The cryptocurrency market has crashed “again” and most assets are showing 20%-40% losses over the last 24 hours. Now, this isn’t the first time it has happened and it’s not out of the ordinary, as most of the seasoned investors would tell. However, the fear and despair in the market remains the same. There are massive liquidations for leverage traders, a plethora of mixed FUD, some Tether involvement and centralized exchanges going offline. It’s the same way it has always happened and it’s not different this time also. Here’s why you should buy a severe crypto dip.
Crypto Dips: Investments Are An Emotional Affair
Famed American investor and author of “What Works On Wall Street” James O’Shaughnessy often says that the four horsemen of the investment apocalypse are fear, greed, hope and ignorance. He loves to point out that out of those four, only one isn’t an emotion, that’s ignorance for you. The remaining are emotional states – fear, greed and hope. Big lesson here? Any kind of investments are an emotional affair.
Human beings are emotional creatures, so we are always affected by it. There’s no way to get rid off them, but they can be managed. Unfortunately, like all great skills, it takes a lot of effort to master it. But, it’s worth cultivating. We all feel like buying on green candles and selling on red ones. Even though we should we doing the opposite and counter-trading our emotions (and by extension ourselves).
The current fear and greed index available from Alternative, shows that there’s extreme fear in the market. According to contrarian investment principle, that’s the best time to buy and load up. Because most others aren’t thinking of doing the same and that’s what creating a financial opportunity (arguably of maximum potential). It’s much more rewarding than buying when things are right in the market, people are optimistic and everything seems to be going up.
Contrarian Investment Principles
You might believe that it’s highly risky at this point, but likewise it’s highly rewarding later. The market has bottomed out and everybody is selling? Buy the crypto dip then! Nothing has changed on the fundamental side of crypto, just temporarily on the technical and sentiment side. Crypto has never been more popular and never more happening. It’s gaining mainstream adoption and the developments are an all-time high. This isn’t the end, let’s stop saying and believing it.
Warren Buffet once said that “Buy when others are fearful and be fearful when others are greedy”. It never pays well to follow the herd, but to choose to go down your own path and play the long game. Another famous such quote by Baron Rothschild is “Buy if there’s blood on the streets, even if the blood is your own”. When it comes to making life-changing money through direct investments, all successful investors advise the same. Buy the crypto dip!
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