I Lost $150,000 in Crypto. Here’s How.
With the recent collapse of the LUNA and UST ecosystem, the current crypto market feels eerily similar to early 2018 just after the Initial Coin Offering (ICO) craze and crash.
That was a unique time to enter the crypto market.
Investing in an ICO was not all that different than simply playing the lottery, and I happened to buy a winning ticket.
In October of 2017, I invested in an ICO project that just a few months later reached the illustrious 100x mark.
I rode a $1000 investment all the way up to just north of $150,000 and all the way back to effectively $0.
This experience taught me some invaluable (and expensive) lessons that I will share with you.
Let’s start at the beginning.
The ICO Gold Rush
Back in 2017, the crypto space saw one of its first phases of mass adoption thanks to the creation of Initial Coin Offerings.
ICOs were similar to Initial Public Offerings (IPO) in the traditional finance world, minus all of the regulation and red tape.
An ICO allowed crypto companies and projects to quickly raise funds by launching a token and selling that token to the general public.
And ICOs picked up steam VERY quickly.
In the first quarter of 2017, there were only a few million dollars raised by ICOs.
But by the end of 2017, ICOs had raised an estimated $4.9 Billion.
I purchased my first Bitcoin in August of 2017 and very shortly afterwards fell down the crypto rabbit hole.
This led me to the world of ICOs and I soon found myself researching whitepapers, roadmaps, and teams in search of the next hot crypto project that would change the world.
Enter Horizon State
I don’t remember exactly how I stumbled upon Horizon State, but I was instantly intrigued by their mission.
Horizon State aimed to become a secure, anonymous, convenient and affordable electronic voting platform, built using blockchain technology.
At the time, Horizon State had a real mission, a strong team, and a sleek website. There were even rumors of a partnership with the United Nations.
That was about all you could possibly ask for from a ICO, so I was hooked.
The token sale for HST took place from October 16th — October 30th 2017.
On the first day of the sale I paid 3 ETH and received 10,500 HST in return.
At the time ETH was at a price of $334, so my total investment was around $1000.
After the ICO ended, Horizon State airdropped additional coins to investors, so I ended up receiving an additional 10,500 HST based on my original investment.
In total, I received 21,000 HST with a $1000 investment, a price of roughly $.047 per HST.
Over the course of the next few months I acquired a few thousand more HST, but the bulk of my holdings came from the ICO.
The Rise and Fall of HST
The period from November 2017 to January 2018 was chaotic.
Around Christmas Day 2017, HST rocketed past $1.
Just over a week later on January 7th 2018, HST hit a high of $5.80.
Roughly a month later on February 8th, HST had dropped to $1.49.
The price of HST continued to fall for the rest of the year. By January of 2019 HST was back around the original ICO price.
In August of 2019 the Horizon State platform was shut down and HST went to virtually $0 where it continues to sit today.
At the peak, my 26,729 HST were worth $155,028.
Today they are worth nothing. Ouch.
I continued to hold my HST the entire way and never sold.
Even to this day I still have the 26,729 HST in my hardware wallet.
Lessons Learned.
While I learned a number of things from this experience, there are six key takeaways.
I paid a steep price to learn these lessons.
Hopefully these lessons are not nearly as expensive for you.
1) Take profits, dummy.
This one is obvious.
Anytime you enter into an investment, you need to have an exit plan.
If you go in thinking whatever token you are holding will go to the moon, greed will get the best of you.
Diamond hands and hodling are overrated. Put a plan in place and stick to it.
Even something as simple as removing your initial investment after a 2x gain will better protect your portfolio for the long run.
And if you ever hit 100x, sell your damn tokens.
2) Stack blue chips.
I talk about this lesson in more detail here, but your end game should be to stack blue chip crypto assets.
Specifically BTC, ETH, and stablecoins. On January 7th 2018, the all-time high date for HST, the price of blue chips were:
- Bitcoin: $17,527.30
- Ethereum: $1,043
Now it is much easier said than done to sell an asset at peak price.
But had I sold my HST anywhere near its highest levels, I would have alot more than $0 to show for it.
Bitcoin, Ethereum, and overcollateralized stablecoins have withstood the test of time. Most other crypto assets have not.
Take your profits and hold BTC/ETH long term.
3) Risk management trumps conviction..
At the peak price of HST, 90+% of my portfolio value was in one coin.
Having that much of your net worth in such a speculative asset is terrible risk management.
However, I let my conviction in Horizon State override risk management. I was certain HST would continue to skyrocket in price.
Instead, the opposite happened. The price went to zero.
Similar to the first lesson, you should have parameters in place to account for risk and ensure your portfolio value is not at the mercy of a single asset.
4) Being too early is the same as being wrong.
I was certain that voting would be the next real application of blockchain technology. In fact, I still believe it eventually will be.
But five years ago in 2017, we were simply too early to see any kind of real blockchain technology adoption on a global scale.
And as a result, my conviction was wrong.
Try to be as realistic as possible when it comes to investment decisions.
Understand that crypto does move fast, but adoption takes a long time and patience is key.
5) Take moonshots.
With all of the previous four lessons in mind, taking moonshots are perfectly acceptable. They have the potential to pay off 100-fold.
Just keep in mind that you should not solely rely on these investments to be successful because there is too much uncertainty and luck involved.
There is a more realistic approach to building a six figure crypto portfolio.
6) Stay in the game.
If you have missed out on investments like this or lost a large amount of money in crpyto, don’t beat yourself up.
Have I had a few sleepless nights due to my HST experience? Sure.
But life goes on. In fact, I hadn’t even thought about this for quite some time until I decided to write this newsletter issue.
However, my biggest mistake after the ICO crash was to leave the space entirely.
HST left a bad taste in my mouth, and I decided to just step away from crypto and try to forget about it for a while.
This led me to miss out on some of the largest plays in crypto.
I missed out on DeFi summer.
I missed the explosive growth of alternate Layer 1 blockchains.
I missed the intital adoption of NFTs.
This space has a way of rewarding those that stick around long enough.
Bear markets are when the real building happens.
I have no idea what the next big wave in crypto will be, but I will be here and ready to take advantage of it this time around.
I will not make the same mistake I did back in 2018.
And I hope you will stick around as well. I have a good feeling it will pay off.
Final Thoughts
Don’t make the same mistakes I did. Apply these lessons learned and accelerate your knowledge and growth in the crypto space.
If you have ever been in the same boat as me and lost money, learn from your mistakes and move on.
Thanks for reading and I will see you next week!
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