Crypto? What’s the essence.
What happens next
What’s happening?
The date is March 25, 1929. The central banking system of the United States- The Federal Reserve warns the general public about excessive speculations in the stock market. A few hours later, the market starts a steep fall. Two days later, a millionaire banker provides $25 Million in credit to cushion this, the rally continues.
It was not hidden knowledge that the market was fragile and was having a steep ride like it was on steroids, yet the speculations kept increasing — people kept investing funds in huge amounts. Prices had been bullish for 9 years and had a tenfold increase in this time.
On Sept 3, prices peaked. Irving Fisher — an economist gave warnings again. Sept 8 — a decline started after another broadcast that a ‘crash is coming’. Investors regarded the September decline as a healthy correction — and buying opportunities.
At the opening trading bell on Thursday, Oct 24, prices in the markets plunged due to heavy selling pressure. This was nick-named Black Thursday. After this, leading financial market bankers met and decided to buy an incredible amount of shares at a high price. This helped a little, but all hell broke loose again on Monday, Oct 28. Investors were facing margin calls and were on the verge of liquidations. The selling was worse. Black Monday it was. The day after- Black Tuesday — Billions were lost- thousands of investors were completely wiped out. This lasted for three years, affected the world, and led to a depression.
The events of the past months (and weeks) for the cryptocurrency industry aren’t too different from the stock market crash events. Just a different context.
This time last year Bitcoin reached its all-time high, since then it has lost 75%. Investors and traders have lost money, there have been liquidations, and others have quit crypto.
These happened for different reasons. Three of the five worst events in crypto history occurred this year alone:
•Terra Luna collapse
•3AC collapse
•FTX collapse
Due to these, at different times this year, huge liquidations and drawn downs have occurred with so many traders and investors being affected in different ways. In one week, $10 Billion was wiped out, the second largest exchange went down with public funds — their founder and CEO saw his net worth go from Billions to 0.
One very significant difference between these predicaments to the stock market crash is that the general public- investors and traders alike had no hand in any of these, it was never their fault. People trust and invest in crypto- suddenly they get wiped out for reasons out of their control.
The events were caused mainly by a lack of transparency from leaders of big and important projects and companies in the industry. This is fueled by a lack of regulation. Another major cause is the lack of adequate security. ‘Hackers’ have been on a roll for some time.
What next? Where do we go from here?
The effects of these events might hang on for a while. But knowing what to do at different points in time is key to being a successful crypto investor.
Crypto will survive this. After the stock market crash. The markets recovered and rallied for decades- reaching highs in the mid-1950s. Nothing is ever as good or as bad as it seems. I see this as some bad actors (leaders) being wiped out of the scene and some actions being corrected for the greater good.
If you have somehow survived this- kudos. If you lost resources- condolences, you will be fine as long as you don’t quit.
Moving forward — what next
No one is certain about the future, but we can make predictions and decisions based on the data we have today.
•The first thing to do will be to go back to the basics. Ask yourself why you joined crypto and are those reasons still valid. I believe in a decentralized model of finance- and personal banking. I’m also a trader. Nothing has changed, I’m sticking around.
•The boxes are checked, but now isn’t a good time to invest- never catch a falling knife. Allow the market to settle fully in the coming weeks or months. Crypto has huge volatility, and traders can always make money at all times- but it is a high-risk endeavor, always stay safe and handle risk.
•Move your funds to cold storage: Storing funds outside the internet is the safest way to go now. Hard to hack and is secure. This is mainly for investors- people who don’t trade frequently and hold for the long term. You can get a ledger from shop.ledger.com.
•Always do your research: This can’t be overemphasized. Before investing or buying a coin of token, always go through everything about them. From the tokenomics to the whitepaper, their website, the team, founder, their social media platforms. Everything should be duely scrutinized.
•Build in the midst of Fear, Uncertainty and doubt. The crypto industry is vast, there are opportunities in different forms. DeFi, NFTs, Trading, Freelancing. Taking out time to gather knowledge and learn specific skills will pay off in a short while.
•Focus on other skills and other sources of income. Crypto isn’t doing well at the moment, pay due attention to other sources of income and double down on them. Never put your eggs in one basket.
A rebuilding will happen, crypto will have more bull market rallies. Don’t leave and come back when it’s too late. We will survive this, as always. Stay safe.
