The Bitcoin Lesson You Need to Learn
If you are still in the cryptocurrency market after this last chaotic week, congratulations. You may just have what it takes to be able to stay in this market long-term, and potentially change your life financially. But, it won't be easy. Perhaps that is the exact part that new people who had gotten into bitcoin or crypto during the last year had had misunderstood, or taken for-granted. We were all told by some of the largest crypto influencers out there that prices would be reaching astronomical places in 2021. When that didn't happen, many of the influencers then switched those 2021 predictions into 2022 ones. Promises of riches were made, and all you had to do was to invest in this hidden gem coin, buy into this upcoming Layer 1 chain that was competing again Ethereum, stake stablecoins for huge interest rates, get into meme coins or NFT's, or buy a large amount of bitcoin. It didn't matter what you decided to do, but the important thing was that you were actually invested in the market. You could literally buy any coin, because, number go up. It would be any month now that prices begin to go parabolic, and life-changing riches are made.
As you already know, that isn't how things turned out. I truly believe that the price of Bitcoin and Ethereum will recover, and also will head towards amazing places. But, it won't be a straight upwards movement towards those destinations. Volatility can be our friend and is what will allow us to reach those places. On the other hand, it also will be our kryptonite at times and bring real panic into your life. If this is your first time experiencing crypto market turmoil, rest assured that it won't be the last time as well.
This is the moment that you will actually learn part of the real value that bitcoin and also ethereum provide. While yes, smaller altcoins can see gains much higher than those two blue-chip coins. But, during times of market turmoil, you will quickly see those gains evaporite. Let's look at bitcoin, which itself is still heavily down from it's all-time high of $69, down nearly 57%. Ethereum is also down nearly 58% since it's all-time high. On the other hand, popular coins like Solana, Polkadot, Avalanche and more are down 80%+ since their all-time highs. If you move further down the list of coins with smaller market caps, this discrepancy becomes even worse. Fantom is down 90% since it's all-time high. And it continues to get worse from that point on. So much so, that being down only 57% with Bitcoin seems like a golden-opportunity.
The thing that you need to know is that not only is bitcoin protected better to the downside, but it will also be the quickest coin to make a recovery as well. While not guaranteed, it is a relatively safe bet that bitcoin will at some point reach its previous all-time high price, and surpass it. It could be this year, next year, or sometime else in the future. On the other hand, there is no guarantee that those altcoins will recover. XRP still has never recovered to its all-time high set in 2018. Many DeFi coins that exploded in value during the summer of 2020, still haven't reached their previous marks, even while other coins were pumping during 2021. Altcoins are often a victim of what is popular now, or the current FAD. 2017 brought the ICO craze, 2020 brought DeFi summer, early 2021 brought MEME toke mania, and then NFT's took off soon after that. In each of those categories you can quickly find coins that never recovered after their "moment in the sun," and in all likelihood will never recover.
That is why people who have been investing into crypto for several years will often recommend to just stick to investing into the blue-chip coins. Currently the only blue-chip coins are bitcoin and ethereum. They are tried and true, and have been the most tested out of any of the blockchains out there. You will not see what happened with Terra Luna, happen on the bitcoin or ethereum Layer 1 chains. While many people that are on this website are here to make gains as quickly as possible. And when I post updates on my portfolio allocation have commented on it being too safe or stable with bitcoin and ethereum. There is a reason for that. I have been in the cryptocurrency markets for several years now, and have seen almost everything you can imagine. While I will miss some opportunities from being conservative, maintaining a safer-portfolio that is guaranteed to be around 10 years from now is more important to me. After all, we have all learned this past week that investing into the cryptocurrency market can be extremely risky by itself. Why amplify that even further and possibly lose everything? The possible gains that you can still receive with bitcoin and ethereum are far greater than nearly any other market out there. The whole hodl approach of just sitting back, and just buying bitcoin and ethereum is more often than not the best thing that you can do. Stay safe out there, and take advantage of these dip prices. These are are prices that help to give you a head start in building your portfolio.
How about you? What does your crypto portfolio allocation look like?
As always, thank you for reading!
Thanks for the write up, John.
Market crashes are excellent times for introspection. It's very important to be able to learn from these experiences and better position yourself for the future.
I wrote a similar post today with my own 10 lessons learnt - one of the most important ones is that ZERO is not a meme, as Luna, a top 10 coin, just showed us.
It's crazy out there, just need to stay afloat, stay sane and outwork the quitters.