2018 has been the worse year for blockchains if you look at the price. Unfortunately, measurement of success in this industry has been measured by market cap. It has roughly lost 85% of its financial value within12 months which may be among the worst performance for any asset in the modern history. There are many other indicators showing all time worse situation for the industry. Question is it all over for blockchain or we can recover from here.
Capital preservation is the #1 reason behind success of wealthy people. If you look at the chart below, it shows how much gains are required to make up for the loss. Summary is It’s much difficult to make up for a loss.
If you look at the history of bitcoins, it has been pronounced dead 100s of times. I’ll do a blog post on death announcements vs price action some later day. Bitcoin has lost 85% or more around 5 times now in last 6 years. Defying every traditional law of finance, it has however recovered strong every time. This exponential rise isn’t alien in the tech world and hockey stick pattern is fairly common.
I got into bitcoin purely because of FOMO 7 years ago. I couldn’t resist staying out while watching everyone around me flaunting about their crazy gains. For me it was unreal & there was no chance I was going to lose. Sadly, I bought my first bitcoins at All Time High (ATH). Bitcoin crashed the very next day losing 50% of the value. I’ll be honest I was really upset over what just happened and pessimism was at all-time high. Fear of losing everything almost made me sell it, but then I figured I’ve already lost 50%, what if I lose the another 50%. Bitcoin at that time was already up by some crazy 12X or so, so there was a hope it can do it again. That was almost 7years ago when bitcoin dropped from $260’s to $40’s.
Looking back, it seems very easy to make the decision toHODL, but it’s not an easy choice when you’re in that moment. It’s very simple to classify the early bitcoiners as lucky but as a matter of fact, they’ve scars all over them. Perseverance in the end paid off for majority of them, but it was super difficult back then.
Bitcoin is lucky enough to have a cult following composed of libertarians, economic freaks & tech geeks who’re in for ideology rather than monetary benefits. This bear market has little impact on them. While everyone is hurt, they’ll continue to BUIDL. With every price rise, there has been a new set of people who come in but as things start to fall apart, they’re the first to pack their bags. In case of a disaster, it’s the tourist who leave first. Habitants stay and focus on rehabilitation.
Cryptocurrency is going through its tough time when it comes to valuations however adoption is all time high. There hasn’t been a time in history when there were this number of intelligent brains working on brilliant ideas. I’ll call it crypto winters where majority of the project don’t have enough resources to survive. It would be a litmus test that’ll differentiate the boys from men. Let’s see how long this survive & most importantly who survives.
Terms Used:
- HODL – Hold on for Dear Life. A term very popular referring to holding on the bitcoin regardless of whatever is the price.
- BUIDL – Derived from HODL meaning Build for Dear Life. Meaning keep on building regardless of whatever is the price
- FOMO – Fear of Missing Out which makes you take an irrational risk without any due diligence in fear of missing on a massive potential upside
- ATH – All time high means you’re the sucker who bought at a price at which you may not be able to offload.