Many of us discovered Bitcoin (BTC), Ethereum (ETH) and other digital assets in the last one year or so. Before that, we probably had no clue that such technology had existed since 2009 when Satoshi Nakamoto launched the Bitcoin Ledger. We were comfortable with life as it was till we started hearing from mainstream media and social media, about how there was this new way of investing with the potential for massive gains.
For many of us, the doubts were there. But once we read up on the technology, our curiosity was amplified and we bought our first digital asset in the form of BTC, ETH, LTC, XRP or any of the prominent coins. We then did our research and discovered there was a pool of exciting blockchain and crypto projects. Our eyes were opened wide and the excitement was there.
This excitement on a global scale is what probably caused the bull run that we saw from last October up until early February this year; when the market started to contract due to regulatory fears from South Korea and Japan. Then the American IRS came in with their hands open asking for their share in trade profits in the form of taxes.
Marathon, Not A Sprint
From the point of view of a traditional investor like Warren Buffett and George Soros, the events of the last one year clearly look like the Tulip craze of the 1600s. Notable investors like Buffett and Soros have understood the fundamentals of investing and the increment of value of the crypto markets was not organic (natural). For lack of a better analogy, it was a sprint to get rich that was amplified by a fear of missing out. The first ones to cash out got rich. The ones who got in late got rekt.
But let us borrow a leaf from the greats of Buffett and Soros by understanding that any sort of investing is a marathon and not a sprint. Investing involves buying and HODLing for more than just 6 months. And before buying any asset, lots of research needs to be done that includes who is running the project; the roadmap; the final product or real life problem it solves; and how long it will all take to achieve it.
Take for example the Tron project. Justin’s game plan is to decentralize the web in 10 – 20 years. Therefore, HODLing and cashing out at a loss after 3 months is not seeing past the proverbial nose.
In conclusion, there are several investment strategies out there when it comes to digital assets. In this particular episode, we focused on long term crypto investing that can be compared to a marathon and not a sprint. To those more tolerant to risks, day trading, shorting on BitMEX and scalping might just be viable options in the current bear market.
[Photo, 2017 BMO Vancouver Half Marathon. Source, teamsetlack.com]