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Don't Panic: Why Dipping Out of Ethereum is a Mistake

Written By Alexandra Perry

Posted May 8, 2017

Whatever You Do, Don’t Sell

Sorry. I had to be harsh there for a moment.

Sometimes investors need tough love, especially when it comes to beating a primal part of our human nature: panic.

When investors panic, they hurt their long-term profits, especially in volatile markets heavily influenced by emotion.

To explain this concept, I want to tell you the story of how I jumped off a horse to survive a plastic bag.

When I was a teenager, my parents used to send me and my siblings to a horse riding camp once a year. It was a glorious event. We each selected a horse and embarked alongside 20 other children on a slow, bumpy trek into the Sierra Nevadas.

This event happened year after year without incident until 2007, which was the year my sister’s horse saw a plastic bag. Unfortunately for the whole caravan, my sister’s horse was in front. When it balked, everyone panicked.

And I, by proxy, also panicked.

So, I jumped, landing on a rock and cracking a bone in my foot. I spent months in a cast, having lost a battle of wits to a piece of garbage.

The moral of this story is that we are all victims of our own emotions — in relationships, in jobs, and in horse caravans.

But especially in our investments.

Which is why you are not going to sell Ethereum right now.

Investors who put money into Ethereum should be interested in long-term profits. That means you have to stay steady when the road gets rocky.

Digital currency has proven to be as volatile as gold — if not more so. We saw Bitcoin drop from a hefty $1,300 to a pathetic $213. Now it is back at $1,650 and investors who sold feel like fools.

Last night, Ethereum had its volatile moment. The digital currency plummeted in value on currency exchange Kraken — a dip that caused thousands of investors to panic sell. 

But that is a bad move. 

Instead of jumping off the horse, let’s take a second to talk about what is going on.

The Kraken Attack 

On May 7th, Kraken was bludgeoned by a distributed denial-of-service (DDoS) attack.

For those of you unfamiliar with the term, A DDoS attack is when multiple computers make the same request toward one server, eventually overwhelming it. Once this happens, the server stops responding to user requests. Only the attacker gets through to create more mayhem.

And, unfortunately for Kraken, this attack occurred simultaneously with a large Ethereum liquidation — a coupling that sent investors into a tailspin.

I understand that the term “hack” is terrifying.

But hacking is an unavoidable part of our internet world. At least, it is with our current internet structure. Ethereum is our first step toward securing the internet.

But in this instance, the hack did not cause the liquidation. After an intensive investigation, Kraken said that the two events were not correlated. The liquidation was scheduled and was already underway when the hack happened.

Kraken went on to say that DDoS attacks on its service are unavoidable.

Sadly for the investors on Kraken, Ethereum’s plummeting in the platform did hurt. Because of the way the service is structured, the two events happening at the same time fueled investor panic.

And Kraken does not offer reimbursements to investors in the case of a technical malfunction. In Kraken’s mind, the dip was caused by a normal market fluctuation. The panic of the hacking was not its fault.

That is why we chose Coinbase as our digital currency exchange as it insures investments up to $250,000.

This event was nothing more than a “plastic bag” popping into investor’s field of vision and initiating panic. Many people sold before they analyzed the threat.

Avoid Ethereum Remorse

In the past hour, I have heard multiple stories of seller’s regret — people who cashed out at $87 watched Ethereum return to $92 in under 30 minutes.

The moral of today’s story is to not panic. These investments are volatile by nature.

And we are going to experience dozens of “plastic bag” situations before Ethereum has made its long-term profits.

The secret is to hold steady, assess each threat with diligence, and invest with your mind — not your emotions.

P.S. For the past month, we have been covering digital currency extensively. We want to help you through any hiccups that happen on the road to profit. You can sign up below to receive our free e-letter with timely updates on digital currency fluctuations or moves.