If you hold Bitcoin (BTC 0.50%), XRP (XRP 0.53%), or Solana (SOL 0.88%) right now, you're probably getting a bit sick of the volatility. Given that there's a lot of economic and geopolitical instability, and probably even more to come in the near future, the fact of the matter is that it's getting pretty tiring for everyone.
If you're sitting on big gains from the last few years, you're probably getting tempted to quit your positions and liquidate everything you hold, especially if this is your first real encounter with the downside of crypto market volatility. But even with the intense uncertainty of the current moment, dumping everything would be a big mistake in my view. Here's why.
CRYPTO: BTC
Key Data Points
Buying when it's nauseating is often the best time
To be clear, selling all your coins right now wouldn't be the end of the world if you're sitting on some profits. Nor is it inadvisable to rebalance your portfolio if you are currently realizing that you've unknowingly committed to a bigger position than what's appropriate given your appetite for risk.
Indeed, there's no guarantee that the looming economic turbulence is going to break in favor of the crypto sector. Having more cash on hand could leave you positioned to get deeper bargains down the line.
Nonetheless, holding through periods like the one we're in is often when a large portion of your portfolio's gains are made, especially if you can convince yourself to buy the dip rather than sell. Ditching all of your coins right now would feel good for a moment of relief, and then the financial consequences might start to accrue.
There are a couple of reasons for that. First, the odds of you successfully timing the market, both in terms of when to exit and when to reenter, are extremely poor. Simply holding on, or adding to your positions, is both technically easier to implement and also more likely to keep you invested for long enough to get a good return. Being reactive to the difficulties of one week or one month could sabotage your portfolio's chances of compounding in value over time.
Second, periods of uncertainty are when the coins with real investment theses have a big opportunity to show that their value is distinct from the short-term sentiments about their price.
For instance, will Bitcoin be any less valuable five years from now because of the threat of a trade war today? It's possible. But that still wouldn't detract from the long-term thesis, which specifies that the coin's ever-scarcer supply dynamics will cause it to gain value over time even with a consistent level of demand.
CRYPTO: XRP
Key Data Points
Now let's turn to XRP. Does geopolitical instability around the globe make the coin any less appealing to potential institutional buyers, who could cut some of their costs by using it to make international money transfers? No, not really -- those players could demand less XRP if the instability becomes concrete financial damage, but the benefit they would get wouldn't change.
The same idea applies for Solana. If the economy were to collapse tomorrow, it'd probably reduce investors' demand for buying the coin to gamble it on meme tokens. But it'd still be a fast and cheap chain to transact on, and it'd still have a great developer community, smart contract features, and an active development roadmap that would make it a more appealing place to build apps or invest than other blockchains. So the ground would be fertile for a recovery.
All of this is to say that if you sell all your coins when times are bumpy, you won't get the benefit of the value those coins are generating for holders.
CRYPTO: SOL
Key Data Points
Make plans for the many years ahead, not the next few weeks
It's often easier to discuss holding your coins through hard times than it is to actually do it. Having a plan for how to actually take advantage of potential bargains can thus be helpful, as it'll mean you won't feel powerless in the face of volatility or downtrends.
One counterintuitive tip is that if you find yourself feeling like a given moment is an absolutely terrible time to buy, it's often a good time. Sentiment is fickle, and it oscillates between extremes. If you can detect when it's at one extreme, you can avoid making the mistake of hopping on a bandwagon that's going in the wrong direction. Alternatively, it's perfectly acceptable, and perhaps even preferable, to set up a dollar-cost averaging (DCA) strategy for your coins so that you won't need to be subject to your own feelings about the market at all.
Finally, if you're investing in Bitcoin, XRP, or Solana, remember that you're investing in some of the largest and most proven crypto assets that exist so far. They've each survived more than one major market cycle already, and they're all held by many of the world's financial institutions, not to mention massive armies of retail investors. That doesn't mean you are never allowed to sell any quantity of them, it just makes them far more likely to survive long enough to reward holders with further growth, even if they temporarily lose value.
