“TO THE MOON!”
If you have entered the CRYPTO SPHERE, it’s likely you’ve heard this saying. Are wild gains and price action associated with cryptocurrency? Yeah, sure! Mostly, it’s fun: comradery, if you will. But, what’s more realistic? The moon? Or the growth of a hardy houseplant?
Today’s lesson is less about calculation, and more about the concept of growth.
There’s many factors to consider when investing in cryptocurrency. (Remembering my blog is solely my views & opinions, and never financial advice…) Personally, I like to look at what I call “People + Potential.”
How many people (holders/wallet addresses) does the coin/token have already?
What is the crypto’s target audience: what kind of growth, in terms of people, can we expect?
What is possible, in both the short- and long-term?
Here’s a few stats to keep in mind. Currently…
- <5% of the world is invested into cryptocurrency
- Bitcoin (BTC): ~140 million holders/addresses
- Dogecoin (DOGE): ~4 million holders/addresses
- Ripple (XRP): ~1.4 million holders/addresses
- Shiba Inu (SHIB): ~1.3 million holders/addresses
You probably already understand more about the growth potential of a new cryptocurrency than you may think! Hypothetically, if two cryptocurrencies were both going to be utilized to a similar capacity, and were equally sustainable, we may assume the younger/less-adopted crypto would have more room for growth. Being a very early investor into a cryptocurrency is the easiest way to make these catastrophic gains, and go on a ride “to the moon!” Only, however, if the crypto survives and thrives: this speculation is an aspect which may be risky business.
Many people result to thinking or saying all crypto is a “scam” if they don’t experience such gains, or if they see a significant price drop shortly after investing into a crypto project. Though the particular token, at hand, may actually be a scam token, it’s just as likely the individual made an ill-timed investment decision. If you are “buying the news,” you’re probably seeing and hearing about a given cryptocurrency EVERYWHERE. It’s filling and flooding your media timelines, the news, and you may even hear people talking about its success, socially.
The saying to keep in mind, here, is “buy the rumor, sell the news.” If you are feeling FOMO (Fear Of Missing Out), it’s probably wise to take a step back, and consider your goals and risk: would it be better to wait, and watch for a retracement if the crypto has already made significant gains over a short, seemingly unheard of, time period? Maybe, it’d be better to purchase only a small amount, allowing the opportunity to DCA (dollar cost average) into your investment, if the crypto does drop in price. These are decisions you must ultimately make and be responsible for, no matter how many YouTube videos you see of people yelling for you to “GET IN NOW!” In fact… the more of those you see, the better it may be to stay away, until a bit calmer time of price action.
Further consideration should be given to a variety of factors, including, but not limited to…
- The age of the token
- The product it’s producing/purpose it’s serving
- Why do we need this cryptocurrency? What is its utility?
- Goals that are set and/or being met (or not) for the crypto
- Is the team following a roadmap? Is it meeting these targets? Why/why not?
- What is the crypto’s potential audience?
- Will 100,000 people be interested in its use case, or millions?
- Referring back to the team… What do you know about these people?
- Are the developers known individuals, whose identities are disclosed? (This is known as being “doxxed”)
- Is their identity important, or are they shown/known to be trustworthy, through some form of history in the space? Maybe they have been involved in other successful projects?
This list of questions and considerations is merely a starting point for conducting your own research. Before you invest, think back to my topic of People + Potential.
After all, for some people, the risk is worth the reward!