One of the best investment advice is to buy when others are desperate to sell and to sell when others are desperate to buy, or “buy low, sell high,” easy as that. Buying the deep could sometimes be wise, however, some other times it could turn out to be just a “falling knife” (and no one can couch a falling knife).
How successful that advice turns out should depend on what you are buying as the pathetic following story of this crypto investor.
While the crypto markets tumbled throughout 2018, the crypto trader possibly liquidated his Bitcoin holdings to invest in a new promising ICO – the ERC-20 based Substratum.
The SUB token, at that time ranking among the largest 50 cryptocurrencies by market cap with an all-time high of $650 million market-cap, was starting to decline along with Bitcoin and the whole market. As the price of SUB crashed, he intended to buy the deep and average down his entering price.
He acquired over $100k worth of the now tumbling SUB token and increased his position as the bear market went on up to $115k
It turned out that the Substratum project, which promoted the idea of “the different internet,” turned out being a complete scam.
It was later discovered that the founder of the Substratum project was gambling on investor funds with not much work being done with regards to the ICO Whitepaper. Additionally, the project had fake announcements on new partnerships and had lot of red flags around it.
The SUB token got recently delisted by the major crypto exchange Binance and subsequently crashed even more down to a market cap of under $7 million (a 99% loss). With no other financial option, the desperate trader has to liquidate what remained from his investment: a mere $7,000, following a $115,000 investment.
Indeed, while investing in cryptocurrencies is never a bad idea, a thorough understanding of a project, the team behind it, and their roadmap goes a long way to save investors from heartache. And even if you make the above thoroughly, if the market sentiment is bearish like the recent year, nothing is likely to help.
Also, while buying the deep, diversification could be the survival route especially when it comes to speculative investments like mid and small cap altcoins. It’s always recommended to define stop-loss.
Learning the hard way is never a sweet experience while learning from other people’s experiences could save you some.
