For the last couple of weeks, the comment sections and subreddits of everything crypto-related have been a mess of fear, regret and smugness. A mass reaction like this was an inevitable consequence of Bitcoin (BTC) price action in the last few days — it has dropped more than 30% in value once again.
It only felt like yesterday when you could buy pretty much any cryptocurrency from the top 100 on Coinmarketcap and get unbelievable returns. Initial Coin Offerings (ICOs) were booming and offered something private equity couldn’t: the opportunity for anyone to invest during a company’s early stages.
Anybody with an entrepreneurial idea could use an ICO as an investment vehicle. ICOs bypass the bureaucracy and impenetrable nature of traditional financial markets for the general public — exclusive only to those in the system. They gave hope that anyone could be involved in both soliciting and investing in the early days of an enterprise they believed in.
Last year felt like we were watching something incredible unfold. The potential of cryptocurrency to disrupt and revolutionise every industry was just around the corner. The democratisation of investment and fundraising had never been seen before in the history of finance.
Sadly, when greed, lack of research and irrational behaviour got thrown into the mix, the vision collapsed. Just like the dot-com bubble, when expectation weighs more than the foundation that is still being built, destruction is inevitable.
Let’s be honest with ourselves. 99% of ICOs jumped on a trend and will never be able to deliver what they promised. Look through Coinmarketcap right now. How many of these projects do you think will be around in 10 years? Most of these tokens will fade into the past, leaving investors holding the bag.
In order to forge a new path forward, it’s time to realise that investment methods in the future aren’t going to look the same as 2017 — the same rules will not apply. As an investor, you have to evolve with it or end up getting left behind holding the bag.
As a technology, cryptocurrency is brand new and the foundation is still being built. Just like the dot-com bubble, it is likely we will see an extended bear market followed by a large consolidation into quality projects that offer something of value to society. Institutional investment will pour into genuinely promising coins, like it did with the dot-com companies that rose out of the ashes.
There are many lessons to be learnt from the last year. Following the herd and buying at the peak of mania is the most difficult one to move on from. If you want something of value from this experience, don’t look to blame. Look to learn and improve the next time you invest. To step into the future, self-reflection is essential. This year has shown the immense value of thinking outside the herd with your feet on the ground.
As a responsible investor, now is the time to explore new avenues of revenue to diversify your portfolio in this defining moment of crypto-history. You can look at this market as a gut-wrenching and unforgiving one. You can also look at the adoption occurring on a daily basis and realise that right now is an amazing opportunity to help build something the world has never seen before.
I want to hear your thoughts. Let me know what you think about the future of cryptocurrency below.
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