Last year this time, hope was bleak for crypto investors.
Crypto was a massive sea of red. Luna, a hot crypto that promised high yields, fizzled out. FTX, one of the biggest crypto exchanges, collapsed. And aggressive punters were wiped out.
One year later, Sam Bankman-Fried, the founder of FTX is in jail for fraud. Bitcoin is now up 154.02% and Ethereum 77%. Heck, even shitcoins launches are back!
Here’re 8 lessons in crypto for you this Christmas, so that you can ride the waves and huat in 2024.
1) Always HODL
While crypto is still a distance from its all time high, here’s a silver lining.
If you had held onto Bitcoin since November 2022 when FTX collapsed, you’d be up ~88%.
But let’s be more realistic. Say you caught the top in November 2021 and the market crashed there after.
Well, if instead of selling, you decided to DCA every month since then, your average price would be $31,026.75 and you’ll also be up ~38.1%!
If you had bought crypto because you think that cryptocurrency will become a valuable asset into the future, HODL.
Selling at the bottom (SATB) is never a good move.
But this all boils down to…
2) Do Your Own Research (DYOR)
As the saying goes “trust, but verify”. You should always do your own research in investing, and never follow the moves of others. You just don’t know what’s the reasons and context for their investments. And hence, you’ll never have the same conviction when the market crashes.
Plus, you’ll never be able to get in at the same price, nor get out at their profit (if you can even catch it).
So, always do your own research when dealing with crypto (or any other investments), and be vigilant. It’s your own money after all.
And if you’re not sure how to, find the right mentors who can help.
3) Not your keys, not your crypto
The FTX collapse was a huge reminder of this popular saying in the cryptoverse.
Folks who kept their crypto in the exchange are not likely to get their assets back, even if FTX tries to put together a plan to send recovered assets back to former customers.
While you can rely on exchanges for easier ways to trade cryptocurrency, if you plan to hold your coins for the long term, you should be storing them away from exchanges or any public addresses.
Before you dream of making big in the next possible crypto run, spend some time to read about crypto security and decide if a hardware wallet is suitable for your needs.
4) Regulation will protect you, even though crypto bros say otherwise
Despite the vendetta against regulations, regulations have a role to play in protecting the greater masses from the bad actors in finance.
As we have seen from the frauds and scams in the crypto industry (and the wider finance industry), general guidelines will still be required to protect the man-on-the-streets from the bad actors and snake oil sellers in the scene.
But regulation is not enough to protect you
Cryptocurrency is unique because it is a global, digital asset that was created to be accessible anywhere in the world, through an internet connection.
This means it will be difficult to regulate.
Hence, you will need to actively protect your own assets. Even in the relatively safe Singapore, we still lock our houses when we head out and our cars when we park, we should also lock up our crypto assets to keep unwanted hands away.
Again, spend some time to learn how you can keep your crypto secure before you jump in.
5) You’ll never know what the next trend in crypto is
The first crypto bull was driven by the hype behind Bitcoin’s potential, way back in 2011.
The second crypto bull was driven by the ICO mania back in 2016.
The third crypto bull was driven by DeFi and extended by NFTs.
While the current price run was ignited by the talks of Bitcoin ETFs and fuelled by rumors of rate cuts, we will never truly know what’s going to drive the next bull run. For all we know, the current run could die off if Bitcoin ETFs are turned down by the SEC again.
So…
6) Don’t jump onto crypto trends
It is possible to make it big if you know how to take advantage of crypto trends – there are folks who had made their millions through DeFi, trading NFTs and more.
But you need to know what you’re doing.
For those who want more, you might be able to limit your losses by finding the right mentors.
That said, most of us are better off HODL-ing only the major cryptocurrencies. As mentioned above, DCA-ing into Bitcoin might prove to be a viable strategy to consider.
7) The longer it survives, the longer it will survive
at least according to Lindy Effect.
Compared to assets like stocks and bonds, cryptocurrencies have a relatively short history. However, cryptocurrency has grown and survived over the past decades and multiple market cycles, which indicates certain resilience.
Lindy Effect suggests the future life expectancy of non-perishable things like technology, ideas, or institutions is proportional to their current age.
That said, the Lindy Effect will always hold true…until it doesn’t. Hence, there’s no saying if crypto will last forever.
But given the continual increase in cryptocurrency adoption, we’d say that…
8) Crypto is here to stay
With a disillusion of fiat currencies growing as inflation continues to devalue cash (the effects are felt more strongly in certain countries), cryptocurrency offers an attractive alternative.
Remember, our investment journey, marked by resilience and innovation, mirrors the ever-evolving crypto market itself. With the end of the year approaching, you may be reflecting on your performance for the year. The current cryptocurrency landscape beckons with future possibilities, but don’t forget the past lessons it has taught us.
This festive season, let’s embrace the lessons learned with a spirit of patience and informed decision-making, gearing up for a promising 2024 in the dynamic world of crypto.