So as many people are aware Bitcoin is all the rage right now. There's people who are literally putting everything they own on the line with the hopes of massive gains. This article is going to explain why, even from an optimistic perspective, this is foolish.
If you find your adrenaline is pumping while looking at CMC and you feel some immense need to rush into throwing all of your money into crypto exchanges then you're one of the many influenced by the fear of missing out.
As all of the focus surrounds bitcoin we're seeing more and more people jumping on the bandwagon every day. I've personally read several comments on various sites from people who bought at 18-20k and are devastated that just days later it's crashed down to 13-14k. This is the perfect example of how emotional investing and what's commonly referred to as "FOMO" (fear of missing out) will cost people a lot of money.
The recent bitcoin crash down to 13-14k is not, in my opinion, a big deal or even a bad sign. It's a healthy correction that many people predicted and even counted on due to the fact it had to happen eventually (nothing goes straight up for ever). So the reason I mentioned the people who bought in while the price was above 15k is not to say they will lose their investment, it's more or less to point out how a little bit more patience and researching would've gotten them a significantly better deal.
FOMO investing does not always end badly. A good example of people's FOMO paying off is really anyone who invested into bitcoin as it began it's rapid climb this year. The key is to make sure your greed, fear of missing out, and other relevant emotions are in check and ensure that they are not the only thing driving you to invest at a particular time. Keep in mind that there's still plenty of time to get rich off of crypto currency and missing a few opportunities is not the end of the world. Nobody is omnipotent and there's no magical crystal ball that's going to help you. All you have to rely on is your own logic and reasoning, so try to remain as level headed as possible when trading.
It seems a lot of people have some very narrow-minded views when it comes to investing in crypto currency. I've found most of these people simply don't understand how the crypto market works or how a crypto currencies' price growth is limited/influenced (see this for more information). This leads them to having completely nonsensical or unrealistic growth expectations and therefore they're at greater risk for making bad investments. Once a crypto currency has grown to a certain height, investing becomes far less lucrative.
It's important to gauge where a crypto stands and how far it can go/is likely to go in comparison to other investment options. If a crypto currency has shot from $1 to 500 dollars in less than a month buying in at $500 dollars is an extremely stupid move. Sure you may profit, but you're taking a level of risk that no savvy investor would take. In this situation the only smart thing to do is either wait for a significant correction and buy in while it's considerably cheaper or don't buy in at all and move on.
At this stage of the game buying into bitcoin is kind of silly in my opinion. Don't let the massive numbers fool you into thinking bitcoin is the best investment to make for quick/massive profit in the crypto world. In the time it took bitcoin's price to rise from 10k to it's short lived peak at 20k (a 100% gain on your investment) you could've literally made several hundred percent gains if you were invested in various altcoins instead during that same time frame.
Altcoin investing does require a lot more work than most people are willing to put in since you've got to spend a lot of time reading and verifying projects, teams, claims, etc. But if you're diligent and careful with your investment choices and timing you will literally just watch your profits soar.
Essentially I think, aside from being blinded by emotion, people are missing the mark with altcoins because from a glance you may see something like ripple jump from $0.22 to $1.00 and think to yourself "Oh look ripple is a dollar now, how cute" without really taking in how massive the profits people made off of that were. If you invested $1,000 into ripple when it was 22 cents you've made $3,500. While if you invested that same $1,000 into bitcoin when ripple was still 22 cents you would've hardly made anything in comparison.
In short, people are trying to board a train that's already departed while missing/ignoring several opportunities to board trains heading in the same direction. That's not to say any crypto currency in the foreseeable future will ever hit bitcoins current value, but the point is that they don't have to for you to make insane amounts of money. If you let go of this bitcoin tunnel vision you will be amazed at how many lucrative investment opportunities you will find in the crypto world.
