There is a chorus of voices within and without the crypto space world calling what we are seeing in the cryptocurrency markets a bubble. This fuels fear and makes people unnecessarily trigger happy with their investment in an industry sector that, in so many ways, represents a revolution in the way humanity will govern, manage, exchange, produce etc. etc. There are a multitude of reasons why we are witnessing what could arguably be called the biggest bull run in history. There are very human reasons for allot of the speculative runs on coins that, for those that have done their research, seem absurd. You gaze in disbelief ... 300% in 24hrs for that? WTF? There are many who are undoubtedly going to loose big time - their money is going to be scooped up by those savvy and patient investors who see this for what it is. I would argue though that the level headed among us pause before selling off in the next big correction because this is not a bubble.
The Tulip bubble of the 17th century was based entirely on a fashionable item that (apart from it's beauty) has no intrinsic value. The fashion died and the supply overshot demand by a mile. If this is the classic example that defines a bubble then what we are witnessing in the crypto space is not a bubble. Crytocurrencies are not a fashion (although admittedly there are coins in the 700+ mix that might as well be). Neither can supply (specifically in the case of Bitcoin) potentially spiral out of control.
Sure, tokens in and of themselves have no intrinsic value. Strip them of their context and they are no better than fiat money. However, let's not be short sighted here. In the right context they have tremendous value. They ...
- fund enormous intellectual effort
- can be used as a form of currency
- are a store of value due to their scarcity
- fuel the blockchains that are the revolution
Some call the dotcom boom a bubble - sure there were projects and companies completely over valued during that period but out of the mayhem came the internet in it's present form. Using the same simplistic argument, you might as well call the internet a bubble! The dotcom boom provides us with at least some lessons to apply to the present situation:
- Vast amounts of money will be thrown at what will, in perfect hindsight, been seen to be valueless projects.
- Huge corrections (volatility will punish wild speculators) will be the order of the day.
- Failure in this immature and experimental technological sector should be expected.
The counter to all the uncertainty, volatility and fear is the knowledge that investors in this Wild West Crypto Space are funding web 3.0 that has the potential, not only to make them millionaires, but to fundamentally change the future in ways we are now only beginning to imagine. In my assessment this is a nascent and expanding market subject to speculation and volatility - not a bubble!
The enemies of sound investment strategies are fear, greed and impatience. Don't let these detract you from an investment opportunity of a lifetime. I personally do not trade shorts or use leverage. I invest in communities of developers that look solid and by all appearances are working hard towards a specific goal. Those are the projects where I hodl for dear life! I speculate in others but only if I see clear advantage in stacking the coins that have potential. If you want to try and predict the corrections and benefit from them by selling high and buying low - suite yourself but ... I personally hold during the correction times and buy in with more (if I have the spare cash at hand) at the bottom.
Do your research. Invest wisely. Take some profits now and then! See you on the other side :)