Crypto Mind

Let’s be honest, most people get sucked into the world of cryptocurrencies and DeFi by one thing, the promise of riches. Sure, the technological revolution is interesting, and we all like the idea of “sticking it to the man”, but we’re mostly after one thing: money.

If you’re a film fan, you’re probably familiar with the iconic Eddie Felson line, “money won is twice as sweet as money earned”. It’s a line that resonates deeply with me when thinking about cryptocurrency markets, and the allure of winning big on the crypto slots. Don’t get me wrong, I’m not equating investing in cryptocurrency to gambling..Well, not completely. What I am hoping to do is examine the psychological traps many crypto investors fall into, and try to offer a system that will protect you from yourself.

Envy & the Fear Of Missing Out

When starting out as a cryptocurrency investor, it’s very easy to compare ourselves to others, especially the friend / colleague / relative who’s been lucky enough to get in early to a successful project, and can boast 10-100X returns with no apparent effort. Hearing these success stories can lead unrealistic short-term expectations and poor investment decisions. It’s no coincidence that the Latin word for envy, Invidia, translates as “nonsight” as we are often blinded by the emotion. It’s also telling that Aeschylus, the author whom I quoted above, is often described as the father of Greek tragedy. Trust me, for every person who has 10X’d their investment, there are hundreds of others who have ridden a shitcoin down to zero.

The fear of missing out (commonly referred to as FOMO) is related to envy, but expresses a more widespread phenomenon that’s exacerbated by social media. It can be defined as:

…‘‘the uneasy and sometimes all-consuming feeling that you’re missing out — that your peers are doing, in the know about, or in possession of more or something better than you’’.

Overcoming crypto FOMO can be hard. You’ve just watched a very convincing YouTube influencer explain why “Project X” is “going to the moon”, and you feel assured the project has the fundamentals and team to deliver. There is no time — this is the once in a lifetime opportunity you have been waiting for, that will elevate you to the status you deserve. “Fortune favours the brave”, “Who dares wins”, “Opportunities don’t happen, you create them”.

First of all, let’s ease-off on the inspirational quotes and take a few deep breaths “in through the nose, out through the mouth”. Do you feel relaxed? Great. That’s the problem with FOMO, your nervous system is in a heightened state of arousal, and the dopamine that’s been released is driving you to act immediately. We need to learn how to take control of these emotional and biological triggers, before we ape into something we’ll regret within 24 hours.

Treat FOMO like you’re a bad MOFO

What do you think Samual L. Jackson would do if some punk of a YouTuber told him he better rush out and buy some Doggy coin? Do you think he would struggle to contain himself whilst scrambling for his laptop? Or do you think he’d sip his milkshake with disdain ..and be cool. It’s this mindset that we need to cultivate.

Generally speaking, rational decisions will return better results than emotional ones, especially when you’re new to crypto investing. As you gain experience, a gut feeling / intuition can be useful, but it’s usually based on accumulated knowledge as well as the external stimuli. We need to practise controlling our emotions (limbic system) and utilise our rational mind (prefrontal cortex). Here are some methods I use to achieve this:

• Meditation. The benefits of meditation are so well documented I almost feel like it’s a cliché to mention them. But it’s worth noting there are different types of meditation, which can affect different parts of the brain. Mindfulness meditation can improve your concentration and ability to process information in the prefrontal cortex. I personally use Pranayma (breath work) and Transcendental Meditation to focus my mind.
• Wim Hoff Method. Wim’s use of breath holding and ice baths may not be everyone’s cup of tea, as they require incredible amounts of motivation and self-control. Both of these attributes are useful when investing in and trading cryptocurrencies.
• Gratitude. I find practising gratitude essential to maintaining a healthy mind. An overload of stimuli often blinds us to what we already have, especially relationships and health. A short daily gratitude practice will not only improve your general sense of well-being, it will also allow you to appreciate any gains you realise in the crypto space.
• Journaling. Much like meditation, articles propounding the benefits of journaling are ubiquitous to the point of nausea. But there’s a lot to be said about organising our thoughts on paper. Julia Cameron, Jordan Peterson, and Tim Ferris all have something to add regarding this practise. You don’t have to be Michel de Montaigne — a simple exercise might be noting points down from a Whitepaper or YouTube video, or writing your own investment strategy.
• Exercise. Healthy body, healthy mind (as the old saying goes). Exercise doesn’t only reduce stress and release endorphins, it’s also good for the brain. Whether you like Crossfit, Zumba, or Tai Chi, exercise will help you lift your crypto game.

