This simple crypto investment mistake cost me $ 200

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When you lose faith in a project, it may be time to sell.

Important points

• If you no longer believe in an investment or the original rationale for buying no longer votes, it’s probably time to move on.
• Timing the market is almost impossible to do since no one can predict the future.
• While it is important to avoid panic selling, there may be scenarios where it makes sense to sell an investment.

We talk a lot about the dangers of panic selling, or any kind of investment decision that is made quickly and driven by fear. But there are times when it is a good idea to sell your crypto investments – namely when you have lost faith in the company or product and do not believe it has long-term value.

That’s how I lost the $ 200 I had originally invested in Terra (LUNA). I knew things were not right – I even wrote an article about LUNA’s unstable vision. But I did not sell as soon as I realized that there were significant shortcomings in the project plan. As a result, I lost my investment when the entire Terra ecosystem collapsed.

Sell ​​your crypto investments

As a long-term cryptocurrency investor, it is not always easy to decide if – and when – you will sell your coins and tokens. It gets even harder when the whole market crashes and you hold on to dear life and wait for the storm to pass. However, LUNA was different because once I had dug a little, I did not see long-term value in the project.

Without reproducing the entire Terra meltdown story, my concerns about LUNA were:

• The interest rates on Anchor Protocol’s interest-earning accounts were too high and the whole dynamic was not sustainable. Terra effectively subsidized the high returns that drew people to the platform in the hope that it would eventually become self-sustaining.
• Terra was based on an algorithmic stablecoin model. Other algorithmic stack coins had struggled to hold on, and I was not sure that Terra’s reserve fund would be enough to protect it. If it lost the link, there was little in the way of investor protection, and both LUNA and UST stablecoin could get out of control.

Even though I knew it, I still hesitated to sell my LUNA coins. I had sold my SushiSwap (SUSHI) months before because I lost faith in the project management and saw the price go up after I jumped off the ship. As a result, I was waiting for the best time to sell my LUNA. Trouble? There is no one – no one has a crystal ball, and it is almost impossible to time the market.

Takes profits

Another scenario where it may make sense to sell your crypto is when the price has gone up 200% or 300% since you bought it. You can decide to sell part of your investment – sometimes called a profit – and keep the rest in the hope that it will increase further. However, this route does not work for everyone and usually does not make sense for less volatile investments such as stocks.

Still, with the benefit of hindsight, it would be good to make a profit when my coins were worth twice what I had paid for them. But that’s easier said than done. Not only is it almost impossible to time the peaks and know when to sell, at the time I still thought LUNA was worth keeping. We are all investment geniuses with the benefit of hindsight.

I tend to be a buy-and-hold investor. However, I learn (often the hard way) that volatility in the crypto market means that profit taking can be a valuable strategy, even for long-term investors. That said, we do not have enough price history for crypto to be able to predict what may happen in five or 10 years – and whether winning withdrawals can beat buy-and-hold investments.

The bottom line

The decision to sell a crypto can be as complicated as the decision to buy a crypto in the first place. But if your original investment statement is no longer true, there is a great reason to sell. In my case, I no longer believed that LUNA could sustain itself in the long run and could not see how it would become a global payment system. Postponing the decision to sell cost me money.

The next time I lose faith in a cryptocurrency project, I will sell immediately instead of trying to get out at an unspecified “right time”. I was luckier than some LUNA and UST holders who lost a lot more money. Still, there’s much better I could have done with $ 200 than watching it drop to zero.