them)
Finally, if you are in the crypto space for the memecoins, this certainly is where some big money can be made. That said, most will end up losing, simply because they do not know how to play the game correctly. One of the biggest pieces of advice here is to take your initial investment out as soon as you can, then you are playing with the house’s money
Also, take profits regularly. If you have made a 10x, take the money. Yes, it could be that your memecoin might go another 10x, but the chances are that it will plummet and head to zero as soon as the market turns. Happy investing!
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.