Why I am investing in crypto again
I often get asked by my friends how much cash I made on crypto as i've been a shill for it for almost the better part of a decade now.
I would say I am a standard reason for how you can buy crypto way back in the day and not be a millionaire today. Life is always getting in your way needing cash, and when you see markets rally like 600%, you almost always sell with the herd. Now that the next cycle is near with this crypto crash, I think its time to give it another shot.
Be fearful when others are greedy, and greedy when others are fearful.
My Thoughts on Crypto Now
As I write this FTX just declared bankruptcy, BTC crashed to around 15k, and people are calling for the end of crypto, again... It's truly mesmerizing watching the bitcoin cycle over all these years, and how it always plays out the same way.
The Cycle
- 3 Year Rally - "bitcoin is the future" +∞%
Its crazy during a bull run, no matter how high bitcoins goes, people are always saying the hyper cycle is around the corner.
- 1 Year Crash - "I think this is finally the end" -85%
People are blown away they got burned so fast and declare that crypto is officially dead this time, even though crypto just rallied just as fast to get them there.
Whats that mean for now?
85% loss from the highs is around 11-13k, we are like halfway through the down cycle, maybe 6 months to go as I write this until people start "discovering" crypto again.
Do I think there is a risk of it "officially" dying this time? No
Do I think there is a risk of it crashing another 50%? Yes
Am I calling the bottom? No
I do not think crypto will ever die. Yes there are bear markets, yes it might trade sideways for a time that convinces you its broken, but trust me, it will survive.
Markets can stay irrational longer than you can stay solvent.
You know how to beat this?
- Dollar cost average in when you think the cost is right (or just always).
- Don't put in money you cant afford to lose
- Again don't put your entire life savings into it
- Start accumulating. When new highs are hit, start selling a bit, poco y poco. I normally try to at least pull my investment out, but as you can see, standard returns dont reward weak hands. Maybe ill have the courage to hodl this time.
The Future of Crypto
Trying to predict the future (crypto) is like trying to drive down a country road at night with no lights while looking out the back window.
Its kind of foolish commenting on this but I am passionate about the space and I think it is worth at least commenting on this experience.
The Blockchain & AI
I feel that most people that are in crypto these days, are only in it for the potential gains from their portfolios. People need to realize, the blockchain is a revolutionary technology with the potential to change many major industries.
We are in alpha version of crypto, before there is any market adoption. Crypto has not found product market fit yet. The current iterations are probably going to be overtaken by other blockhain technologies we wont even see coming. Stop thinking of crypto like an asset, but more of a technology. Find your edge, or at least pay attention to the ecosystem. Yeah you can make a lot of money from appreciation right now, but in the long run these arbitrages will run out.
I would make the point that taking the effort to at least dabble in both AI and blockhain, will lead you down the rabit holes that will change your life, or at least expand your toolset for future problems that will make you very valuable.
Regulation
This last crash was pretty bad, many institutional investors got burned, entire markets that appeared stable, were overnight were evaporated. There is also a suspicious amount of bad actors influencing the events right now.
Crisis precipitates change
If there wasn't regulation on the horizon, I would be surprised.
The Pro Regulation Argument
When countries adopt a framework for regulating a new financial industry, it generally expands the market as investors become more comfortable as there are institutions protecting their wealth. The last thing a billionaire wants to do is loose their wealth due to something out of their control. Governments and regulators are the enforcers for the elite. I dont think ever before, there have been so many governments that have similar views points in collaborating to try to figure out what to do with crypto.
I think the biggest question for regulation now is:
- Will the community come together with values and ethics we want enforced?
- Or will the government rashly force a dated framework on crypto?
We need to be very careful with this as to what organization or individuals can control the flows or limit the markets. With governments so power hungry right now and our community in shambles, im a bit worried we are in for some very limiting legislation.
My Deregulation Argument
The alternative view, is the truist view of crypto, is that it should remain unregulated and out of the hand of governments. Any time a government interferes with the free market, it generally makes it more inefficient and stifles innovation.
For a technology like crypto, its hard to see any way the government can control such a thing in any logical sense. Crypto is very difficult to control and will be rapidly evolving. Even if governments come in and try to control the speculative investments side of things, treat them like securities etc, there are going to be entire ecosystems not dependent on this.
Crypto by definition is a decentralized technology. Even is super powers like the US and other major countries come together, there will always be holdouts and safe havens that do not agree with these rules. If one chain gets regulated, more will pop up. Stopping fiat going into the chains will only force adoption outside of the fiat systems, making crypto more free than ever. We are entering an ever increasing globalized and online economy, I dont see crypto getting shackled.
