These days, the word “bubble” has become just as big of a buzzword as “blockchain” or “artificial intelligence”. As cryptocurrency investors, we hear this term used almost every day, but many of us are actually too young to have experienced our bank accounts zeroing as a result of a bubble popping.
When I first got into crypto, I had to grit my teeth and hold with steady hands as the value of my assets fluctuated up and down, staying in the red for months at a time. But over the past few months, cryptocurrency investors have had a different narrative.
Everyone has been trying to predict the next coin that will provide 10x returns, but if you missed that boat your consolation was still at minimum a 2x or 3x profit. This is the exact reason everyone has been so apt to pour in money — it feels like a low-risk, high-reward investment. Over the past few months, as long as you avoided the coins that had just pumped up 300+% in the last 24 hours, you essentially couldn’t lose.
Now ask yourself, what happens when the crypto market slows down on this nonstop upward trajectory? Will people be so quick to put a second mortgage on their house when the risk of losing all that money actually becomes a reality? Will investors continue to throw money into cryptocurrency “hedge funds” after they get crushed and realize that their 1000% return rate was merely a product of the previous bull market?
Many experts predict that while a few coins will prevail and their valuations will go to the moon, the vast majority of coins will watch their price plummet to zero. Now that prediction may urge investors to enter positions in top 100 or top 25 market cap coins, but does their current market standing really indicate whether they are here to stay?
How does Litecoin maintain its value proposition when other coins offer faster transactions and lower fees? What’s the need for Ethereum when Bitcoin finally makes a core update offering smart contracts… or when another coin makes it easier to create apps using widely-known languages like python instead of Ethereum’s native language solidity?
When this bull run finally comes to a halt, and valuations become more about value and less about hype, these are the questions we will need to be asking ourselves in order to have any chance of succeeding in the cryptocurrency market.
This is the best. Also 90% of the hype was created by people who didnt know what they were hyping. I’ve literally had people ask what a bitcoin looks like.
The words ‘distributed ledger system’ far from the mouths of most. Thats whats important here. The value lies in the ledger and one other important factor. Scalability. Which cryptocurrency will be the one to scale properly. The race is about the best tech. When we start seeing who those are this market is going to be very different I think.
Well said person.