HODL or DIE? - Good Strategy despite ongoing Dilution of Crypto Market and Regulation Rumors?
Dear Steemit friends,
times are tough for us actually. After the huge rise of the whole market to unhealthy heights in early January of 2018 it feels now like a tumbling drunken sailor on deck of an old ship.
There are many voices claiming "HODL!" for the ones who doesn't know what it means
Hold your coins even if 300 spartans with flashing swords standing in front of you signalling to do not..
Funny thing about HODL it was unintentional invented by a drunken man on the Bitcoin Talkforum in December 2013 over 4 years ago.
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Why the hell it is necessary for us human beings to create and use such war cry to hold our cryptos?
Who are familiar with the stock market there is a strategy called "buy and hold" and means nothing more than buy stock at cheap or fair price and hold it for a very long time to use the magic of compound interest which unfolds over time if you bought a good stock or in other words better company. That strategy applies often to already established companies with high market caps over 10 billion or even 100 billion US Dollar. Such companies often have a decent growth rate of 10-20% per annum and also pay dividends of 2,3 or even 4%. Peter Lynch (famous manager of Magellan Fund with a average return of nearly 30% over 14 years) called such stocks "Stalwarts" which are rock solid businesses with big moats to easily defend their market positions for years or even decades, something a savvy investors is looking for. They are also called Bluechips.
What happened to crypto market?
2.5 months ago we climbed to the top of the mountain with near a trillion US Dollar value for the whole market! That were astounding numbers for the first time in history of cryptocurrencies!
Many predicted a further rise from that height and the Altcoin buying frenzy was unrivalled. Bitcoin's share (orange zone) was squeezed to a mininum around 30% market share and is now up again over 40% market share as you can see below.
A big sell-off started from that alltime high and has now stabilized at around $300 billion market cap
What about the market dilution by ever new emerging cryptocurrencies?
Eek! Yes it's true we have ongoing dilution with all these new cryptos every morning. To show a general trend you can see below the fundraising by ICO's is growing in 2018 up to now near $2 billion per month!
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chart by coinschedule.com
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pie chart by coinschedule.com
It is known there were sometimes double digit numbers of new ICO's each day in 2017 and now! Each of them try attracting people for their coins.. whether they have some value or not. I assume often they have no or extremely low value.
How many Stalwarts are among them?
How many established projects or companies are in the market currently? How many projects are invulnerable by competitors or which are the ones have such a big moat to defend their position for years or even decades?
I would say in terms of the stock market
No one!
Because we cannot compare these blockchain projects to Apple, Coca Cola or a Google. The latter sell millions and billions of phones, sugar drinks and information each year and make tons of money. Especially Google is fully aware of the potential of blockchain technology and will using it massively in the future. IBM, Microsoft and Accenture are the top spenders to develop blockchain technology for their businesses. That means for them it is just a subsection or a extension of their widely established businesses.
But for me the so called Stalwarts of cryptocurrencies are currently Bitcoin.. huh, maybe Ethereum.. but nothing more. There are many much smaller project with working products but they belong to the small caps or even tiny caps which are always highly speculative and often victim of market manipulation like in the stock market. That means crypto markets are still highly speculative with high risk but also with chances of huge returns long term.
A special case is Steemit for sure. I have a bias because i'm using it every day, you should not believe me. But it could be a fast-grower (if new accounts are accepted and the process is widely automated and works like a breeze..). The whole ecosystem with all the dApps are fascinating, bright future!
Regulators flock in droves into the crypto market
We know the news in the last weeks were often dedicated to regulators like the SEC, PBoC or ECB which don't like the steep rise of cryptocurrencies. They may have expected a slower pace to bring their own cryptos in place. Regulators, especially the SEC are now on the hunt for security like projects. They look for the masked dividend payers or other who fit in their scheme of a security. That leads to shutdowns, slowdowns and other problems for blockchain projects but cannot stop them at all. But the question is raised:
Are the prices for cryptocurrencies justified?
Tough question i cannot answer. Some say a fair value of Bitcoin alone is at $5,000 others say $0 (what is ridiculous nonsense!). Many Altcoin projects are now under their ICO price which is something very annoying for the typical long term or HODL investor! To give you some examples:
note: rough estimate, because of some airdrops directly after ICO it leads to cheaper price
| project name | ICO price | current price | +/-% |
|---|---|---|---|
| Sether | $1.91 | $0.36 | -81% |
| Bread | $0.72 | $0.56 | -22% |
| Indahash | $0.08 | $0.08 | 0% |
| (Tezos IOU) | $0.40 | $3.95 | +887% |
| (1)Iungo | $0.72 | $0.08 | -89% |
| carVertical | $0.0045 | $0.0032 | -29% |
| (1)PundiX | $3 | $1.1 | -63% |
| BeeToken | $0.25 | $0.08 | -68% |
| (2)Titanium | $0.88 | $0.25 | -72% |
(1) - ongoing airdrops dilute or change prices, PXS swap to NPXS 1000:1
(2) - BAR to TBAR swap because stolen funds, not traded yet
You can see there are many projects who suffered not just from price slump in times of FUD after January, but i think also because of some bad decisions or mismanagement by the teams themselfes. It was a double-hit-takedown! Interesting to see the not yet released Tezos which is traded as virtual IOU with a multiple of the ICO price.
