It's a Loss When You Say It's One

You choose when to get off this ride

A friend who is new to crypto investing reached out to me the other day. She got in a few days before this last market slump.

“I’ve lost quite a bit of money,” she wrote. “But today I’m up four bucks!”

I typed a few replies, and deleted all of them. In the end, I told her to just keep holding. That’s because—this is one way that crypto investing is similar to investing in stocks.

Your portfolio only has a loss if you say it’s one. Until then, it’s a unrealized loss.

This can be hard to remember, especially in the heat of the moment, when emotions run high and a downward trajectory can feel like a huge nosedive. And to be clear, crypto is full of rug pulls, shady deals, and scams. Seeing a decrease can trigger big fears.

That’s normal.

But ask yourself this—is that portfolio decrease really a loss? The answer is, not really. It’s not a loss if you keep holding. It’s more like a temporary dip, and one you might not care about too much in the future.

Considering that, ask yourself these questions before you hit the sell button:

• Do I need this money right now for an essential expense?

• Am I selling because I’m afraid?

• Is this a project I believe in for the long term, or short term?

Once you have the answers, then you’ll know if selling is the right thing to do. Maybe it still will be.

But my guess is…. it won’t.

The Crypto Connection is for entertainment purposes only and is not meant to be financial advice. Please do your own research before investing in any asset class. Sara Celi is not a financial advisor, and holds several cryptocurrencies. To purchase her books on Amazon, please click here.