These days, it seems like everyone has an opinion about major cryptocurrencies Bitcoin, (CRYPTO: BTC)Solna, (Crypto: SOL) And ethereum (Crypto: ETH). But, as with much commentary on the markets and investing in general, there’s a lot of noise that’s worth ignoring, and some valuable nuggets of actionable insight.
Especially if you are not directly involved in the cryptocurrency sector, it can be quite difficult to properly orient yourself and focus your attention on the factors that really matter. So let’s take a look at three types of things that are worth ignoring rather than including as part of your investment process.
It is reasonable for people to pay attention when a major global player, such as a government, decides to divest its holdings of a cryptocurrency. Such players often command large amounts of assets, and it is clear that selling those assets all at once will have a detrimental effect on the market value of the respective coins.
For example, Germany’s decision to sell $3 billion worth of Bitcoin was followed by an asset seizure in June 2024. Apart from being the talk of the cryptocurrency town for at least a few weeks, it has also posed a serious challenge. A decrease in the price of King cryptocurrency, at least for a while. A potential sale of nearly $6.4 billion worth of Bitcoin by the US government that could happen this year could easily have a similar or even more damaging effect.
Sales by the whale Other cryptocurrencies, such as Ethereum, have rarely been on the scale that governments have done, but they still make headlines. Individual large holders selling just $33 million in mid-January of this year are attracting attention, even if the price impact is not as significant as with bitcoin.
However, these discussions are not worth pursuing. In the long run it didn’t really matter which players were selling or when. Thus, as an investor, keep your focus on the long view and not what some big investors are doing.
The distributed nature of blockchain networks such as those realized in Bitcoin, Ethereum, and Solana means that if the network’s validators disagree about some of the fundamental properties of their protocol, they can Fork the chain and start a new project.
Such forks have occurred several times in the past in both Ethereum and Bitcoin. You may have heard of these forked versions at the time, and it’s possible that you own some of the forked coins as well.
But if you’re a casual investor who holds these cryptocurrencies indirectly through your financial institution or through an exchange-traded fund (ETF), there’s no need to entertain too much of the general discussion surrounding the possibility of a new fork. is It’s not something you can control, and there’s a lot more talk about potential forks than actual forks – not to mention the extreme rarity of forks that perform better than the actual ones.
As with stocks, it’s always tempting to want to know more about the recent price changes of your favorite cryptocurrency investments. Experience gathering information about what is happening with prices right now The data you find tends to be addictive because of the financial implications. After all, prices change every day, and you want to be an informed investor to avoid losses.
The right way to do this is by looking at the price chart for a minute or two; I suggest that at least a one-year period should be represented in the chart to help focus on the long-term performance of the investment.
If you’re taking more than a few minutes to pore over the chart, you’re at risk of overtrading, because almost all short-term value data, and discussion of it, is noise. The more you zoom in on your time horizon, the more likely you are to determine the importance of random fluctuations that have little to do with the investment thesis for holding a particular coin.
So don’t do it. Commit to holding your cryptocurrency investments for at least two years, and check the value of your coins once a week to start. Remember, looking at a price or reading an article about price action doesn’t really change it.
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Alex Carchidi Has positions in Bitcoin, Ethereum, and Solana. The Motley Fool recommends positions in Bitcoin, Ethereum, and Solana. Motley Fool has a Disclosure Policy.
