Last week we witnessed a top 10 coin die in real-time.
I made a couple of videos on this in my Patreon group and I’d like to share one of them with you today, since this event even made it into the mainstream media news.
This is an important reminder to...
Stick to BTC and ETH if you want to play it safe. They have occupied the top 2 ranks since the beginning, while all the other top 10 coins come and go
Never bet (too) large sums on a new project that hasn’t even survived one bear market yet, especially if you’re not knowledgeable enough to review their code and how their smart contracts are being audited (which, let’s face it - is 99% of us).
Never bet everything on just one asset.
Never use any money that you need to live for the foreseeable future. The motto “Never put in more than you can afford to lose” is not just a meme!
Never trust a coin that has any version of “moon” in the name… ;) (Side note: as someone who's following the astrological cycles a little bit, I find it interesting that $LUNA collapsed just around the time when this massive lunar eclipse of May 15/16 is hitting us...)
If you want to have fun investing in this space (rather than panicking), make sure that you're safe first (keep enough money for your living expenses) so you can always keep a long-term view.
This is good for bitcoin
Many people find my own investing approach a bit boring. I’m not chasing after the latest hype that could make me rich. I prefer stability and mostly “no stress”.
That’s why I’m betting mostly on bitcoin. It is the most solid money technology out there, with the most stress-tested blockchain and consensus mechanism. It’s been in the number #1 spot ever since its inception. It came about organically and is not attached to one single person (and most of all their ego).
Every other crypto asset - including Ethereum - can be compared to a startup business with one or more founders that we put all our trust in. (Actually, Hive might be one of the few exceptions to that.)
For example, I believe a lot in Polkadot, because - having worked for their creator organisation - I know the project better than any other one. However, I’m also aware that it is strongly tied to the reputation of its founder, Dr. Gavin Wood. Should he suddenly change his mind and leave his own project, the community might lose trust in it and move their investments elsewhere. That would crash the price, which would never recover.
So I hold my largest % in bitcoin, with smaller allocations in other assets. And I have a gambling budget, too. $Luna was in my “gambling” category, so I didn’t get hit very hard.
It’s all about trust
As a result of this week’s $Luna event, more and more people realized that they had put all their trust in an algorithm they don’t understand, as well as in Terra Luna’s uber-confident founder Do Kwon. Many said on Twitter that they are becoming “bitcoin maximalists”. Meaning that they are starting to place more trust in bitcoin rather than any newly hyped coin, no matter how good it sounds.
The reason why this was such a major “trust” event, is because Terra Luna and its stable coin UST were highly regarded and in the top 10. People lose money every day in crypto, and scams, fads and ponzi schemes come and go. But this was a legit project with high profile investors.
I’m not sharing this to make you scared of investing in crypto. This is just a reminder that to make it as a crypto investor, always be conscious of what or who you are placing your trust in. The crypto space is still the Wild West of finance, which some people find scary, and others (like me) exciting. I love it, and I’m having fun, also when prices crash. I trust myself, I trust my intuition and I always put my financial safety first.
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Very informative video and write-up. Great reminder not to 'blindly' 'buy coins.
Also so interesting about the name (Luna).
Thank you.