It's sometimes the fear that drives our actions. An event occurs we didn't anticipate. The lack of anticipation brings a sense of the unknown that may help or hinder us. You are not alone. The world may not be out to get you. It may just need to set the balance. Our fears of missing out can turn into fears of being invested.
Introduction
Another bubble is bursting.
On May 12, 2021, ETH reached a historically high point of approximately $4400 per share. Since that point, it has been dropping steadily and, at times, dramatically.
Reports of massive cryptocurrency movements by Vitalik Buterin, followed by the calculated statements of Elon Musk, shocked the currency world into its $300 billion downfall. While Elon's rants focused upon Bitcoin, the industry felt its effects.
Why do I write the word "calculated"?
- On March 24, 2021, reports arose that Tesla was accepting Bitcoin as a means of payment. According to Musk, the new payment method would extend to Tesla facilities outside the USA by the end of the year.
- On April 24, 2021, Elon Musk tweeted the phrase "What does the future HODL" to his followers.
- On May 13, 2021, Elon announced that Tesla would no longer accept Bitcoin as a method of payment due to environmental concerns.
- on May 19, 2021, Elon announced that Tesla had diamond hands. He proclaimed that neither he nor Tesla has further sold any of their holdings. Interestingly enough, the Bitcoin opponent, Peter Schiff, whose company accepts payments in BTC, responded to Elon's tweet by stating BTC held no value.
All investments, no matter how formally dressed in mathematics, are a gamble. The bubble can burst at any time.
Caveat Emptor
What is a Bubble?
All assets have a value that is real or idealized. We ascribe value to anything we find helpful. In cryptocurrencies, we base the value of a token on how we can use it. Crypto's like BTC, for instance, rose in value through terms like security, anonymity, and application.
When prices associated with an asset start to approach or rise above its historical value people give claim to a bubble that forms. Like any bubble, it would eventually pop. If the asset's value surpasses its intrinsic value, the bubble will most certainly pop. Once that occurs, prices quickly drop to a new lower value reflective of that asset's intrinsic value.
We've seen examples of financial bubbles popping in our recent history. The dot.com and housing market bubbles, for instance, reshaped financial markets following the burst and collapse of institutions. The cryptocurrency bubble is no different. It's my guess as to why Elon did a 180-degree turn on his initial May 13 announcement. An asset valued above the trillion-dollar mark would be quite the house of cards that tumbled down.
FOBI
While we have fears over not investing at the right time, fears can also come with being invested in an asset. I've no doubt events over the last week have put you in that special place in varying degrees.
I would recommend maintaining a high degree of emotional intelligence. Don't let the fear take hold of you. Do not accept its embrace in exchange for a reduced value of your investment. Do not, unless you decide you must. Your assets are your own. Even Elon is changing his tune, and he didn't even sell his share...yet. Why would a billionaire release his investment in a thing unless that release profited him?
Should I sell! That's up to you. The prices are stabilizing, and I believe the BTC whales have had their needed drop. Chain Analysis' Chief Economist Philip Gradwell reported a high volume of BTC purchasing occurring a couple of days following BTC's lowest price:
It's easy to assume that whales purchased BTC during this time, but honestly, I find it difficult to accept it. Transactions are anonymous. Aren't they?
Please share your thoughts below. I'd love to know if there was a way to identify someone making such purchases.
Choose Wisely
We all invest. Being on this blockchain alone proves it.
Listen to the advice of your colleagues and then decide on YOUR OWN. Perhaps, you make a sound investment with a clear head—you alone place value on your choice.
In Closing
Image by Gerd Altmann from Pixabay
Thank you for reading and following on throughout my Hive journey. Please stay safe and clearheaded on your decisions. Keep your emotional intelligence high, and, in the case of crypto, be sure it's you, and not just your emotions, that are running the show.