My friend Xiao Zhao is a "loyal fan" of the cryptocurrency world. When he first entered the market, he was full of enthusiasm, spending 70% of his salary on Bitcoin and Ethereum, believing that "holding coins means wealth." He watched the candlestick charts every day, fantasizing about the day the coin price skyrockets, but a year later, he found that his account assets had decreased instead of increased. Worse, every time the market fell, he was so scared that he couldn't sleep and even thought about "maybe just liquidating everything."
Xiao Zhao's operations are typical: as soon as his salary is paid, he directly converts it into cryptocurrencies, firmly believing that "holding coins is king." As a result:
1. He put all his savings at the peak of cryptocurrency prices, resulting in severe unrealized losses in his account.
2. Without diversification or consideration of cash flow, one can only liquidate positions when unexpected expenses arise in life.
3. Mindset follows market fluctuations, often collapsing between rises and falls, with no investment planning at all.
One day, he complained to me: "Why do others get rich in the cryptocurrency world while I keep losing as I hold more?"
I told Xiao Zhao: "Hoarding coins is not wrong, but you overlooked cash flow and risk control. You cannot put all your money into highly volatile coins, nor can you invest all your living expenses."
• Financial knowledge points:
• When investing in cryptocurrencies, first allocate funds well:
• Living expenses: Set aside 3-6 months of daily expenses in low-risk assets, such as bank deposits or money market funds.
• Investment funds: Use 30%-50% of disposable income for cryptocurrency investments, avoiding impact on daily life.
• Flexible funds: Maintain a certain cash flow to respond to emergencies or market buying opportunities.
Xiao Zhao only bought Bitcoin and Ethereum, two mainstream coins, without considering potential coins in other tracks or ecosystems, which made his investment returns heavily reliant on a single market condition.
• In the cryptocurrency world, diversification is crucial. You can try:
• Mainstream coins: like BTC, ETH, as long-term value storage.
• Track coins: such as DeFi (AAVE), Layer2 (MATIC), Web3 (FIL), seize growth opportunities in emerging tracks.
• Stablecoins: like USDT, USDC, used to maintain liquidity and buy the dip during market declines.
• Diversifying investments not only reduces the risk of a single coin plummeting but also captures more market opportunities.
I asked Xiao Zhao: "Did you go all in when you bought coins?" He said: "Yes, this way, when it goes up, I make a lot!"
However, the cryptocurrency market is highly volatile, with prices rising and falling dramatically in the short term; a one-time investment may hit the "highest point." At this time, regular investment is a more stable strategy.
• Dollar-Cost Averaging: Buy a fixed amount of cryptocurrencies weekly or monthly, regardless of price highs or lows. This can average out the investment cost and avoid the risks of one-time purchases.
• For example, if Xiao Zhao invests 3,000 yuan each month, he can set a weekly investment of 750 yuan, persisting over the long term to gradually lower his holding costs.
I told Xiao Zhao: "If you never sell, your profits are just paper wealth. Set reasonable stop-loss and take-profit points to protect your principal and lock in gains."
• Take profit: Set a profit point based on investment goals, such as selling part of your position after a 50% increase to lock in profits.
• Stop-loss: Set a decline threshold, for example, reduce positions when losses reach 20% to avoid larger losses.
• Discipline is essential in cryptocurrency investment; one must not let greed or fear affect judgment.
After listening to my advice, Xiao Zhao changed his investment approach:
1. Maintain cash flow: Divide monthly income into three parts: 50% for daily expenses, 30% for cryptocurrency investment, and 20% for cash reserves.
2. Start regular investments: Invest weekly in mainstream coins and new track coins, such as BTC, ETH, and a small amount of DeFi project tokens.
3. Set goals: Set profit-taking points (+50% sell half) and stop-loss points (-20% sell half) for each cryptocurrency to protect the principal with discipline.
A few months later, Xiao Zhao told me: "Although the cryptocurrency market is still fluctuating, I am no longer anxious. My account is slowly recovering, and I can earn a little pocket money. Rational investment has made my mindset much more relaxed!"
• Don't go all in; allocate funds reasonably: The cryptocurrency market is volatile, and living expenses must not be disturbed; the money used for investment must be spare cash.
• Diversified layout, balancing returns and risks: Capture long-term growth opportunities through a combination of mainstream coins, track coins, and stablecoins.
• Regular investment smooths costs and steadily increases value: Don't get caught up in short-term fluctuations, use regular investments to combat market volatility.
• Take profit and stop-loss to lock in gains: Set disciplined goals to prevent losses due to greed or fear.
In cryptocurrency investment, wisdom is more important than enthusiasm.
Xiao Zhao's story reminds us that investing in the cryptocurrency world is not a "gamble" but a long-term battle that requires planning and patience. When investing, it is essential to control risks, stay calm, and let digital assets become tools for our wealth growth rather than sources of anxiety.
Whether you are a newcomer or an old player in the crypto world, remember: you are investing in the future, and controlling your mindset is crucial!#投资理念