The Golden Rule of Cryptocurrency and Bitcoin
What is the one thing in crypto you can rely on?
Disclaimer: This is not financial advice, always do your own research and invest responsibly.
It is November 2022 which marks exactly 1 year since the start of the current bear market, it would seem we are currently in the deepest crypto winter. Even though there has been a little bit of rallying over the past few weeks, the price of BTC is still hanging around $20,000 with a dramatic price rise to a new all-time high of over $70,000 seeming just as unlikely as a dramatic price drop to under $1,000. The industry itself is not looking too healthy either with exchanges such as Celcius and FTX running into trouble and the myths that BTC is not tied to the stock market and a great hedge against inflation finally put to rest.
A year ago everyone was still sure that BTC would end up hitting the magic $100,000 mark before the year ends. Why would it not? All of the technical analysis done on historical data and price patterns confirmed it and the Dutch analyst Plan B had his incredibly accurate stock-to-flow model which basically guaranteed a $100,000 price. Bitcoin and therefore the entire crypto market was supposed to continue its bull run up until a blow-off top just like what had happened after every halving. It did not matter that the blow-off top didn't happen 18 months after the halving just like it did every other time, a delayed market top was acceptable, but not an anti-climax.
What is the golden rule of crypto?
The one thing that we have learned over the past 2 years is that no one knows shit about fuck when it comes to crypto. It is a new market and asset class and we just cannot rely on historical data or anything else. There is no way of knowing when another bull run will start or if crypto will even prevail and still be around in 5 years' time. You have definitely heard stories of people who invested in crypto early and became stinking rich from it. If you have not become a millionaire from crypto by now, you may never become a crypto millionaire.
Crypto has never been around during a recession and has never been properly tested with mainstream adoption, but it is now leaving the little safety bubble of predictable growth in which it has been since its inception in 2009.
Should you still invest in crypto?
This question cannot be answered accurately as no one knows anything (see golden rule above), it has simply become a matter of whether you have faith in the technology and the collective valuation or if you would rather take your chances with more established assets.
With all of the doom and gloom in the news regarding inflation, war, corporate greed, and aggressive money printing, the question is if there is any asset class that is truly safe to invest in. It seems like there is definitely going to be a lot of hurt ahead of us and since the stock market has actually been more volatile than crypto in the past few months, the golden rule of crypto might actually apply to many other assets over the next few years.
When all else fails, having faith in the collective valuation from a community rather than the guarantee of value from a government seems like the more sane approach to me, but what do I know? Not shit about fuck.
What do you think?