Ines AissaniYes, I'm sorry, another article talking about LUNA...I myself am tired of reading and writing about it. This is why I decided to write a final article. I hope it will be the last.
I would like to share with you my current feelings about the rather funny situation that we have experienced recently. For those who come across this article by chance, and who don't know Luna or even Terra Blockchain, you say that this was one of the biggest crypto crashes known to date.
In fact, there have been other crashes and other cryptos that have completely disappeared from the market. The difference is that the Terra blockchain was one of the most promising projects in the crypto universe. THE algorithmic stablecoin UST was able to attract numerous institutional investors. The protocols developed on the blockchain were always more numerous. In short, we are not talking about a vulgar Ponzi or a shitcoin. We are talking about real blockchain technology with successful commercial partnerships.
In short, the collapse of LUNA was a real shock. Even the resolution was a real fiasco. We can't say it any other way. Even if today, we have a glimmer of hope with the creation of Terra 2.0, we still have a bitter taste in our mouth….
The important thing is to learn from each major market shake-up
In reality and to be honest, I didn't lose that much (money). I regularly took my profits during the Luna climb. Not as much as I would have liked, but enough. It was even quite easy for me because I was able to invest at the very beginning of the project. In fact, I really reinvested with smart money, with the profits even from the increase in the price of Luna. In addition, I had a fairly small proportion of it in my overall portfolio. Nevertheless, it was money lost. We can't deny that. What I mean is that what "hurt" was not so much the loss of money, but the loss of confidence in a project that I highly valued. A bit like when a friend you highly value plays a dirty trick on you. It saddens you.
Anyway, after this long intro, it's time to unpack my bag. Here are 5 lessons I learned (despite myself) with Luna's crash.
The only thing I know is that this failed experience makes me even “stronger” in my journey as an investor.
I hope this article helps you learn some useful lessons for you too.
1/ We are all influenced by what others say.
The crypto community is like a flock of sheep, a few bad sheep, and a few wolves.
(It is not trivial if the game Wolf Game so popular with crypto-enthusiasts). This herd is very attentive to what others say and think. The very word FOMO alone sums up this very particular state of mind. The image of monkeys imitators and the word " Ape " is the very symbol of the community. The art of spreading rumors into information. The art of thinking that you have to invest now or never.
Social networks and influencers allow rumors to spread very quickly. It happens quickly and few people really think about it. In general, we repeat what the other person said. Sheep that don't do their own thing fundamental analysis.
What I learned is that not all influencers are equal. I realized that thousands of views on YouTube videos, for example, mean something. People listen and follow the "recommendations" of influencers. Even if the guy behind the screen doesn't know what he's talking about. Especially if he doesn't know what he's talking about. A good thumbnail and a good title are sometimes enough to stir up and excite the herd. Most of the "reviews" of influencers are in fact rereadings of bogus articles translated into French. In short, it is not based on anything concrete. And, they will influence thousands of people to invest by making them believe that they will earn "more". Always more...
Personally, I am always wary of "influencers" in all fields. I am even more wary when they create businesses linked to their content...
For those who know me and see bad faith on my part, know that I put myself in the same bag. I don't have anyego on this point. In the field of content creation, we are sorely lacking in intelligence, knowledge, perspective, in short, everything. I am very aware of this.
It's a big lesson for me, casually. Understand that most of the enthusiasm for a project is actually based on the fact that a more or less well-known influencer has talked about it in a video or a tweet. A bit like the rise of Dogecoin with Elon Musk. It's insane when you think about it. I didn't think influencers had that much impact. I didn't think the crypto community was so easily influenced...
It's terrifying to see that valuations are based on wind and empty words. Beware of everyone, even yourself. We are all impressionable.
2. Never forget to take your profits
We tend to advocate HODL in cryptos. For novices, this consists of buying cryptos and keeping them for a long-term horizon. I myself have diamond hands and particularly with Bitcoin. This is no surprise to those who know me a little. Obviously, I hold because I am convinced that Bitcoin will gain ground and that its price will appreciate over time. Since my first bitcoin obtained in 2016, I have not resold (or almost none). On the contrary, I keep buying Bitcoin more or less following the dollar cost average method.
For Bitcoin, this holds (for me). However, for other cryptos it is different. They are subject to fashion effects. They are subject to sponsored partnerships and crowd effects and FOMO. L'social engagement can make a crypto boom and destroy it tomorrow. Most crypto projects are copy-paste projects with no interest. All the value gained is based on good marketing and a ton of sponsored tweets.
