Why traditional Buy & Hold is obsolete
Whether you are new to blockchain or have been active in the crypto world for the past decade, you have come across “Hodling”, a.k.a. the buy & hold. Today, this investment strategy is at its pinnacle thanks to a fan base, a community of “diamond hands.”
Its members preach abstention from selling crypto assets at all costs for the sake of gaining 10x and more in the long term.
They have an unwavering belief that the price will eventually go up. But is this really a viable strategy in today’s market?
Firstly, ask yourself if you can stomach high volatility and potential loss of all your portfolio value.
99% of retail investors can’t – even a subtle market swing triggers a fear that spreads like wildfire, making the crypto fear and greed index go bonkers.
Prospective millionaires feel pressured and eventually walk out, losing everything or owing a lot of money if they have taken loans. The psychological burden of such a defeat is enough to push some users out of crypto for good.
In 2022, the crypto market has been highly unpredictable. Rising inflation worldwide, war conflicts, and overall instability are not doing it any favors either. Consequently, crypto volatility is surging, hinting that the buy & hold strategy is only good if it’s risk-adjusted.
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Buy & Hold: The Origins
As the top choice for many, the Buy & Hold got traction as the ultimate investment strategy from renowned investor Warren Buffet. In a nutshell, it states that a company is worth your attention under the conditions of solid fundamentals and a stock trading below intrinsic or book value.
For Buffet, these are the signals of stable returns over the long-term period. Therefore, any price corrections and swings are treated as market merely noise after his initial stock purchase is done. So following his success, now that the crypto market is in existence, the buy & hold strategy has quickly become the most popular choice among many investors.
However, while crypto and traditional stocks are similar, they are definitely not the same.
The smart way to Buy &
Why the traditional Buy & Hold Is Problematic
Firstly, the crypto space is now flooded with people looking to make a fortune in a day.
Their investment decisions are based on short-term goals and crowd behavior rather than company fundamentals. Consequently, many solid projects stagnate while well-marketed, but questionable initiatives take a big piece of the pie home.
High risks combined with an absence of regulation create a case for high volatility and extreme unpredictability where the buy & hold strategy simply loses its magic.
Remember the 2017-2018 ICO madness? If you were around that time, you know that a majority of founders disappeared after successful funding, effectively undermining the credibility of the entire crypto industry. As a result, the market entered a bear cycle.
The latest Luna collapse is an example of how the buy & hold approach can go horribly wrong. Luna went all the way from 86$ to almost zero in a matter of days, with a majority of retail investors losing all their life savings as a result. So what’s the take?
There’s clearly a need for a risk management solution that can neutralize such horrendous pitfalls.
A loss of all your hard-earned savings can overturn a life of optimism and security and leave an unbearable psychological trauma.
At Libertify, we offer a smarter way buy and hold that can prevent financial disasters by detecting them earlier on in their infancy.
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The Smart Buy & Hold Alternative
The smart Buy & Hold is an investment strategy that aims to extract value from volatility. It does this by continuously cutting risk to increase returns. Also known as a performance-driven risk adjustment strategy, it also introduces a solid discipline in investment decisions.
Due to FUD, almost every crypto holder has been on the verge of breaking the fundamental rules of a chosen strategy, be it buy & hold or dollar-cost-averaging.
That’s normal. But if you don’t have the discipline yourself, or the knowledge of how to inject your tolerance to risk into your crypto investments, the smart buy & hold does it for you.
It keeps you sane through the periods of vicious volatility.
Think of the smart buy & hold is like a state-of-the-art electric car packed with the latest personal safety technology. It lets you avoid unforeseen bumps on the road while getting you from point A to point B.
The smart buy and hold will detect dangers and slow you down automatically, therefore reducing your risks. And it does this regularly. That’s the discipline that smart buy & hold introduces. Whereas if you had a regular vehicle you would need to constantly follow, monitor and detect unpredictabilities and avoid those dangers yourself.
At Libertify, we believe every investor must have a mechanism to avoid this situation. Safety is a necessity, not a luxury. Therefore, we aim to take care of an investor’s discipline and improve gains through a tailored performance-driven risk adjustment strategy, a.k.a. the smart buy and hold.
Every time we detect potential risks or opportunities, we inform you with personalized advice, actionable in realtime, on a per asset level. We’re your crypto seatbelt that makes your crypto investment journey safe, fun, and exciting at speeds.
The buy and hold strategy remains popular to this day. Diamond hands continue to call for “hodling” while antagonizing other approaches.
They try to use stats to back up their claim, showing that swings must be ignored for the prize in the long term. But despite being somewhat true, remaining disciplined and loyal to the Buy and Hold amongst the steep drawdowns is often overlooked in this equation.
Some can stick to their chosen strategy, while others are pushed to the edge by the extreme volatility, eventually panic selling. That certainly proves that discipline must be taken into account and the buy & hold is not the easy journey everyone thinks it is.
If some are fine with losses, others can’t bear them. That’s exactly why with Libertify, the smart buy and hold is 100% personalized to each of our unique risk profiles. And it is through personalized risk profiles that builds the pace of your returns and allows you to prosper in the long run.
Join 1000’s signing up to the smart buy and hold, the long-term methodology to survive and thrive in the crypto market.