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Below are some tips we hope will help those new to crypto:
1) Store your assets under your control. Be your own bank.
The power behind blockchain technology lies in its P2P, decentralized nature – people no longer need “middlemen” to do business and manage their assets as much as they used to.
Take advantage of this and reduce your reliance on third-party services as much as possible. Don’t leave your assets on exchanges, for example. Follow this link: A Crypto-Trader’s Guide to Online Security to learn more about how to become “your own bank”.
2) Don’t expect the crypto space to be fair. It is intense, volatile and irrational most of the time.
Not everyone is trying to manipulate the market. Only a few are doing it, but that’s ok. Most people are simply reacting to extreme emotions that dominate most market activity.
People experience fear (sometimes panic), and they have doubts about what will happen in the future. They also experience excitement, sometimes to extremes, such as after an asset grows 200% and everyone shouts “to the moon!” We at Santiment have all of these feelings too. There’s no escaping them, unless you are a robot or AI… but then you wouldn’t really need to read the market anyway.
The mass media and “analysts” will try to sell you some rational explanation for what happens – technology has changed, there is an important news event, etc. Don’t spend too much time on these stories. They are mostly attempts to explain the past. Observe and you will notice that logic rarely helps you “buy the bottom” and “sell the top”, simply because emotions are pretty much irrational and unpredictable most of the time.
3) Find reliable sources of information. Learn to avoid too much hype and doom.
Bitcoin has “died” more than 20 times. Ethereum has at least 5 times, too. Yet, they are the most valuable crypto assets at the moment. They both were praised to the heavens several times as well, and what happened thereafter? They fell dramatically.
Watch and you will see – this dynamic happens over and over again, to every crypto asset. We need to understand it and accept it for what it is. Seek out people who have realized this as the way crypto works. There are quite a few of them around (many hang out with us on our Slack: https://santiment.slack.com/ – you’re welcome to join us!)
4) Practice smart money management all the time.
Preserve your capital at all costs. There will be temptations to invest more than you should, as chances to enter a good position are opening constantly – monthly, weekly, sometimes even daily. Follow our points 2) and 3) above and don’t put in more than you can afford to lose.
Also, the size of your position is important. It should be small enough that your nerves are saved when something goes wrong (notice we say when), and you are comfortable either closing the position, or “hodling” without losing sleep until things get better (which they often do, sometimes quite quickly but sometimes slowly, so patience is key).
And now a folklore story from China…
“Two brothers saved a golden phoenix. In return, the phoenix promised to bring the brothers to a place where they could find a lot of treasure. But they had to go during the dead of night, and fly away before dawn or else the rising sun would burn them to death. When they arrived and found the treasure, one brother was so greedy he could not stop filling his sacks. The other simply took a few pieces of treasure and went back to the phoenix. As the dawn approached, the phoenix urged the one brother to hurry up, but he refused to go and finally died in the hot sun. The other flew back and sold his treasure, and ever since lived a happy life.”