We all know the typical story of many people that are new to crypto: they enter at the heights of a raging bull market and buy the proverbial top in a rush of euphoria, only to get first depressed and then bored as they sell their tokens 80% lower and leave crypto completely. For many, the pain of that loss will be enough to keep them from ever coming back to anything related to blockchain. But for others, such an experience is a learning opportunity, giving them time to analyze what they did wrong and what they can do in order to make it in the next cycle. This sort of thing takes weeks and even years, but most importantly of all, it takes the one resource that is perhaps the scarcest of all in the era of instant gratification and 5-second entertainment: perseverance.
Sticking around in spite of the all-encompassing despair and boredom of a crypto winter is the one thing that determines who will “make it” in this market. Those who serve themselves off from the space during such difficult times will only regain interest again when there’s another euphoric rush, meaning that they’ll be likely to buy the top again - if, that is, they do ever come back at all. On the other hand, those who choose to build, learn and grow in that period will have much more than just a head start in terms of time. Apart from dedicating more time to crypto, there are three main benefits to doing this: (1) learning to do your own research at a time when you don’t see countless projects popping up every day; (2) learning to control your emotions as you experience the full impact of a long downtrend first-hand and (3) being able to utilize the first two factors in order to invest at prices that are way lower than they will be once your favorite projects start attracting more attention.
It's impossible to overstate how much of an advantage this will give you over everyone that’s just joining in when Bitcoin is printing new ATHs (All-Time-Highs) again. For one thing, you’ll be used to sifting through all the noise and euphoria, since you’ll have a lot of experience with fundamental analysis at a time when crypto was almost a ghost town. Besides, research is also easier in the depths of a crypto winter: projects that were little more than obviously unsustainable Ponzi schemes have almost completely died out, while they can quite easily look invincible amid the constant inflow of fresh capital in a bull market. What’s more, you’ll be much more immune to the dangerous effects of greed when prices are soaring, as you’ll know all too well where the market can go, and where it inevitably will go sooner or later.
You might think that this is giving too much importance to trading psychology, but this aspect of trading and investing is the biggest factor that will make or break any investor. The reason behind this is a psychological tendency that can be very tempting. We can call this the price-value confusion: humans tend to see more expensive assets as having more intrinsic value – i.e. more potential – while precisely the opposite is most often the case. When everything is trading at insanely high valuations, this is when most people jump in, but it’s also the point at which the risk is greatest and the potential reward is lowest. If you make some very well-thought-out investments at that point, then sure, you’ll probably end up making money, but odds are that you’ll first spend a painfully long time being 80+% down.
In short, if you’ve got what it takes not to give up and turn a downtrend in price into an uptrend in your knowledge and skill, you’ll be on the fast track to making it. When your hard work pays off, your friends might call you lucky, but then again – given how much upside you can capture, it’s no surprise that your success will be beyond most people’s comprehension.