E L Emerson – Monday 5th February 2018
The cryptocurrency market fear out there is almost palpable.
You can’t blink twice without seeing a Bitcoin warning.
And no pair of Beats or Bose headphones will help drown out the Large Hadron Collider-like hum of so-called experts raging and ranting their way through patchworks of guesswork and grandiose statements about when the market will “stabilise.”
Just try and keep in mind that sort of alleged predictive nous is complete crystal ball gazing tosh.
All of it.
Delusion & Doubt
No one out there holding a single piece of Bitcoin, Ethereum or any other altcoin should be wandering around in that cloud of delusion that suggests they or anyone else can predict a market top or bottom; those moments when prices either peak and turn downwards, or find a floor and begin their next ascent.
It’s a fool’s game played by commentators with matador-style bravado during bull markets, and Harvey Weinstein-esque denial during bear market plummets.
Equally, that point of delusion should serve as your first clue as to where we are in the cryptocurrency market cycle at this moment.
The consensus of opinion is saying “run like hell.” And when a crowd of investors is running in one direction, be damned sure that you should be moving the opposite way.
So, what does that mean?
Well, you might want to pause and think about a few market facts before you decide to buy some Bitcoin or drop-and-run from Ripple:
- Game Changer -While anything is possible, common sense suggests that the actual blockchain technology underpining cryptocurrencies isn’t going anywhere. It’s a game-changing information security and smart contract blanket for the future. And it’s not that new either; peer-to-peer information exchange has been around for a while, just not on a trajectory and developmental cycle as evolved as blockchain.
- Strong Survive – There are a number of cryptocurrencies that are building blockchain-based products that can solve problems for companies and industry sectors in a way that could not be done before. These currencies, on the basis of product development success have the potential to evolve, become more valuable and survive through what will be an inevitable market reckoning of those coins currently priced-up based on popularity or novelty alone (sorry Dogecoin).
- Big Returns – This is not a market for the faint of heart. You probably should not be or become a cryptocurrency investor if you’re trying to top up your pension or are seeking a low-risk investment as a college fund for your kids. The danger here is big, ugly and very real, But so too are the potential rewards. Altcoins are a “play big or go home” world compared to the relative safety of the more traditional stock markets of the Dow Jones, S&P 500, Nasdaq or (Lord help you) the FTSE 100.
The Turn Around
What that all means is that there is a strong sense of long-term viability about blockchain technology and the initial currency products operating as the poster children for its potential.
It also means that while we are most certainly now in a downdraft, and one that, on the basis of what we know about the core strength of this sector, will at some point or another turn around.
And as this market now whistles fast towards the ground with the fiery burning smoke trails of market pessimism, scary headlines and apocalyptic predictions following close behind, there is also opportunity; as former highs for individual currencies have in many cases been halved, quartered or even split into ratios of their previous value, they now hang like low fruit, and near mouth-watering enticements when considered in the light of even a moderate rebound.
Fear & Greed
So, you may want to take the snapshot of a consensus at any given moment as an indicator that what everyone else is doing is probably wrong. In simplest terms, when it comes to financial decisions, the herd is a place of slaughter.
And that principle, while difficult at times to apply, is a very useful and often profitable strategic edge.
It would be impossible for us to know at what price you bought into the market and thus when an exit would be deemed as appropriate and represents good value.
But what we can say is that the prices at which some of these currencies can now be gotten, even when considered in their median, mean or mode values, suggests a hotbed of investment opportunity available to us now.
Particularly when fear is this rampant.
What was it that billionaire investor Warren Buffett said?
“Be fearful when others are greedy, and greedy when others are fearful.”
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