I personally support the deregulation argument, but crypto is mainstream now, I am not sure the people will have a say in this. Perhaps the collective knowledge of the world can figure out a compromise and find a governance framework that works. We are talking about a hopefully bright future here for humanity, most people are good in the long run. The global elite is dying off day by day and being taken over by the new generations.
Inflation and Macro Economics
One major risk right now is the systematic failure of many economies. Daily we are seeing news of complete economic collpase in smaller countries. If there is anything I have learned about macro economics from school, is that all the charts are broken and we are in for a rough few years, maybe even longer.
I am no economic genius however, i'm not going to try to time the market, so I am starting up accumulating again.
- If we experience wide scale market failures, I am sure my crypto holdings will be the least of my worries.
- If the markets recover, we could be in for a massive bull run and I would rather potentially become rich, then potentially go broke. Money comes and goes, you gotta take risk. No one knows what is going to happen.
Will BTC continue to be the chosen one?
One argument I have always held is that BTC is king, however I am starting to change my mind.
I think that this market crash was so fundamentally bad compared to previous ones, I think other alt coins might challenge bitcoin. Not because there are other coins I feel individually will dominate, but rather there are a lot of technologies and coins that will provide more utility than BTC and I think a change in the ecosystem is needed.
/rant about crypto
Below is my journey into crypto for my friends interested in answering the originaly question for how much I made, spoiler alert, around 40k. Not too interesting, but some might relate to my skillz.
My First Purchases
Just a quick humble brag, I bought 2 BTC for $153 USD, then 5 BTC for around $68 a piece. And I held them ever since!
Lol I wish, I think I sold when it hit it first bull run at around $300. Looking bad at these trades though however marked the beginning of the journey into crypto.
The next decade of Meh
I bought and sold BTC many times making decent money, but never really held a large amount, I think at the peak I had around 25k USD. All together I made maybe 40k but that was spread out over a lot of minor withdrawals.
Its not too much in the grand scheme of crypto, if you bought any of the crashes the last 8 years, you would make bank. I even day traded for a few months and turned like 5k into 40k before losing it all.
Buying a Miner
One fun crypto idea I had was to buy an ETH miner with some of those earnings, I think ETH was around $250 USD when I bought the miner. I got a beefy GPU rig, I think it was like 2k from Panda Miner.
This thing was a cash machine! This thing was pretty slow to start, but it got up to like $20 a day at once point. Also just the fact that it ran for like 4-5 years with absolutely no effort was remarkable. I think all in I made around 15k all in.
Liquidating my stash
After crypto crashed from 25k down to 6k, I held some the entire way down, and even bought some at the new lows. Balls of steel, also I wasn't broke for once as I had a stable job.
However, when it started hitting new highs again, I was in disbelief at the meteoric rise this time and called the top at 35k. I thought the market was entering irrational territory, and I also started needing the cash again. Im out.
Nearing the last top
Watching the rise to 60k was brutal, but what are you going to do. I remember when it hit 60k I was so certain the market was about to fall, I actually opened a short on Bitmex with some pocket change I had in there. Boy I should have levered up that trade!
Short Opened - $57,645.36
Exited - Jul 9, - $33,796.02
I believe I transferred all this money (like $400-500) to CoinPoker and I gambled it all away strategically :)
So you doing it again?
Hell yeah! This time around I am doing it a bit more seriously. Ill do my best to avoid the next ponzi.
Here we go.
I have been out of the loop for so long that I don't know what alt coins I am behind, but I do know I want to diversify my holdings a bit more this time around so I am just going to start with an easy split and adapt as I accumulate. Better to get the money in more than anything.
My New Starting Allocation
BTC - 50% - Still has a good chance of remaining king, I wont be too foolish.
ETH - 30% - I feel has the best chance of taking over BTC in my mind, the utility of the chain has shown a lot of promise, and its overall just much easier to use than BTC.
Polygon - 20% - I want to get into the web3 technology and build something, and Polygon seems okay? It has a lot of marketshare and doesnt appear to be too centralized so I am giving it a shot.
Ending Thoughts
- If your trading daily or highly leveraged, your most likely going to get burnt
- Buy the dips and hodl
- Keep your coins off the market exchanges, I prefer Exodus
- If a new coin post insane returns for relatively little apparent risk, dont put a lot in 🚨
- I'll probably continue to be an average crypto investor :)