Are You Ready To Buy Crypto Amid the Negative Market Sentiment?
The Crypto Fear and Greed Index (FGI) is a daily snapshot of market sentiment in crypto, which is updated daily based on different factors including: price volatility, market volume, social media, dominance, and trends gathered from various sources on the internet. FGI is designed to help eliminate emotional overreactions and enable crypto investors to make more rational decisions in a segment that is more volatile and irrational than other markets. From March 28, the index has seen a significant fall from its 2022 record high “greed” reading of 60. Currently, the FGI index shows that the current market is in a fear, uncertainty, and doubt” (FUD) mood since 12 April when it dropped to 20. It has stayed at this depressed level of “fear” and “extreme fear” ever since as the chart below indicates.
Obviously, this negative sentiment trend makes many investors shy away from risky investment projects, particularly in crypto where it’s especially volatile. Therefore, if you want to invest in cryptocurrencies, BigONE’s suggestion is to carefully prepare first. If you are showing any of the following four signs, it could mean you are not ready to invest in cryptocurrencies.
Thinking all cryptocurrencies are the same
It is very easy to group all cryptocurrencies into just one broad investment category if you’re not careful, with thousands of different cryptocurrencies available to add to your portfolio. But commonsense you tell you that if you haven’t done any research on a particular cryptocurrency, you are not ready to invest in it. As a serious investor, you should first carefully study and learn all you can about the cryptocurrency you want to invest in, from the website for a specific token to engaging in AMAs. You need to make up your own mind for rational investment reasons, and not as a result of social media hype and FOMO sentiment if you are going to make successful investment decisions.
You have no emergency funds
When you start investing in cryptocurrencies, you are taking the risk of losses due to inevitable market fluctuations. This especially applies to investing in cryptocurrencies, as the crypto market is volatile and can be even more violent than the stock market. Therefore, in addition to preparing sufficient investment funds, you should also have emergency funds set aside from the start. Panic selling is usually the wrong thing to do when the market is significantly down; if you choose to fight market volatility, you therefore need emergency funds to ensure your daily life is not affected and you don’t need to panic sell. When you have enough funds to cover your basic living expenses for three to six months, you can avoid the risk of losing your cryptocurrencies by mistakenly selling your cryptocurrencies in a bear market for example.
You are not fully aware of the risks
There is no such thing as a risk-free investment, especially one with in-built unique risks such as cryptocurrencies. For one thing, it hasn’t been around for long, so it’s hard to predict exactly how much staying power any specific cryptocurrency will have. If you invest in the hope that you can achieve financial freedom as soon as possible, then you may need to be very careful to rely solely on cryptocurrencies to achieve this goal. Additionally, evolving regulatory policies from governments across the world from the US to South Korea may impose additional regulations on cryptocurrencies, potentially affecting their future value. Again, do your own research to minimize the risks, and if necessary, move your funds into a safer asset such as a stablecoin during a down market. And even then, take care to choose a safe stablecoin as the ‘algo’ stablecoins are inherently riskier.
You have no investment strategy
Many people find crypto has a place in their personal investment strategies. But if you haven’t taken the time to develop your own investment strategy, then you should take care looking for ways to figure out which portfolios might help you achieve your short-term profitability goals. If you don’t have your own investment strategy, you’re not ready to invest in cryptocurrencies.
While a lot of money can be made from cryptocurrency, there are also greater risks associated with buying it without a strategy in place. So, if you plan to invest in cryptocurrencies, then make sure you have done your research, have understood the risks, and developed a strategy. That means making sure you have sufficient emergency funds, so you don’t have to liquidate your cryptocurrency in a pinch and lose your investments as a result. “Prices can rise and fall quite dramatically day to day, and novice traders are often duped into panic selling when prices are low. Cryptocurrencies are not going to go away. Leaving your money in the crypto market for months or years at a time could offer you the best rewards,” advised The Times. You’d do well to follow that advice by doing your research in advance, having a good investment strategy with backup funds to deal with any downturns in the market in order to succeed.
