In recent years, we have been able to learn a lot from the past when it comes to cryptocurrency. In 2022, the crypto market has been quite bearish and cryptocurrency prices have dropped significantly. As investors, we can learn from what happened in 2022.
The industry is also working on new developments so that the crypto world can continue to grow again. In this article, we look at the lessons learned from 2022 and how we can improve in 2023.
Balance in investing is important
We’ve all heard the clichés about how important balance is while trading crypto. You may have allowed yourself to be too guided by emotions and therefore bought and sold at the wrong times. Seeking balance as an investor is important and is a lesson that can certainly help you as we look toward 2023.
The crypto market is volatile and that means the price can go in any direction. The market is currently guided more by sentiment than by ratio analysis. With that, it is important to find a balance between the emotion of the market and the ratio behind investing. This can be done, for example, by applying an investment strategy.
Collecting the loss in crypto
If there is one thing we have learned from the past two years, it is that there can be hard knocks in the crypto world. Many investors have faced big losses for the first time and the market has been rocked several times. Think for yourself what is important and what is the purpose of investing. If you believe in a project, it is a good idea sometimes not to stress about this too much and look at what the future holds. If you really have faith in the project, you will be more likely to end up making good profits from it.
Moreover, all investors sometimes suffer losses. Again, balance is the magic word. The key is to keep the number of winning trades greater than the number by which you suffer losses. Experienced investors use rules of thumb (for example, the 2-6-20 rule which deals with percentage loss) by which they manage their positions. Using a stop-loss or stop-value also protects against large losses. In addition, of course, it is important to avoid common mistakes.
Regulating crypto around the world
Many countries are making laws so that investing in digital currencies becomes safer. Because criminals can’t steal large amounts of crypto as easily and have higher penalties for doing so, this will deter them more. The government is especially interested in regulating various stablecoins.
If you look at the crash of Luna, you can see that it had a lot of impact on various stablecoins. Many investors saw their entire portfolio disappear within days and lost confidence in many crypto-currencies. Other stablecoins made the choice to freeze withdrawals as a result to avoid high transaction fees.
While a regulated market is good, as SBF recently proved, regulation will create uncertainty for investors in the near future. With all the developments surrounding FTX, there is a fear of overly strict regulation.
Bitcoin (Image: Pexels / Karolina Grabowska)
The future of DeFi within crypto
If you’ve been involved in crypto investing at all, chances are you’ve heard of the term “DeFi.” Its meaning is “decentralized finance” and is used for all alternative payment methods such as cryptocurrency and blockchain technology. DeFi uses smart contracts so that transactions can be made without the involvement of banks.
DeFi is a new way for keeping your digital currency safe and making transactions. This way you are protected from criminals such as hackers. At this point, it is still early to fully rely on DeFi. This very uncertainty added pressure to DeFi in the already declining crypto market. Still, it offers a good start for it for making secure transactions and storing your crypto currency.
The future of cryptocurrency will only become more secure as DeFi continues to evolve. Again, the lesson of 2022 is that we should not see this development as “making money fast,” but as an opportunity for long-term investment and innovation.
Stay up to date on the latest stock price developments?
You can always follow the developments yourself with our WANT analyses and overviews. Of course, you can also follow the BTC and live cryptocurrencies 24 hours a day if you want to stay informed in real time. Finally, you can practice stock and crypto investing without financial risk by creating a free account on virtualinvestment.com.
Note: We never give financial advice, so you can’t interpret our contributions that way either. Always do your own research and decide rationally if, when, what and how much you want to invest.