Is There A Case Against Bitcoin Maximalists? 3 Smart Investment Perspectives
Bitcoin isn’t the only cryptocurrency in town. And investing in bitcoin isn’t the only way to make money in this space.
All of this may sound like fighting words to people whoonlybelieve in Bitcoin. After all, Bitcoin, which launched in 2009, has continued to be the number one cryptocurrency by market cap (calculated by multiplying its market price by the circulating supply). As the first cryptocurrency to hit the market, it’s been number one for years and is seen by some as a store of value.
But just because something is number one doesn’t mean it’s the only option. For instance, bottled water was the most consumed drink in America, confirms a November 2020 report by Statista. But that doesn’t mean carbonated soft drinks, coffee, and beer and cider (which ranked second, third, and fourth, respectively) don’t also deserve attention and market share.
Today, as the global cryptocurrency market continues to grow, the utility of other cryptocurrencies has emerged and can be worth our time. So while we make our own decisions about how to invest, it’s worth being a bit open-minded in this space.
To unpack all of this a bit, I talked with Curtis Kobane, an educator, full-time trader, and mindset coach. (He’s also a friend.) He notes that being a Bitcoin Maxi can be “problematic” in some ways.
“I get the fact that the technology of bitcoin is awesome—it’s innovative,” he says, but notes that being a maximalist can be “a great disservice” if you’re shutting yourself down from seeing anything else.
Being this kind of Bitcoin maxi, Kobane says, is like going out of town, trying a new restaurant on a block, falling in love with the food, and then saying that everything else on the block is garbage—without even trying other places.
“When it comes to just looking at bitcoin, and saying it’s the ‘end all be all,’ that’s a stifling way of thinking,” he adds, noting that this kind of mindset is also not ideal for any one cryptocurrency as the technology continues to develop.
Now true, in this market where there are thousands of cryptocurrencies, you must proceed thoughtfully, particularly since many altcoins are scams or won’t survive. And the fact is drops and crashes have happened pretty drastically for altcoins in the last cycle—which can leave investors with serious declines in their portfolios. But while Bitcoin has trended up over the years, it also has been volatile, going from all-time highs of nearly $20,000 in 2017 before falling to around $3,000 in 2018.
Since there are so many altcoins, including Ethereum (which some may argue isn’t an alt coin at all), a process often needs to take place in order to learn which ones may be worth our time. But if we can do this, and navigate the risks, there can be growth opportunities to explore in Bitcoin and in altcoins.
3 Ways To Be Vigilant
Though the cryptocurrency market is volatile, here are some ways you can help protect your investments.
Don’t make emotional decisions
First understand that no one can predict the market, no matter what they say. And you shouldn’t invest capital you need, as there are no guarantees. Knowing this, if you buy cryptocurrency, do so based on facts. Not because of euphoria, which is a part of market psychology. And not because of fear of missing out (“FOMO”), as this emotional decision making approach may not be ideal for your goals. Instead, review facts such as a currency’s utility, technology, team, and historic performance. And make decisions with this kind of information in mind, along with an understanding of market cycles and goals.
Have an exit strategy
This is major. And if anyone understands the importance of this, it’s traders. Cue Kobane: “Being mindful of where you are emotionally, and where others are emotionally, is a huge deal with exit strategy. Because if you’re looking at yourself saying, ‘Oh my God, this is so awesome, like I never thought it would do this, this [high] is crazy’—yeah, it’s time,” he says.
Also be willing to look at indicators like the 21-day exponential moving average to understand market trends, he says. For instance, if you see an uptrend cooling off, and it continues to go down, it can help you snap out of euphoria, he says, and reexamine your positions.
Kobane also suggests looking at news surrounding specific digital assets, such as announcements for airdrops or launches, for context around price. And with institutions now in this space, he notes that they will take profits which can affect pricing for retail investors (AKA: us). So if your investing goals include taking profit—perhaps to buy a house, put it into a stablecoin until the next bull run, or roll it over into bitcoin. (All valid strategies, by the way). And be willing to reconsider your positions in altcoins if you notice certain trends.
Engage with a smart community
This is important. Ideally you’re part of a community where there is some diversity of intelligent thought. Because hearing only one point of view can be problematic, on any topic, and can create what’s called an “echo chamber,” where your beliefs are reinforced by repetition and not subject to rebuttal.
Your community may include people you know in real life or those you find via social media. The key is for these people to be operating on facts. “Be careful of who you listen to on social media,” Kobane adds, noting that some people “just want their bags pumped” (which means some may speak to try to boost their financial positions rather than to help you).
Remember, it’s your decision to invest as you please. But being exposed to new ideas can help you learn and grow. “Having a team—having a community—goes a long way with your exit strategy,” adds Kobane, noting that if you’re holding an asset, and everyone around you has taken profits, you may want to consider your strategy so you don’t end up in a bad position.
In general, if you can be open to new technology, be willing to do your own research and understand market cycles, and be willing to have intelligent discussions and debate, you can navigate this space. Because, while there are certainly real risks with Bitcoin and altcoins…there are real benefits, too.
Leslie Quander Wooldridge is a writer, editor, speaker, and coach whose articles have reached tens of millions of readers. Visit her at www.lesliequander.com or follow her on Twitter and Instagram @lesliequander. [end]