4 Investing Lessons I've Learned From The 2020 Covid Crisis

The outbreak of Covid-19 has led to one of the worst Bitcoin crashes so here are a few lessons you can learn from the covid-19 crash.

4 Investing Lessons I've Learned From The 2020 Covid Crisis

It has been a year ever since the Covid-19 global pandemic gloomed over us as the economy plunged to the bottom. It’s easy to get caught up in the whirlwind of emotions and make decisions that will leave your finances in disarray, that’s why it’s important to follow rules that will allow you to profit from market crashes. 

From new regulations to companies showing interest in Bitcoin, the pandemic has caused lasting changes to the crypto market in the past 12 months and now is a good time to look back at the year and learn some key lessons from March’s Covid-19 selloff.

1) Buy and Hold Works

Here’s one lesson learnt: sometimes the best strategy is to do nothing. When the market dropped early in March 2020, many investors panicked and sold off, meanwhile, some experienced investors behaved and rode out the covid-19 bear market. 

Those who have sold during the downturn of the covid-19 crash may be temporarily relieved from the sense of panic. However, they will be facing another difficulty in deciding when they need to reenter the market and chances are they have already missed out on recovery gains. Therefore, it’s better to just hold onto them for as long as possible and benefit effortlessly after the rebound.

2) Diversification is Essential

The market fall during the covid-19 crisis has shown us that by holding on to different types of asset classes, there’s a better chance to mitigate losses during a downturn. Diversifying your portfolio is a preventive measure for investors to help them to avoid panic selling and make quicker decisions to rebalance their portfolio, all in all, allows investors to stay on track. 

Diversification works, even though sometimes you may lose money or get unsatisfied with some of your asset allocation. The main reason to diversify your portfolio is to spread your risk because there is no way to predict which cryptocurrency is going to outperform or underperform and for how long. 

3) Seize Great Opportunities During Bad Times

There is no doubt that buying more during a market fall seems thoughtless. Many will ask “Why add more money to something that’s dropping in value?” or “Shouldn’t we cut our losses short?” 

But like what Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.” As seen in past performances, Bitcoin often bounces back and goes on to greater heights. 

Take Bitcoin’s slump in March 2020 for an example. The sharp drop is followed by a bullish signal to its longest winning streak of the year. Thus, if you are willing to seize the opportunity during a market weakness, you may be rewarded with stunning returns. With long-term time horizons and available cash, buying the dip when the markets are in a selling frenzy is generally a good decision. 

4) Bitcoin is The Ultimate Investment 

If nothing else, Covid-19 proved the importance of including Bitcoin in your investment portfolio. 

Bitcoin is arguably the best performing cryptocurrency asset that outgunned every single asset class. Being the largest cryptocurrency by market capitalisation, it has appreciated a 5.2 million % return from 2011 and a CAGR of almost 200% since its inception. 

Bitcoin 10-year CAGR chart. Source: Twitter

Bitcoin outperformed gold by 92x in compound annual growth rate. Bitcoin is also the most liquid investment asset that is widely accepted in various exchange and trading platforms like Binance, Altimates, etc. As we continue to see a strong upward momentum from Bitcoin, just imagine what will happen to its price once it is officially established as an integral part in banks worldwide. 

It’s definitely concerning to see your investment lose their value in a couple weeks, but with a little patience and time, your resilience will build you a successful investment portfolio in the long run. 


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