Those wishing to start interacting with the crypto sector often ask the same type of questions about the purchase of an asset, earnings or analytics, writes RBC Crypto. By an interesting irony, these questions are practically taboo in numerous communities that are professionally engaged in cryptocurrencies, whether for the purpose of trading on the market and investing, or even more so those who want to integrate blockchain into existing solutions of various communities and industries.
Considering such inconvenient questions, as in the case of harmful advice, will help you better understand how to do the right thing, as well as improve your understanding of the basics of investing and trading digital assets.
Whether to take bitcoin for $ 20 thousand or similar questions about other assets are most common. It is impossible for professionals working with blockchain assets to answer such a question in one word or even several sentences. For a satirical comparison, we can cite a fictional situation in which a person would approach a doctor on the street and ask if it was worth drinking cough medicine. Without the proper amount of information about a person’s situation and some analysis of all available data, the doctor will not be able to answer affirmatively or negatively to such a question.
In exactly the same way, for cryptanalysts and traders, questions sound about whether, for example, it is worth taking ether for $ 1 thousand. To answer such a question, a specialist will need to find out a lot of information about the situation of the “patient”: does a person already own digital assets, if so, at what prices he bought, is he familiar with the basic principles of investing and managing funds, is he aware of the risks of any investments, and especially investments in blockchain assets, is he planning to short-term position or long-term investment and many other issues.
In order to correctly assess the situation and allocate a proper share in the portfolio for a new asset, it is also desirable for a specialist to know the total size of an existing and potentially possible portfolio.
As you can see from the nature of the questions, such a conversation will definitely not fit into several sentences. Such communication also implies a certain level of trust between people, based either on a kind of mutually beneficial agreement, or on friendly or family relationships.
One of the varieties of the previous question, however, with an added note of regret about the “missed” opportunities. Quotes are used because any assets never move only upwards — there are always phases of correction and falls, which in the case of cryptocurrencies can be especially deep. Even if the prices of some of the most common coins and tokens do not present users with the desired entry point at a certain moment, you can always find many other promising projects.
Every year, a lot of new projects get into the list of the hundred largest digital assets by market capitalization, which become visible to the general public only after the explosive growth of the exchange rate and publications of mainstream publications, but trading on these assets, of course, has been going on for a long time by this point.
Thus, the answer to the question “is it too late to take?” in fact, it implies some kind of introductory presentation about the features of the crypto market and the movements of digital assets, after realizing which the question itself becomes irrelevant.
Which project will fire?
The next category of questions are requests for evaluation of certain investment ideas. Unfortunately, very often a lot of users are ready to throw their entire deposit into a freshly baked project advertised by someone, while not even having the “blue chips” of the sector in their portfolio – BTC, ETH, BNB, ADA, SOL, DOT and others. Also, a huge number of pyramid schemes still go around among the people.
Can an analyst unequivocally answer the question about the investment attractiveness of a particular project? Maybe, but a detailed answer will definitely take more time than a conversation on a coffee break and will be more like an audit-a due diligence service, which includes drawing up an objective view of the investment object, assessing investment risks, a comprehensive study of the project’s activities and a comprehensive check of its position on the market.
All of the above applies to classical investing, however, in addition to these points, blockchain due diligence will also include the study of acceptable methods of asset storage, as well as the study of issues of obtaining passive income using stacking or other similar mechanisms if a long-term investment is planned.
How much have you earned so far?
The cherry on the cake of unloved questions over tea is the question of the analyst’s or trader’s own earnings.
Firstly, communication on the topic of income is an undesirable topic of conversation in most countries, and the culture of some regions that highly value individual freedoms even implies the rejection of seemingly more neutral questions about money – so in Texas and Florida they can easily refuse to answer the question “For how much did I buy a car or how much do you pay a year for the university?”.
Secondly, as with the previous questions, the answer may be more complicated and longer than the interlocutor expected. To answer the question, you will need a number of clarifying questions: what period are we talking about, whether to take into account unrealized PNL (unrealized profit or loss on currently open positions), whether to count the profit against the dollar, ruble or bitcoin?
It would be inappropriate for a trader to answer such a question, because his answer is unlikely to find a positive response from the interlocutor. Whatever amount is named, the subsequent reaction may be negative. From surprise and pity, “why so little, I read that people at NFT raise millions,” to unvoiced envy, “he earns so much for pressing a couple of buttons while I work at the factory.” As it is easy to guess, none of the options has anything to do with the reality of ordinary market everyday life.
Let’s draw conclusions
Having considered the most frequent questions, it can be concluded that in most cases, if the questioner has a serious intention regarding interactions with the crypto market, it will be desirable to devote sufficient time to self-education in this matter, or to use a paid expert consultation. It is also worth noting that professionals working with digital assets like to receive new information from any source, so they will treat any question better if they add some interesting fact or observation on the market situation made on the basis of their own research.
Another reason why traders and analysts do not like to give advice outside the framework of professional activity lies in the fact that any advice should be able to implement. In inept hands, even the most accurate buy signal can turn into a disaster due to the use of excessive leverage, the absence of a correctly calculated stop loss and take profit, or an overestimation of the volume of a trading position relative to the user’s entire deposit.
Not least in the unwillingness to answer numerous questions is the fact that selfless help is often underestimated due to the peculiarities of the psychology of human relations.
So, a recommendation to buy an asset at a certain price can lead to a lot of negative emotions for the psyche of a newcomer to the crypto sector unprepared for the reality of the market, in which the person who gave the advice will be blamed. If the price goes up, but a little bit, they will say that they have earned little. If the price goes up, but not immediately, they will say that it was possible to buy cheaper. Even more predictable will be the reaction of an unprepared user to the long—term departure of the price below the entry point before the start of the rebound – by the time the growth begins, the nerves of a newcomer to the sector may already be irretrievably spent and the relationship between the one who wanted to get help and the one who helps for a long time will be spoiled.