The crypto market is nascent and volatile but its foundations are no less solid.
2022 has barely begun and investors have already endured sharp declines in the crypto market.
According to CryptoSlate, Bitcoin and Ethereum, the two largest cryptocurrencies by market cap, have dropped 45 and 48.2 percent, respectively; the last thirty days has seen a total market loss of $757 billion.
According to a Bitwise report, the drops are largely short-term, due to volatility driven from macro challenges in the crypto space. In 2021…
VC’s invested $30 billion into crypto startups; more than all previous years, combined;
The number of crypto/blockchain developers rose 75%, a new all-time high;
Dapp usage skyrocketed; i.e. MetaMask users grew 20x, from 1M to 21M;
A majority of the world’s largest banks adopted blockchains and/or invested in crypto;
Coinbase’s IPO debuted at over $80 billion, the largest public offering in any industry;
Crypto has broadened in the mainstream. From Bitcoin and a few digital commodities to DAOs, DeFi, NFTs, the Metaverse and Web3.
Yes, Crypto is subject to shenanigans and manipulation like any other market. But with the advent of Web3 and a growing public demand for decentralization there is an inevitable shift to these new technologies.
Pertinent to any trading strategy is the belief in the crypto’s project. There are many things to consider but a brief summation project analyzation would include answers to questions like these:
Is the team led by a Wall Street investor or a web developer/blockchain developer? (Should be the latter);
Is the project foundational to other projects? For example, Solana (SOL) is a blockchain platform that provides faster transaction time than its comparable Ethereum (ETH). That means future blockchain projects may desire to build on Solana, pumping its price.
What is the total volume traded over time? How volatile are those numbers? The volatility of volume traded will tell you the amount of investors’ interest in the project.
I personally own a number of coins and my personal trading strategy is based primarily on the projects’ goal, team execution and investor interest marked by trading volume. These are fundamental across the board for any crypto coin or token because it signals the project’s potential expansion into the broader market.
Looking at current Web2 companies we can see a comparison:
Facebook is the ground floor platform for most small businesses; Google as well. Apple, Microsoft and Dell dominate the computer hardware industry. Amazon is the ground floor of eCommerce and Shopify is not far behind. How about the shared economy? Uber and AirBnB lead the pack. All of these companies are publicly traded and many investors wish they had gotten in back in 1995, or whenever..
Yes crypto is subject to the same human forces that all markets are subject to: greed, thievery, shenanigans, herd-mentality, etc. But it also offers a truly major upside: the door to a new fundamental technology that underlies a myriad of new technologies: the blockchain. It is the transition from a centralized Web2 to a (for the most part) decentralized Web3 that is happening right now.
Crypto offers another once-in-a-lifetime opportunity for many investors. (And a second one for investors who are of age to remember the 90’s but missed out on Web2 opportunities.) So, get in while you can. Stay smart. Be lucky. Do your own research (DYOR).
Because right now it’s 1995 again.