Disclaimer: This post is not advice. This post is information only.
Many people will have been suffering over the last 6-7 months because the crypto market has crashed. The market has gone from just under $3 Trillion dollars to just over $1 Trillion dollars. This is a big drop and will have caused huge pain around the world.
At the all-time high of November 2021, BTC was $69k for 1 BTC. Currently, it is hovering around $20K.
Like everyone else in the crypto space, I’ve felt the pain over the last 6 months. But what do I mean by pain? I’m talking about being anxious about your investments or money in general. Your personal finances are suddenly squeezed because of rising inflation and you’ve lost money on crypto.
Just to be transparent, I want to give you a warning. Crypto is not for the faint hearted and I would seriously consider working on mindset and learning about investing before you start.
I have 20 years of experience and that’s included a few market crashes along the way. I’ve been investing in crypto now for 5 years and have a few losses and a few wins under my belt. Basically, I know what not to do. And I know what to do.
In today’s post, I’m going to be helping you navigate a crypto bear market, and the info can be applied to any market. See below for a brief summary:
- WHAT NOT TO DO WHEN THE PRICE IS FALLING
- MY EXPERIENCE OF MARKET CRASHES OVER THE LAST 20 YEARS
- HOW TO INVEST IN ANY MARKET CONDITIONS …… THIS IS A BIG ONE AND WILL HELP TO REMOVE THEM EMOTIONS THAT WILL CAUSE YOU PAIN WHEN MARKETS CRASH
Everything seems to be negative at the minute when it comes to investing. On the flip side, I believe anything is possible if we are positive and put the work in. Mindset first, then educate yourself and then invest with skill. I became so negative about money after the financial crisis of 2008, and it led to a decade of being negative about money. Negativity leads to poor results trust me I know.
Just try and be open minded and learn from my experience…
WHAT NOT TO DO WHEN THE PRICE IS FALLING
DO NOT panic sell. Many novice investors buy when the price is high and sell when the price is low or when the price is falling. This will mean you lock in your losses.
Let me give you a little scenario. Imagine you got into BTC a few years ago in 2017. The price of 1 BTC ends up pumping up to around $20k. Life is good.
A few months later and the price is falling. You are not sure why you got into this fake ponzi scheme and you are going to sell. Let us imagine you sell at $4000 dollars at some point in 2018. You’ve actually made a loss, but you’re not bothered because at least you got something back.
How do you feel in 2021, when BTC pumps to $69k? How will you feel in a few year’s time when it pumps to over $100k. This may or may not happen by the way. I am a firm believer in BTC for what its worth and feel it’ll go up to well over $100k.
If you invest in something just try not to panic sell. You’ve invested in that asset for a reason and it’s worth standing by your convictions.
Avoid negativity if possible. What I mean is try not to read the papers or listen to the news. Even be mindful when you’re on social media. There is a lot of negativity surrounding crypto at the moment and it can bring your mood down.
I read the papers and watched the news a lot after the financial crisis. It’s like I was attracted to the negative. Looking back this was one of the factors in me being anxious and stressed out for long periods. I haven’t read a single newspaper in 3 years and I am better off for it. I look for the positive if possible.
Don’t check the markets too much! Like don’t look at coinmarketcap every 5 mins. This will do your head in and won’t do your emotions any good at all.
I done a lot of investing in crypto in 2021 and I was anxious and moody for long periods. I got myself too worked up and was far too emotional. Don’t let this be you. Let’s just say I wasn’t always in the room.
Back in April 2021, I made a BIG mistake in crypto and it led to a 6-week period when I was completely obsessed with crypto. This put strain on my relationships and it wasn’t a period I’m proud of at all! Thankfully, my awesome wife was able to pull me back in the room and I’ve been able to sort my act out. And this is what I’ll be getting too very soon.
MY EXPERIENCE OF MARKET CRASHES OVER THE LAST 20 YEARS
Markets are cyclical and that is every market. They go up and down. Sometimes they go up A LOT and sometimes they come crashing down. I can tell you this from experience and from the books I’ve read on investing.
When you become financially literate, you learn to zoom out and think long-term. If you react to every little bump in the road, it will lead to pain. It is about educating yourself, and learning to respond with intelligence and skill. Move away from being and emotional investor and try and become neutral around money and investing.
There has been many ups and downs over the last 20 years. I’m going to focus on the 2008 financial crisis, the crash caused by COVID and the crash that is happening now because of QE and inflation.
Basically, I done everything wrong after the 2008 financial crisis. Like not buying a rental property for 12 years. This is because I was fearful. By the way, ALL of my mistakes are covered in my first book – FI MONEY: Learn the hard way, teach the easy way.
At the end of 2018, I had really had enough of the negativity that had followed me like a bad smell for 10 years. I made a decision to sort my act out. I got into personal development and it’s helped massively. This has helped me deal with market crashes.
When COVID kicked off, markets were crashing and everyone was fearful. This wasn’t the case for me as I’d already got that t-shirt. Plus, I’d read the books and knew what to do.
I doubled down on educating myself. I read more books and became more financially literate.
I continued to dollar cost average into my index fund (stock market).
And most important, I ignored the noise and remained positive.
It’s the same this time round. I’ve been reading up on inflation for over a year and knew that inflation was going to increase massively. This is because of the amount of money getting printed around the world (QE).
Again, I’m educating myself. This time it’s with books, podcasts and YouTube videos.
I’m dollar cost averaging into my index fund and into crypto.
I am ignoring the noise and have remained positive.
HOW TO INVEST IN ANY MARKET CONDITIONS
I’ve already touched on it but I’m going to go a bit deeper.
Mindset. Think long-term. Educate yourself. Cut back and focus on personal finance. Build a cash buffer. Invest with skill.
Don’t get too emotional. This was me for many years. It’s only since getting into personal development that this has improved for me. It comes back every now and again like last year but I’m learning to be more neutral around money and investing.
There are loads of things you can do. I now go weeks without checking coinmarketcap. It was difficult at first but personal development has improved my self-awareness. I knew how badly it was affecting me by obsessing over the price of my crypto. Another thing that helps is not using social media over the weekend. It’s this type of discipline that leads to success in investing.
Think long-term. You need a strategy if you’re going to be a successful investor. Mine is long-term buy and hold with property, index investing and crypto. If you think long-term, the price becomes insignificant. Try and play it cool and respond with skill instead of reacting to everything that’s going on around you.
Educate yourself. I find that educating myself helps me to focus on the bigger picture. It also helps to get insights from the experts who have navigated market crashes for many years. There are many resources that are available. You can read, listen to podcasts, read blogs or whatever way you can think of so you can absorb valuable info.
Personal finance. The harsh truth is that if you don’t have spare money, you cant invest. Try and cut back and spend less than you earn. Try and drive less, food shop at discount stores like ALDI, eat less takeaways, remove subscriptions you don’t use anymore blah, blah…
Cash buffer. This will help to remove the amygdala which is the emotional part of the brain. Try and get to a point where you have 3-6 months living expenses. If you have less emotions pulling your mind all over, you can invest with clarity.
And if you have all the steps in place you can invest with skill. Invest with spare money and make sure you have a plan. Like dollar cost averaging into BTC or even a few cryptos. You might like ETH and have £200 pcm spare. In this case, you might put £200 pcm into ETH and not even think about the price. You are a long term investor and you’ll maybe check the price in a few months.
Get the fundamentals right, and I believe that anyone can invest when a market crashes. You can continue to invest and avoid the pain of a crypto bear market.