Is the cryptocurrency craze over or just getting started?

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Is the cryptocurrency craze over or just getting started?

‘Is the cryptocurrency craze over or just getting started?’

Quora

This is the question I received on Quora a while back. I refrained from answering the moment I saw it because I wanted to elaborate my full answer, not just part of it. However, I have decided I am ready to give an answer.

So, let’s get into it: Is the cryptocurrency craze over or just getting started?

Judging emotionally: the cryptocurrency craze looks over

Firstly, the media is always endorsing the worst pessimists. Therefore, it is important to know what these pessimists say. They are talking all day about how Bitcoin is over, it was just a matter of a few months, bla bla bla. In short, these pessimists just heard of cryptocurrencies in 2017, started investing in December and lost most of their money. And they say it’s over. Must be frustrating, right?

“Bitcoin’s downfall from $19k to roughly under $4k”. News headline, pretty much?

A danger in any sort of investment is the emotional side of the investor. It tends to interfere in many market decision, which are only bad influences. I have to admit that my emotional side has influenced me in the past, as it has for everyone. But at least I realised it and I told myself I would try to minimise it in the future as much as I can.

Therefore, it is very easy to be a pessimist. To sum up, Bitcoin and other alt coins has been hit hard with the events in 2018. Regulation, scams, ICO regulation, SEC’s interference in ICOs, more scams, hacks, a little bit more regulation, ICOs cashing their funds in fiat, a little bit of the domino effect and some more regulation on top of this. How would this positively affect the price of any stock, bond, commodity, fund or cryptocurrency? Subsequently, the answer is no, it wouldn’t – because they would all be affected badly. Maybe the increased volatility of Bitcoin is making it fall a little bit more. But let’s remember that this is not the first big fall of Bitcoin. Which means there is hope.

Addendum: previous crashes

Further, as I have stated in a previous article (link here), Bitcoin has had many crashes up to now. In short, you can see them here:

PeriodHighLowDurationLossRecovery
06/2011-11/2011$29$294 days-93.1%461 days
08/2012$16$73 days-56.7%114 days
04/2013$259$683 days-73.7%210 days
12/2013-01/2015$1147$177411 days-84.6%771 days
12/2017-present$19891$3192TBD-83.9%TBD

Wouldn’t you be happy if you bought even at the high of any of the past crashes? Cause worst case, you would get a 300% return now (should I say that best case would be if you bought at $29 in 2011 you would have more than 10,000%!!). So people should stop saying shit and looking at the facts. Speaking of them, let’s look at the next part of the article. Is the cryptocurrency craze over or just getting started?

Judging pragmatically: there has been no crash so the cryptocurrency craze is not over

Now that we saw how a pessimist thinks, let’s look at the facts pragmatically.

Don’t get me wrong. I am not asking you to be optimistic, but for the least rational. If you would ask a 100% rational person about the crash, they would ask which one are you talking about. If you would have bought Bitcoin on the first day of 2017, you would still have a 360% return, even with all of the 2018 bear market and scandals. Have you ever thought of that? What other investment has made you a 360% return in 2 years? Therefore, should it really be called a crash?

Moreover, most of the top-tier investors say that the smart move is to buy cheap and sell high. The problem is that, because of the media and other signals, people buy high and sell low, which puts them into a big loss. This is generally caused by FOMO (fear of missing out).

As you might know, the smart investor buys in a bear market, when everyone is selling and pessimism is at a maximum level, and sell when the levels get dangerously high. In other words, they cash in some hefty returns.

Even though cryptocurrencies are in a bear market, they have the potential to go up a lot more than the bull run finished in January 2018. After they recover the public’s trust, they will see another period of growth. That is the best time, after a few years maybe, to see your investment grow exponentially.

So, there is no reason to consider what happened to cryptocurrencies a crash. It is not right, since for the bubble year it still records a 360% return after a +80% drop. Go figure.

Conclusion: is the cryptocurrency craze over or just getting started?

Lastly, I wanted to remind that I am a conservative investor and I have said that numerous times. In conclusion, considering there are still huge gains on a longer-term, I wouldn’t consider that any crash happened. Therefore, the cryptocurrency craze is just getting started. It needed a little bit of a rollercoaster to be ready to launch into the next bull market. Buy now and prepare yourselves for the next bull market! Now is the time. Not when it gets in the Wall Street Journal. That moment is already too late.

If you want to add something, leave a comment below. I am also open to private chats: don’t hesitate to use this link

2 Comments

  1. It’s the beginning of 2019 and it seems many who started mining a few years ago either sold their equipment or put it in boxes due to the high cost of electricity and low mining revenue. Electronics stores again have shelves full of graphic cards and mining motherboards and prices are significantly lower than a year ago. I’m putting together my first crypto mining rig with my 15-year-old son mostly for fun and a great bonding opportunity. What are some recommendations you have for a beginning cypto-mining optimist who doesn’t have the expectations of “making it big”?

    • tudor says:

      Hey there!

      Thanks for your question. I have been in the crypto mining business for around 2 years, so I can give you some advice.

      It is true that prices have dropped and the demand is not so high on components. I remember about the Ethereum mining craze in 2017-2018. That was a period of nice profits for everyone.

      Even though don’t have any expectations, I would recommend first to use a calculator and determine what profit/loss in a mining month (it depends on the components you use and the price of electricity in your area). There are three options:

      1. You are on a profit: Congrats! That is great.
      2. You have a loss, but that amounts less than if you would have bought that amount of coins: This is not a bad situation, even though you have a negative cash flow. You can consider as an investment in crypto, at a discount.
      3. Your loss is bigger than if you would have bought that amount: This is not a great situation because it makes your mining totally inefficient.

      It is the best to assess before you proceed in which situation you would be. Although the best would be 1, 2 is not a deal-breaker because you are not totally inefficient. Even if it is just for fun/bonding, I would not recommend doing it if you were in the third situation.

      Lastly, here is my best recommendation: Cryptocurrency prices will go up in the future. Don’t be demoralised by the current situation. This is the best time to enter the market, if you want to be a real long-term winner!

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