These days, it can seem like everyone has an opinion about major cryptocurrencies like Bitcoin, (BTC 0.75%) Solana, (SOL 12.23%) and Ethereum (ETH -3.75%). But, as with a lot of the commentary on markets and investments in general, there’s a lot of noise that’s worth ignoring, and precious few nuggets of actionable insight.
Especially if you’re not a direct participant in the cryptocurrency sector, it can be quite difficult to orient yourself correctly and keep your focus on the factors that actually matter. So let’s take a look at three types of chatter that are worth ignoring rather than engaging with as part of your investing process.
1. Major sales by governments, companies, or individuals
It’s reasonable for people to pay attention when a major global player, like a government, decides to exit its holdings of a cryptocurrency. Such players often command vast sums of assets, and it’s obvious that selling off those assets all at once will have a detrimental impact on the market value of the associated coins.
Take, for example, Germany’s decision to sell $3 billion worth of Bitcoin it came into possession of via asset seizures in June 2024. Aside from being the talk of the cryptocurrency town square for at least a few weeks, it also may have put a serious dent in the king cryptocurrency’s pricing, at least for a while. A prospective sale by the U.S. government of roughly $6.4 billion in Bitcoin that could occur this year could easily have a similar or even greater detrimental impact.
Sales by whales in other cryptocurrencies like Ethereum are rarely on the same scale as those by governments, but they still make headlines. Individual large holders selling a mere $33 million in mid-January of this year are gathering attention, even if the price impact isn’t as significant as with Bitcoin.
Still, these discussions are not worth following up on. In the long run it doesn’t really matter which players were selling or when. Thus, as an investor, keep your attention on the longer view rather than on what a few big investors are said to be doing.
2. Discussion of forking chains and other technical matters
The distributed nature of blockchain networks as they’re realized in Bitcoin, Ethereum, and Solana is that if the validators of the network disagree about some fundamental attributes of their protocols, they can fork the chain and start a new project.
Such forks have happened numerous times in the past to both Ethereum and Bitcoin. You may have heard of these forked versions at the time, and it’s possible that you even hold a few of the forked coins.
But if you’re a typical investor who’s holding these cryptocurrencies indirectly, through your financial institution or via an exchange traded fund (ETF), there’s simply not much need to entertain much of the casual discussion around the possibility of new forks occurring. It isn’t something in your control, and there’s a lot more talk about potential forks than there are actual forks — not to mention the extreme rarity of forks that go on to outperform the original.
3. Anything pertaining to short-term price action
Much like with stocks, it’s always very tempting to indulge the desire to want to learn more about the recent changing in price of your favorite cryptocurrency investments. The experience of gathering information about what’s happening with prices right now tends to be addictive because of the financial implications of the data you find. After all, the prices change every day, and you want to be an informed investor so as to avoid losses.
The correct way to do that is by looking at a price chart for a minute or two; I suggest that the chart should depict a period of at least one year at a minimum so as to help with focusing on the long-term performance of the investment.
If you are taking more than a few minutes to pore over charts, you are at risk of overtrading, as nearly all short-term price data, and discussion of it, is noise. The more you zoom in 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 specific coin.
So don’t do it. Commit to holding your cryptocurrency investments for at least a couple of years, and check the price of your coins once per week to start. Remember, looking at the price or reading articles about price action doesn’t actually change it.
Alex Carchidi has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