In fact, I learned that with other cryptos, I should not follow the HODL system too much. Typically, with LUNA, I projected myself a little too far into a long-term horizon.
I think that since the LUNA crash, I need to revisit my cash-out strategies. As soon as I can take even 25% profit, I have to do it right away. I tend to wait stupidly. I procrastinate by telling myself that tomorrow I will earn more. What greed assail me! Even though I gradually sold my LUNAs, I bought some again! Maybe I should have kept my cash and enjoyed my profits. No, I over-invested and I should have calmed down.
It's a great lesson: to concretely apply what I know theoretically. It's not always easy but it's important to do it.
3. Greed has made us blind and deaf
Once, I came across a video of someone who had invested over $100,000 in the Anchor protocol. He was happy and he certainly inspired hundreds of people to do the same. He didn't even question the mechanism of the protocol….No, just happy to earn 20% per year. Many people have dove headlong into this protocol.
As a reminder, Anchor was at the origin of the frenzy around LUNA. This is how the purchase of the stablecoin UST was also "requested". However, it was also necessary for the protocol to print the ANC token in an ever larger way... It does not hold up economically speaking. All the protocols of lending are not equal either.
Token rewards are "fallible" in essence, I want to say. In fact, I had made a video on Yield Farming to expose the many Ponzi cases. I think we tend to ignore what we know inside. For what? Because of the greed...
In general, in DeFi, the highest rates found on lending platforms are around 3-10% maximum.
Was it viable in the long term…? Frankly, between us, we knew it was going to explode sooner or later.
4. Little is better than nothing or re-learn to manage risks
This lesson follows directly from the previous one. We must learn to be satisfied with our gains.
Personally, I place a lot of my savings (in stablecoins like USDC) in several centralized platforms, like Youholder for example.
It allows me to fight inflation and generate passive income in a "healthier" way. Beyond 10%, I tend to be wary. Above all, I am already very happy to have 10%. You have to stay humble and realize that it is already huge.
(I am not talking here about inflation rates and other calculations'taxation because that is not the subject here).
By placing 10,000 euros on a platform like Youholder ou Nexus, you earn 1200 euros per year (I round off). With compound interest, the mathematical formula Cn = Co(1+i)^n gives you an exponential graph. Over a period of 5 or 10 years, that goes a long way!
In short, on DeFi, I am more spread out and I take more risk. For the love of the game, moreover. I also like the sport bets for example, but I have to be more reasonable. Clearly, I must calm my ardor. On DeFi, I mainly use aggregators like beefy For example. That said, on DeFi, the risks are greater (the gains too when you know how to do it). But, I must remain humble in my activities.
The lesson I learned with Luna is this: measure my exposure to risk. Know how to be satisfied. Stick to my winning positions of the "good mother" type. (Yes, I feminized the expression but the idea remains the same).
We are tempted with DeFi to take more risks than we usually would. I don't forget that.
5. Don’t put everything in one basket
Well, here I am knocking down open doors. In fact, it's still good to remember it. I know many people who have invested heavily in LUNA, at all levels.
They did this on both centralized and decentralized platforms. They bought LUNA everywhere. In fact, even if you strongly believe in a project, you must remain disciplined. Always, in any circumstance. THE bear market reminds us violently.
It is important to remember the extreme volatility of cryptocurrencies. Buying in a bear market is still ideal. We all know it. The frenzy of the year 2021 with the NFT (among others) was dangerous. Far too many new investors coming in. It was time to sell as it was not allowed. Now was not the time to buy (that much). Well, beginners don't know that. I have no excuse, I knew that. Hah!
The strategy of buying cryptos regularly and consistently is a simple strategy. The Dollars Cost Average method limits risks. This amounts, for example, to buying 100 euros of this or that crypto every month. I think I should have applied it for LUNA. Even if I would have lost with the crash, I would have lost less in the end.
For this lesson, one must always keep in mind that it is better to gain less by buying later than to lose more by buying too early.
Final word
There you go, I end my monologue here. We lost with LUNA theUST and I know that we will lose again with other cryptos. For sure. You can read the article on "Co-fessions" of those who lost money to get to the bottom of it.
If you had invested like me in the blockchain of do kwon, do not hesitate to find out more about the Luna airdrop.
By actually applying the lessons learned, I could minimize the breakage (normally). I have friends who lost a lot with the Anchor protocol…Today, they even have hatred against cryptos. This is precisely the pitfall into which we must not fall.
It's not the cryptos' fault.
It's always our fault.
It's up to us to take responsibility and make sure we're better next time.
Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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