By Ed DeLeon, CEO and co-founder of Anatha
Bitcoin (BTC) continues to prove why it’s the most valued cryptocurrency. On Nov. 10, the price of one Bitcoin reached an all-time high of about $69,000, before dipping to around $51,000 over the next few weeks (prompting the oft-repeated selloff and cries of crypto skeptics). Every time the original cryptocurrency hits a high, investors and observers are forced to acknowledge crypto’s status as the fastest growing asset class in the world. It also signals to crypto newcomers that maybe now is the time to get in the action.
But focusing solely on price is the wrong way to look at crypto.
For starters, those entering the crypto markets with the intention of getting rich will be unable to distinguish a quality project from a worthless one. Price at best is a trailing indicator, meaning anyone focused on it will always be one or two steps behind the smart money.
So what really matters? The potential that crypto could create in the wider economy—such as creating a more equitable finance system—are far more important than short-term price movements. As long as the four-year macro trend in pricing continues, focusing on short-term volatility is a fool's errand best left to professional traders who don't need to be told how to do their jobs. Unless you are prepared to make that level of commitment, obsessing over price will only make it difficult to find the signal in all the noise.
Investing for success
There’s plenty of noise in the market. The rise and fall and rise of these memecoins suggests a lack of maturity in the market, which may continue to play out every time there is a sudden rush of new users into the larger crypto ecosystem. For a recent example, look to the Shiba Inu (SHIB), which hit a record high. While some of these coins may eventually offer meaningful utility, for now most are placeholder tokens functioning purely as a speculative instrument that is also benefiting from the current phase of the market cycle.
The question every crypto investor should ask is, why bother buying memecoins when there’s an entire ocean of meaningful crypto projects to choose from? When mainstream investors come for the market, fads become the talk of the town, with memecoins and NFTs dominating headlines at the moment. Don’t chase the crowd—real value is often derived by spotting blind spots and focusing your energies there.
As someone who was homeless and used $200 dollars in crypto to make millions for myself and my family, here’s what worked for me to succeed in the market:
Don’t follow the crowd: An unfortunate inevitable outcome of price highs is that new buyers come in at the peak then panic sell during the inevitable correction that always follows. It is a time-honored tradition in crypto at this point.
Instead, learn to think on the macroscale and avoid chasing the crowd into unfavorable positions. Be like veterans of past cycles with a "hold hard" mindset. Wait out unfavorable conditions and have the grit to endure the rapid fire highs and lows inherent in these still-maturing markets.
Figure out why you’re investing in crypto: Ask yourself what changes—reducing environmental harm caused by big oil finance, for example—a particular cryptocurrency is designed to create in the world. From there, decide if that is in alignment with your perspective about the way the world should be.
Investing in your long-term beliefs is far more rewarding than investing for a quick buck. More importantly, it helps shape the future into something we actually want to see. If you are investing money you can't afford to lose into projects that have no established use case and no real utility, you are playing with fire. Focus your energy on projects with robust development communities, public facing teams, and at least some viable use cases on display. For example, if you’re passionate about music, maybe Audius is a good project for you to invest in. Or if sustainable agriculture is more your vibe, invest in Gric.
No matter what, be prepared to lose: There's just so much to learn in crypto that anyone who thinks they've got it all figured out is fooling themselves. The crypto markets are a tremendous intelligence test, and it punishes those that fail with impunity. Be smart, be right, and even still, be prepared to lose. If you find that upsetting, crypto markets are likely not for you.
I didn’t get to where I am today because of luck. I got there because I dove deep into understanding crypto. Anyone with time and focus can do that too. Don’t be distracted by price and instead be excited by the potential that cryptocurrencies offer.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
