The New Race to the “Moon”: What Every Crypto Investor Needs to Remember.
If you’ve been checking the markets, you’ll know Bitcoin’s price is staying afloat just over $6000. We are balancing on a tight wire, miles above the $0.008 it was once worth. And while everyone has their own forecast for what the future of its price holds, do remember to look back at the road we’ve traveled. The price per coin might drop back down to $0, or skyrocket to be worth a fortune in the near future. As Charlie Lee, founder of Litecoin (LTC, the 7th highest valued crypto, according to CoinMarketCap.com) put it:
“There will be at most 21 million bitcoins in existence. There isn’t even enough BTC to go around for EVERY millionaire to own one. So before you buy any other coin (LTC included), try to own at least 1 BTC first.”
The optimism is real. Brought in from December 2017, we started off the new year with predictions from all over the spectrum. Some predicted BTC could go as high as $100,000 per coin by the end of 2018. Unfortunately, at the rate things are currently moving, it seems highly unlikely. Speculators stand firmly on both sides of the spectrum; if the bulls take it the price could land somewhere between $7,000-$15,000 by the end of this year.
Ultimately, as with any new market, thousands have flocked to the social media crypto-space to find “the secret” for becoming the next crypto millionaire. With all the new attention, plenty of opportunists jumped on the crypto-positive bandwagon. Some for good, some to make a quick buck. Hundreds of new accounts on Instagram and Twitter fill users’ feeds with pictures of Lambos (Lamborghinis), mansions, yachts, and heaps of cash. The “hype” is also quite real in the crypto space as everyone sees it as their one-way ticket to quick riches.
The new excitement bringing new users to the crypto space is fantastic! New users mean greater competition and a higher demand for further research and development of blockchain technology.
The Race to the #Moon is on.
The only downside to the current market hype and risk in this emerging new market is the proliferation of scammers and scam projects. That, and the naivete of the hungry eyes of new investors. Don’t be one of these cases, keep your money safe. Don’t walk into a scam that promises quick riches. And if you’re actively trading, don’t let FOMO (impulse buying due to ‘Fear Of Missing Out’) or FUD (panic selling due to ‘Fear Uncertainty and Doubt’) influence your decisions. Research and keep a cool head, above all else. This will help you succeed.
To make sure your crypto-experience is as smooth and pleasant as possible, here are three quick things every crypto-investor should keep in mind:
No Regulation; Higher Risks
There’s a reason the SEC has been so adamant about rejecting the petitions from the Winklevoss Twins to create a Bitcoin ETF. An Exchange Traded Fund (ETF) would make it easier for institutional investment to come in, thus pushing the price up. However, there are currently no real regulations in place yet, making the crypto space very volatile. We’ve seen Ethereum’s price drop from $300 to $3 in a day, and then from $1400 to $190 this year. Assets shouldn’t be this volatile. This is a completely speculative market and the price illustrates supply and demand in its purest form.
Bitcoin and Ethereum are currencies. Therefore, their value is inherently from being used as a means of value exchange. So, if people are hoarding it, rather than using it… its value drops. You wouldn’t hold onto US Dollars for 20 years hoping they’ll go up in value, so why would you treat an online currency any different?
A “Hodl” approach may do more harm than good
“Hodl,” a typo of the word “Hold,” was adopted by the crypto community as a cry to avoid panic selling and “Hold On for Dear Life.” This may seem like a good long-term approach to investing, as the people that did this around 2010 are now crypto millionaires. However, as mentioned above, there are no regulations on cryptos. Holding could very realistically be a disaster.
The tokens released in popular ICOs (Initial Coin Offerings) were not regulated, and thus have no actual reason for raising in value. Their dev teams worked hard to give these tokens usable value, but at the end of the day, they’re really just chips used for fundraising.
The hype of being one of the first to own these tokens was appealing because they could go up 1000x their value. More likely, however, their value could spiral down to $0 in a few years. As tokens are not regulated, there is no legal obligation for the company. Whether the token’s value rises or drops, they still got their capital.
With a stock, it’s quite different. Each stock is legally bound to a percentage of the entire company, thus influenced by the company’s worth. With cryptos, tokens don’t follow that same obligation. “Hodling” may be good in theory, but it’s much better to take a hands-on approach. Setting up “stop-losses” to make sure if the coin is plummeting, you’ve already sold before it’s too late.
The priority is the technology, not the gains
If you’re going to err, err on the side of innovation, not greed. Most importantly, remember that this is a market fueled by greed. The majority of new investors heard about a few people who succeeded and decided to jump into the deep end of the crypto-pool. No due diligence, no research, just “shut up and take my money.”
It’s due to this new influx of greedy hands that you must make the difference. The reason any of these cryptos have worked at all is due to those first few people who saw beyond the possibility to make money and focused on the unimaginable value in its underlying technology. Blockchain tech WILL find its way into all of our major technologies and with the help of the IoT and AI, it’ll change the way we interact with the world forever.
This is both scary and awe-inspiring. We are all going to witness and be a part of this transition. As cars transitioned from stick-shift to “stick-less” automatic, so too will humans switch to a more “automatic” existence.
The future is now, stay safe out there!