Solana
Don’t Buy a Single Dollar of Solana Until You Do These 3 Things
If you are not prepared financially and emotionally, success will be difficult.
Solana (GROUND 1.13%) is one of the most interesting cryptocurrencies this year, not least because the chain is the de facto home of meme coin investing. But that doesn’t mean all investors are ready to jump in and buy the coin, even if they already hold slightly less exciting but more established options like Bitcoin Or Ethereum.
Jumping in before you’ve covered the essentials is a surefire way to jeopardize the value of your portfolio. Let’s go over three simple things you should do before investing in Solana to ensure you’re moving forward responsibly.
1. Diversify your core portfolio with a mix of safe and less safe investments
Solana is a relatively new cryptocurrency, launched in 2020. At the moment, it appears that it will continue to gain traction and gain enough adoption to remain relevant. But if it doesn’t succeed, you don’t want your entire portfolio to go up in flames, so you’ll have to to diversify.
Your diversification plan should include assets like blue chip stocks, index funds and maybe even bonds, as well as cash. Your portfolio might also include a few riskier securities like biotech stocks or stock options.
If you haven’t laid the foundation for your portfolio’s success, the returns you make will be very difficult to maintain long enough to actually achieve your financial goals and improve your life. So diversify, diversify, diversify, and when that’s done – and it could take years to do it properly – you’ll be ready to invest in riskier opportunities like Solana.
2. Develop an investment plan
Whenever you invest, you should have a plan, and Solana and other cryptocurrencies are no exception.
Your plan must articulate:
- Your investment objectives
- Your investment thesisdescribing why the coin is worth buying instead of something safer (or riskier)
- A reasonable set of price targets to know when to take profits or cut losses
- A timeline describing how long you would prefer to keep the coin
- A summary of the biggest risks the investment will face
- Anything else you would like to prepare for in advance
If you don’t make a plan before you invest, your plan is basically hoping the price goes up. Hope isn’t a plan, though, and it’s far too fickle an emotion to rely on to guide your actions when things get tough anyway.
Don’t dream of making millions by buying cryptocurrency. Create a roadmap that outlines how purchasing a particular asset will get your portfolio where you want it to go.
3. Prepare for volatility and know the two most common patterns of major declines
Although it is a bit more stable compared to smaller cryptocurrencies, traditional investments like stocks, and even larger cryptocurrencies like Bitcoin, Solana is indeed quite volatileand daily price movements on a scale of 5% are common.
If you are not prepared for how you will feel when you look at your account and see that the value of your investment has fallen by at least this amount over a relatively short period of time, you are not ready to invest in Solana.
There are a few scenarios that tend to test even the most experienced crypto investors and are likely to happen with Solana as well, so you’ll need to prepare for those as well.
As questionable as the usefulness of technical analysis (TA) is aimed at investors who intend to hold their cryptocurrencies for the long term, as you should, it provides useful insurance that will likely come in handy when the price of your coin drops 30%, or even 80% %, without any risk. specific reason or trend that is easily discernible as the cause.
In short, for a fairly large cryptocurrency like Solana, TA’s idea is that a 30% drop over several weeks isn’t too concerning as long as there hasn’t been a negative catalytic event major, because it is more likely. be a (brief) period of market consolidation rather than a lasting collapse. In other words: a short-term recovery is likely.
The 80% drawdown is a different and more difficult story, and it may take several months to unfold.
In this case, a recovery is only expected to occur in the long term, if it occurs at all. The aggressive move would be to reverse course and buy a lot more and then wait patiently for the recovery, but most investors won’t have the conviction to do that after a significant decline.
Instead, force yourself to buy just a little bit more, then log off and come back in a few months or even a year – and be prepared to do it again if things haven’t improved.
The idea is to demonstrate your agency in your portfolio’s success, even when things go wrong, so that you can at least maintain some semblance of a sense of control over the outcome. This in turn can be very useful psychologically, and even very profitable.
It’s okay to forgo buying more if it doesn’t work, but resist the idea of selling at a loss. If the price eventually rises again, your small purchases at the bottom will result in big returns – and if they don’t, you won’t lose much more.