These days it can seem like everyone has an opinion on major cryptocurrencies like Bitcoin, (CRYPTO: BTC)Saltworks, (CRYPTO: SOL) and Ethereum (CRYPTO: ETH). But as with most commentary about the markets and investing in general, there is a lot of noise worth ignoring, and precious few nuggets of insight that can be gleaned.
Especially if you are not a direct participant in the cryptocurrency sector, it can be quite difficult to properly orient yourself and keep your focus on the factors that really matter. So let’s look at three types of chatter that are worth ignoring instead of engaging with as part of your investment process.
It makes sense for people to pay attention when a major global player, like a government, decides to exit its cryptocurrency holdings. Such players often own huge sums of assets and it is obvious that selling off these assets will suddenly have a detrimental effect on the market value of the associated coins.
Take, for example, Germany’s decision to sell $3 billion worth of Bitcoin through asset seizures in June 2024. Besides making the cryptocurrency the talk of the town for at least a few weeks, it could also lead to serious trouble. a drop in the prices of the royal cryptocurrency, at least for a while. The estimated $6.4 billion sale of Bitcoin by the US government that could happen this year could easily have a similar or even greater damaging effect.
Sales per whales in other cryptocurrencies like Ethereum, they are rarely on the same scale as government ones, but they still make headlines. Individual large holders who sold just $33 million in mid-January this year are attracting attention, even if the price impact is not as significant as Bitcoin.
However, these discussions are not worth following. In the long run, it doesn’t matter which players were sold or when. So, as an investor, focus your attention on the longer view, not on what a few big investors are allegedly doing.
The distributed nature of blockchain networks as realized in Bitcoin, Ethereum, and Solana is that if network validators disagree on some fundamental attributes of their protocols, they can fork the chain and start a new project.
Such forks have happened many times in the past in both Ethereum and Bitcoin. You may have heard of these forked versions at the time, and you may even have a few forked coins.
But if you’re a typical investor who holds these cryptocurrencies indirectly, through your financial institution or through an exchange-traded fund (ETF), there’s simply no need to entertain the casual discussion of the possibility of new forks. It’s not something you can control, and there’s a lot more talk about potential forks than actual forks — not to mention the extreme rarity of forks that beat the original.
Similar to stocks, it’s always very tempting to indulge your desire to learn more about the recent price changes of your favorite cryptocurrency investments. Experience gathering information about what is happening with prices right now it’s addictive because of the financial implications of the data you find. After all, prices change every day, and you want to be an informed investor to avoid losses.
The correct way to do this is to watch the price chart for a minute or two; I suggest that the chart shows a period of at least one year to help focus on long-term investment performance.
If you take more than a few minutes to study the charts, you run the risk of overtrading because almost all short-term price data and discussions are noise. The more you zoom in on your time horizon, the more likely you are to fixate on the importance of random fluctuations that have little to do with the investment thesis for holding a particular coin.
So don’t do it. Commit to holding onto your cryptocurrency investments for at least a few years and checking the price of your coins once a week to begin with. Remember, looking at a price or reading articles about a price action doesn’t actually change it.
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Alex Carchidi has positions in Bitcoin, Ethereum and Solana. The Motley Fool has positions and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
