Cryptocurrencies like Bitcoin and Litecoin have been on the rise for a few years now, and it looks like they aren’t going to be stopping anytime soon. Suddenly, many people invest in cryptocurrencies without really thinking about the consequences.
With the passage of time and more people getting involved, the emotional aspect of trading has developed. Most recently, this emotion has shown itself in the price fluctuations we’ve seen with Bitcoin and other cryptocurrencies.
It’s expected that these emotions exist in any market; however, when dealing with something as volatile as cryptocurrency, emotions can be dangerous when making decisions.
The underlying factor behind the rise of cryptocurrencies is greed. It can be attributed to the fact that everybody wishes they bought an item before it became big, and cryptocurrencies are no exception. As a result, people tend to buy these currencies not because they are helpful or are suitable investments in general but simply because they have become too expensive.
People want to get rich fast without putting much effort into their trade. However, this kind of behaviour isn’t sustainable long term, even though it might help individual traders at first.
To deal with greed, traders should look at cryptocurrencies as an investment opportunity rather than a quick way to make money. It is not always easy when all you see in the news or social media is how much someone’s portfolio has increased overnight. When dealing with emotions like greed, traders must take a step back and assess their decisions to remain objective about what they are doing.
It’s obvious why fear exists in cryptocurrency trading when you see how significant percentage changes in price happen every day with digital currencies – especially for Bitcoin, making it difficult for users to trust their investment. This fear is significantly heightened when traders see the value of their portfolio drop in what seems like an instant, which can be extremely painful for people new to trading.
One way to help ease your mind about the volatility of cryptocurrency is to remember that all investments come with risk, just like any other form of trading you might do. However, this should not make you sit out of the market because there are ways to manage these risks.
A good way for traders who are new to cryptocurrencies is by starting small and then increasing their trade sizes once they get more confident in crypto trading.
Lust refers to always wanting something better than what you already have. Cryptocurrencies provide seemingly endless possibilities, which often creates this emotion for traders. For example, people who spent years mining Bitcoin back in 2010 and 2011 may now begin to think about switching to currencies such as Dogecoin not because they want the profits, but because of how much easier it is to mine compared with Bitcoin.
It is one of those emotions that can be helpful to traders if they use their lust for specific cryptocurrencies as a tool rather than just an emotional response. Essentially, reinvesting your profits into newer currencies helps diversify your portfolio and makes you less susceptible to losing everything on a single currency.
As long as you keep this mindset and continue trading within your risk tolerance levels, this lust for better performing cryptocurrencies can reduce some of the risks involved in trading.
Similar to the feeling of gloating, disappointment is a widespread emotion amongst crypto traders because of constantly seeing how much money everyone else is making online. Sometimes this can lead to not following up with your crypto trades, which makes it even more challenging to deal with feelings like sadness and depression that come with the territory.
This specific type of disappointment is caused by what’s known as FOMO (fear of missing out). The only way for traders experiencing this type of emotion to reduce it is by acknowledging that there are always opportunities in cryptocurrencies. Still, you might just be looking at them in the wrong places or at the wrong times. Remembering this will help reduce the feelings of disappointment in your trading portfolio.
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