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Taking profits in a volatile market – The Dilemma.

joelagbo - 2024-07-05 08:35:33

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It’s been weeks and months of pumps and pumps. If you held on through the second half of the year and ‘filled your bags’; you should be beaming with gains. The investor who turned $8,000 to $5 billion with Shiba Inu must have quit his job and probably be on his way to his estate by the oceans in the Bahamas, lol. I’m not even sure there’s an ocean in the Bahamas…but yeah, anything that represents ‘absolute luxury’ will do!


I’m not a fan of meme coins or “moonboys’ projects”, but the perseverance to watch an investment go from a few thousand to hundreds of thousands is commendable. Cooling off and watching your investment go from hundreds of thousands to Billions is out of this world! People suggest he probably forgot he ever made such an investment…well; that’s a bit sensible, but I still remember all my $50 investments. Another hypothesis is that this investor is a time traveler. That’s weird; but surprisingly, I find it more believable.


Elsewhere, early Shiba Inu investors share their regrets about selling their meme coin too early after realizing some tangible gains following Shiba’s first run. You could guess, Majority sold their stakes too early, and holding on to a project like this would require something stronger than diamond hands.


Hey, before going further, have you Followed us on Twitter?


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Cryptocurrency’s volatility means an investor could make crazy gains in a very short while. 5X, 10X…these are huge returns; in crypto, they are meager returns and happen very often. Well, they could also go either way at the same pace.


Filled with expectations of even crazier gains in the future, an investor who already made tangible gains is caught in a dilemma. Cryptocurrency markets are fast-moving, double-digit price drops could happen in a blink of an eye, but selling after some ‘little’ gains might be too early. Despite having hit the initial target, things still look promising.


“This could be a life-changing opportunity”…investors usually have these words running through their minds as the project they invested in continues to look healthier and promising, even after making some crazy gains already. Greed sets in –normal human behavior.


To take profits or to continue holding? Any investor would find it hard to decide, especially when you already hit your target or are just a few steps away.


While this is not financial advice, here’s an approach you can give a try…


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I’m pro bitcoin, but to be frank, bitcoin makes up a very small percentage of my portfolio. The majority of my portfolio is altcoins…shitcoins if that’s what you’d prefer to call them. My investment process includes scouting for projects under the radar and making low-risk investments in a (very) diversified portfolio. Notable projects I’ve invested in through this strategy include Theta (at $0.08), FTM (at $0.002), and VRA (at $0.0005) others include Singularity (AGI), Syntropy (NOIA), Voice, Mute, and several others.


You could guess; these investments grew in multiple as these projects quickly gained traction, and thanks to the bull market, they hit ridiculous gains. One big mistake was selling off my investments in Theta very early (at $0.55). But despite making about four times my investment, it was a long and tough decision.


Having to go through a similar process many times, a lot was learned each time and I found a way to tackle this dilemma. In the case of Theta, the price grew; but it could have still gone the other way…I’m no prophet! Realizing that every cryptocurrency speculation is uncertain will go a long way to help you make decisions and bear the feelings if they go wrong.


One piece of advice, take every piece of advice on crypto Twitter with a pinch of salt. Yes; on crypto Twitter, every project is a billion-dollar project, but how many could reach this point? Taking a look at the ranks, only very few projects are valued at near or over a billion dollars. The vibe, the bold statement; could make you feel like you’re committing a crime by selling…or holding, depending on the condition. But…


Take time to consider some conditions that are personal to you. What was your initial target? Over everything, why did you make this investment in the first place? To pay off your rent or to fix some debts? Probably a very different reason, but the level of importance is best known to you.


We are all in this for the ‘technology’, but regardless every investment has a financial motive and no investor would love to run a loss. In crypto, getting stuck with a bad of ‘worthless’ crypto is a nightmare. Unfortunately, this happens regularly and faster than you think.


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Imagine waking up to a 30% drop. Jaw-dropping! It could be the other way around. But either way, what are the chances that you will take this event with your head held high? In a situation where you already hit your target but decided to hold on for a little while but things quickly go south. The regrets are huge, but are relative and could vary depending on the investor and the condition.


Nevertheless, it still hurts to see the project you were invested in make crazy gains after you have sold off your investment. The sideways movement constitutes this dilemma.


With this in mind, selling off your bags at once is a bad idea. Selling them in parts at different targets is probably a better approach. Thing is, selling in parts at different targets might mean you get out of the market with less; but if the price continues to go up, you’ll leave the market with more than you would have if you sold at your first target. If the price drops after you sold a part at your first target; you’ll leave with less, but the loss is tamed.


Cryptocurrency investments are risky; not just because you could lose your capital, but you could also lose your profits. In a space filled with thousands of similar projects, finding a reputable cryptocurrency project is harder than it should be. Regardless of the project’s quality, market conditions could be very bad for even the best projects and very favorable for the ‘worst’ projects.


When an investor finally finds a good project, leaving with his profits is hard. The sense of attachment is very normal. However, understanding the need to satisfy the initial goal is (equally) important.


Investors with no urgent purpose would usually take their capital off the table and leave the rest to the fate of the market. A ‘moon bag’ that’s the right term This works too, for this condition.


In the end, personal differences set in, this would determine what works for different persons. If you fit into the conditions stated above, then this strategy could also work for you. The most important thing is to make your own considerations and make decisions which suit you best.


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