Many sold their coins the spiral downward with big losses i assume, some may have reduced their holdings and others like me just slept during the slump 😤 Now there is this question:
Is HODL the right answer for all of them?
My opinion on that if you have already losses of -90% what can you loose? It can make you angry but i think the current market has a bad sentiment and if the project has some intrinsic value with the product or service the price shall go up in better times. Maybe it will never reach ICO price but at least to reduce some losses to a certain degree and others may go up like rockets to the sky.
If you have already fed your pig maybe you can wait til better times or you have some project which you are really interested in. My short experience of just nearly one year in the space is..
Patience is a virtue which is paying off!
That may not fit for a scammy, fraudy, dumb project which is doomed to reside in hell.. but for other projects which are just suffer from the current speculation frenzy and which are continuously working on their already established products.
Yes, i ask that myself from time to time and maybe you. I belief in intrinsic value of projects or companies. If they have something really valuable like a crypto card for paying goods in daily life or a trustworthy gambling platform thanks to the blockchain or maybe world currency with the speed of light.. then it's just a question of time until the true value is reflected in price. Maybe that's at the end of 2018 or maybe just in 2020 for some projects. But if they do serious business and have something unique or could offer something useful for the cheapest price on the market then it's possible that they not only survive but thrive!
To close, i decided to
HODL!
What are your HODL projects?
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Exciting times ahead steemit friends!
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strat ,eth and bitcoin are my HODL projects . what you said is so true. N number of ICOS are coming up in the market :( with no real projects . I mean tons of shit coins :(
Do you mean that start?
Sadly there are many scammy project among the good ones who steal money. But here the regulators coming into play and help to wipe out such projects. Thank you!
@onetin84 I mean to say strat not that scummy coin start. bittrex already wiped it out of their market.
ah, Stratis, me too.
Thanks for given excellent analyzing of current and past crypto review. I extremely suggest hodl. I'm most trust steem, btc and eth. hodl them.
Thanks for your list, keep hodling!
Buying and holding is part of a strategy. But until when are you holding? Are you waiting for another 20x increase and following 90% correction? Are you actually holding through it all? When are you selling? Until you sell, your coins are actually worth nothing.
Just some thoughts. I think holding is a good strategy in some cases, but some people are "brainwashed" by this idea that coins will always just increase more and more in value, it can be a dangerous thought.
Interesting thoughts, i agree. The value of a currency or a token depends on the use case, if it's necessary to use the coin or not, competitors, need, real application, inflation, dilution.. many reasons
@onetin84, Definitely valuable crypto information indeed awesome analyse and review. Well contribution. Your crypto news must important, for take best decision. Currently long drown trend to cryptocurrencies. I suggest you'll follow last years crypto overviews. All cryptos down and then up every year. 2018 year is a crypto year. After coming out SMTs will rise again. Time to buy dip and just HODL better idea. In fact I hodl bitcoin and Ethereum. Other once sold out of my favorites.
I believe McAfee did a analysis year by year and predicted such rise as pattern.. but can't find the source to it. We as human love patterns but often they mislead us because correlation must not be causation. But i believe in a typical cycle of business year with specific money flows which is normal and natural.
I don't know the impact of SMT's but if is adopted like intended it could be huge intake for Steem. Interesting many hodl Bitcoin and Ethereum. I use ETH only for exchange or investing currently and holding a smaller amount of BTC. But that may change.
Greatgreat analysis of the current situation, thanks a lot for this! I am totally with you regarding patience.
Thank you for commenting. I'm optimistic we see better times in the future!
Thanks for post educative article to me @onetin84. I'm new to steem blockchain and cryptos. So I haven't yet any cryptos and will be hope good investor in future. For that, your blog valuable for found.
My advice (from my short experience) don't fall prey to FOMO (fear of missing out) and als FUD (fear, uncercainty and doubt). Make your own decision, do your homework, invest just in projects you know a lot about and before making a move better sleep a night before deciding. I know the latter is hard for many because it is an old saying: One day in crypto is like one year in stock market. But thinking constantly trading coins is good, is a trap for me. High fees for buying, exchange, transaction, wrong speculation, etc. are melting away all the value.
The basic principles are always the same in my point of view. Behind all the SERIOUS! blockchain projects are sitting real people, with real offices with real work to do and just 24 hours a day and 7 days a week. They cannot do magic things and the blockchain is nothing to cure cancer with a touch. It is a great technology with specific application but also needs time to develop and to integrate in the real world and there is no reason to pump a worthless coin to a billion Dollar which is just one day on the mainnet.. i think patience is very valuable also in this space.
Thank you given more valuable opinion. I'll follow them
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Interesting that I also hold Bitcoin and Steem as well although that I often use Ethereum and sometimes Dogecoin for transactions.
For future viewers: price of bitcoin at the moment of posting is 8414.90USD
Better analyse of crypto current condition. Lot of valuable things there. Thanks for sharing community.