I am about as bullish as a person can be about the cryptocurrency market; especially bitcoin. Of course I am partly interested in this market for the technology and how it could change the world. But of course the main reason that I am in this market is to make a lot of money. I have done the research and concluded that this was the best place for life changing gains to be made during the next few years. My goal has always been to accumulate a large portfolio and be able to use that to retire young; have financial freedom and solely become an investor. During this next bull run; a large amount of people are expecting bitcoin's price to grow exponentially. But it is often agreed upon that during this same timeframe altcoins will outperform bitcoin in-terms of percentage gains.
If my main goal was to just retire quickly, why wouldn't I just invest into only these Altcoins, instead of bitcoin? Knowing by doing this I would be able to make even more profits!?
Well, there are many reasons for this; so let's discuss this in more depth.
First I would like to make a note that I don't consider Ethereum an altcoin, and do invest into it. So please remember it is not considered to be in the "Altcoins" category within this article.
Risk
It is true that there is likely a greater chance of reward by investing into altcoins, especially low-cap coins. But at the same time, there is much more risk and you could lose everything. Now let us remember that investing into the cryptocurrency market in itself is pretty risky. You are basically betting that the way the monetary system works now will ultimately fail. It is important to note that everyday that bitcoin and crypto exists, the risk of
But let's look back to the previous bull market in 2017/18. During this time everything pumped, and then everything dumped too. While bitcoin dropped around 75%, other altcoins dropped more than 90%. But the important thing to note is not just how far they dropped, but how long it took them to recover. It took bitcoin around a year for it to reach its low, (outside the black Swann event of the corona virus,) while the altcoins stayed down longer.
And then bitcoin recovered and reached a new all-time high, while many altcoins were lagging behind. Now bitcoin has more than doubled its previous all-time, nearing almost $50,000. But the important thing to remember is that many of the altcoins that boomed the last cycle; still haven't matched their previous all-time highs. While the Altcoins market has been pumping insanely the last few months, the fact is that many of the older altcoins still haven't recovered. Perhaps the Altcoins market is solely a market that should be invested into what is new and hot, such as Defi or the new up and coming chain. While old coins don't receive the attention they used too, and therefore remain lower in price.
If I was planning on selling during this cycle, perhaps I would want to invest into altcoins to capture those quick gains. But I will not sell for at least a handful of years, and therefore need to be much more careful with how I invest. I am not a trader; I choose to just buy and hold.
The Game Has Changed
While the 2017 market was led by retail buyers, that will not be the case during this bull run. Institutions have joined the game, and they are making it known that they are not just here to participate, but to take over. There is a clear difference in mind between institutions and retail buyers. Retail buyers tend to be investing for a quick gain, and if the price goes up quickly or down, they will sell just as quickly. This is one of the key reasons the last bull market came to an end. But the institutions are in it for the long haul, and they don't need the money. Many of them will just use it as a reserve to protect their wealth, and they will never sell. There is going to a supply crunch like you have never seen before. Exchange's reserves of bitcoin have already began to decrease dramatically, it will cause a boom we have never seen before. Most of us have always been able to buy anything we want. Sure if you want the newest iPhone or gadget, perhaps on release date it will be sold out. But you can put an order in and it will just come at a later date. Not with bitcoin. The supply cannot be increased. The only option will be to offer someone more money to buy their cash.
There was a quote that I heard the other day that I really liked. There's a game of musical chairs happening right now with bitcoin. You have the institutions all walking around the chairs, and sooner or later the music will stop and the institutions will sit down and claim their bitcoin chair. Some of these institutions will be left out. But the shocking thing is that the average person is still off in the corner, and hasn't even joined this game yet."
Global Reserve Currency
This is where some people may think that I am too bullish on bitcoin. But I believe there is a very high chance that bitcoin will become the next world reserve currency. There has been an incredible amount of bullish bitcoin news recently. If you begin to piece them all up together, they are beginning to add up to something that is giving us a hint of what will come in the future. If bitcoin would become the world reserve currency there is even less of a chance that they would sell out of their BTC position to enter a position in altcoins. It would be like exchanging your gold for quartz. Or choosing to buy J.C. Penny stocks instead of Apple stock. A sane person would never do that, and that is exactly what will happen in the future with bitcoin.
I have said this multiple times before, but many of the coins that exist today have no real purpose other than to make a quick buck for the founders. They don't have a use case, they aren't any transactions with it, and it isn't being used. In the future these type of coins will begin to trend towards zero, and eventually disappear.
At the end of the day bitcoin has a first-mover advantage that can never be replicated again. It was created at a time when there were basically no other virtual currencies. There wasn't a pre-mine and the creator never even sold 1 satoshi. It grew naturally and organically into what it is today. At this moment if bitcoin were to fail, all of cryptocurrency would go down with it.
Naturally you have probably already guessed that bitcoin is my favorite cryptocurrency, but I also am pretty significantly investing into ethereum and also like Polkadot, Chainlink and even Cardano.
Do you find yourself only buying bitcoin!? OR perhaps you're only buying a different coin? I would love to hear what your investing strategy is, and how you think the future will play out!
As always, thank you for reading!
I have started investing again and opted to split it. I think BTC / LTC / BCH / ETH are the most promising for their own reasons, though I made a slight exception to Tezos, as it had a fascinating project.
As long as you don't put your life savings into it without research, you should be well.
Good luck to you!