The FOMO Ejector Seat

Below are a few principles I try to remember when experiencing FOMO. They are not set in stone, but may help to cultivate level headedness when you’re in a heightened state of excitement.

Time. Generally speaking, there is always enough time to do some research before pressing the buy button. At least there should be. If there isn’t you’re not investing, you’re gambling. Also bear in mind that markets are cyclical, and there will be other opportunities to accumulate.

Influencers. The YouTuber shilling you a coin is either getting paid by the project, or has bought a bag and wants the price to appreciate. Even if this is untrue, this should be the filter you apply when evaluating their sales-pitch. Be selective on your choice of information sources — avoid the “moon boyz”.

Scams. The crypto and DeFi space is rife with scams, especially at token and NFT launches. If it sounds too good to be true (or too easy), it’s most likely a scam. Never transfer tokens to an address without verifying it’s the official one. Stay calm & breathe — missing out is better than being a mug!

Investing in cryptocurrencies can become an all-consuming affair, an addiction, and a lifestyle. Cryptocurrency projects promote communities that veer towards tribalism, offering a means of escape, the promise of wealth, and the vague notion of “financial freedom”. But unless we clearly define our financial goals, it’s easy to over-extend and keep grabbing for more.

“Money’s greatest intrinsic value…is its ability to give you control over your time.” Morgan Housel, The Psychology of Money

Around 2007 I was given Jacob Needleman’s book, Money and The Meaning of Life. Before reading it I had a typically British relationship with money- it was something that was nice to have, but not something to aspire to. Talking about money was considered slightly uncouth, and asking someone how much they earned was unthinkable. I won’t go into detail about what I learned from this unusual book that explores the spiritual aspects of money, but will say it’s one worth exploring. How you view money, and how you use money, is probably more important than how much money you have. It’s a reflection of your inner world, and reveals what you truly value.

A more recent book that has influenced my thinking is Cal Newport’s Digital Minimalism. I recommend this book to anyone who spends significant amounts of time online, especially if they are a crypto trader. Cal doesn’t suggest we turn our back on technology, merely cultivate a highly selective approach to how we use it. Developing a personal philosophy to technology will lead to a more balanced approach to cryptocurrency investment.

How to Play Like a Pro

Most successful investors work with systems. Systems are an excellent way of minimising emotional and irrational behaviour. If you’ve ever read Principles by Ray Dalio, you’ll appreciate that even the most successful investors make mistakes, but it’s their ability to evolve that separates them from the rest. Try to create a way of analysing and assessing cryptocurrency investments (a system) that you can monitor and adapt as you gain more knowledge and experience.

Seek out knowledge and educate yourself. I’m not going to suggest specific educational programs our paywalled groups, but they can be useful. Groups with more experienced investors can be a valuable resource for newbies, especially for playing “Devil’s advocate” to projects that are about to launch.

Create a balanced portfolio to minimise risk, and have an exit strategy in place. What constitutes a “balanced portfolio” is subjective, but generally speaking it will be weighted towards more established projects, with a smaller allocation going towards high-risk low-caps. Exit strategies (even temporary ones) are essential for protecting profits if the market dumps. The ability to switch to a Stablecoin or FIAT quickly, could be the difference between staying in the game and getting Rekt.

Finally, have patience and understand the concept of market cycles. Try to control the polarising emotions of elation and fear, and accept that markets, especially the crypto markets, are volatile and uncertain. It’s a well known fact that Warren Buffet accumulated most of his wealth after the age of 50. He’s considered one of the most successful investors of all time, but what’s often over-looked is the amount of time he’s spent in the game — this is arguably the defining factor of his success. So don’t enter the Cryptosphere believing blind luck will make you a millionaire within a month, it won’t. Instead, cultivate a positive yet realistic mindset that cannot be fucked with. Become the Samuel L Jackson of digital asset investing..or just be cool, like Fonzie.

Thanks for reading this article, it’s much appreciated! If you felt like you got something out of it, please feel free to give it some claps, and a share on social media. If you hated it, please feel free to abuse me in the comments!

Source: https://medium.com/gasworks-news/crypto-mind-fc7104a8ae2b?source=rss——-8—————–cryptocurrency