- The Crypto market has been testing the patience of investors amid the recent consolidation and correction in 2022.
- Lark Davis shares key mistakes that retail investors should avoid, to be in the game for the long term.
After a strong rally post the pandemic, the year 2022 has been full of volatility and uncertainty. Rising inflation, growing Fed debt, geopolitics, etc. are playing into everything that’s happening on Satoshi Street today.
For newbie investors who joined the crypto space in the last two years, this is the first kind-of-its-kind experience of dealing with a major market correction and market consolidation phases. Crypto analyst Lark Davis shares six of the mistakes that investors commonly make and what can we learn from them.
1. Doubling down on crypto holdings
Davis explains that doubling down on your crypto holdings can serve as a dual-edge sword. He said that one of his biggest mistakes was doubling down on losers and not doubling down on winners.
He speaks especially with respect to altcoins and new market projects. Some projects look quite appealing based on their vision wherein investors make a move by buying their tokens. However, the crypto market is volatile and turbulent by its very nature and things can turn south pretty quick. In this case, it might happen that the project can lose traction and momentum. And thus, doubling down your positions on such tokens could turn out to be a bad choice.
On the other side, there are projects like LUNA making all the right moves, and times of correction could be a good chance for accumulation. Thus, doubling on fundamentally sound projects could be a smart move for investors.
2. Don’t hold up to your bias
One of the biggest mistakes that investors do is holding up to their bias about the market trend. However, the market is the ultimate boss and we as investors should listen to what it’s saying. During Q4 2021, many analysts were expecting a mega rally in Bitcoin with price expectations of $100,000.
But post-November, the market turned south from the “easy” mode to the “hard” mode. Understanding this transition and accepting the reality is important for investors. Technical charts and support indicators could be a good guidance to maintain the discipline.
3. Not trusting your gut
Despite all the research and gathering of all data points, investors fail to make the right move at the right time. Davis notes that despite finding good projects and coins at attractive prices, he delayed the decision of buying them.
And by the time he was just kept waiting, the coins gave a quick 300-400 percent upside. And then, it doesn’t make sense to buy high when the coin has already given the run-up. While it’s absolutely difficult to time the market, investors should trust their gut and make partial positions at the beginning. Not doing so could be detrimental to the health of your investment portfolio.
Related: Crypto analyst Lark Davis thinks now is the best time to buy crypto, here’s why
4. Portfolio management
We as crypto investors often tend to hunt for the next big opportunity in the rapidly evolving market. It means that our crypto portfolio could have a bunch of investments and here’s where the importance of portfolio management comes into the picture.
As you hunt and invest in new projects, the portfolio might become too big to manage. It certainly becomes a major task to keep a track of every project that you’ve invested in. Having yield-farming tokens can make it even more overwhelming.
5. Not getting harder into NFTs
Davis believes that not taking a deep dive into the world of non-fungible tokens (NFTs) was one of his key mistakes. He cites some of the very successful projects like Bored Ape NFTs, which he neglected to some extent when they were trading at around $5,000 apiece. The same NFTs are now at half-a-million dollars.
NFTs are a completely different field in the crypto space and have been emerging very rapidly. However, investors need to be very careful while investing in NFT projects. The market has evolved too quickly and thus identifying good projects remains the key!
6. Not taking enough profits
Davis explains the importance of taking profits just when the markets are on fire and everyone is ultra bullish. However, he regrets not taking enough profits, especially on the speculative bets. He also explains the importance of taking moderate profit expectations and not setting them too high.
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