The Crypto Skeptic Takes a Hit
What was that I was saying about arrogance?
Welcome back to my little series on the vicissitudes of the crypto market. When we last left off a mere week ago, I’d just made a serious score that more than doubled my money in less than 24 hours.
Those were good times. As much as you try to control your passions, there’s something very primal about watching that line shoot up into the heavens. It’s a thrill, winning something so quickly. But the wise investor is always a little conservative, and so my plan here was to park that money in ETH until another opportunity came along.
Just a few days later, another batch of new coins hit the Coinbase exchange, and once again, I was lucky enough to get in on one within hours of its addition. This time, though, the results… well, look for yourself:
The culprit behind this drop? IoTeX (IOTX), a protocol for linking autonomous devices. I bought into it at around $0.12; as of this writing, it’s under $0.09.
So what happened that made this one a loser where ACH was a winner? Perhaps it was the result of whales pursuing a different trading strategy.
Whereas ACH went up pretty steadily, IOTX was incredibly volatile in the first few hours on Coinbase, sometimes shifting as much as 20% in either direction within minutes. This suggests traders were going for lightning-fast, low-yield returns — not trying to double their money, but looking for a series of quick 3%-7% gains. It’s certainly risky — a single network hiccup can result in the trader buying or selling at a disadvantageous price — but it can allow a person with a lot of upfront capital to pursue trading full-time.
With the price fluctuating so much, there was never a breakout moment where everyone jumped onto the bandwagon. And when the whales started leaving, the price dipped enough to start a sell-off.
But here’s the real question: What now? When you buy into a loser, you have two choices:
- Get out quickly and eat the losses; or
- Wait until the price rebounds.
The latter is, of course, the old HODL meme, and I have very mixed feelings about this concept.
On the one hand, I’ve had some luck with it. I bought into another coin — AMP — that dropped immediately after I bought it; a month later, I made 15% on it. I have pretty good reason to think that IOTX is going to up soon, as well. It’s part of a group of coins that tend to go against the market, going up when the market is down and vice versa. The market is currently up, but a lot of the coins are taking a dip, which could mean that the whales are taking their cut and looking for something that’s bottomed out for their next investment.
The HODL philosophy misses something important, though. Any coin that isn’t an outright scam is going to go up eventually, but there’s no guarantee that it’s going to hit any particular value. IOTX could double in value from here and I’d make another big score. It could also level out at, say, $0.10, in which case I’d be down about 15% — unless I was willing to take a bigger gamble and wait longer, risking a bigger loss if the market slumps again.
Remember, it wasn’t that long ago that actual financial experts were predicting that BTC would hit $70k or more. It’s currently at just under $46k. That’s up about 50% from where it bottomed out, but anyone who bought in right before the crash is going to be waiting for a while before they get their promised returns…if they ever come at all.
Even when pursuing a safe, conservative, long-term strategy, losses are a real risk. The only genuine zero-risk strategy in crypto is to skip investing and sell suckers on a zero-risk strategy.
As for me? This is effectively found money, so it’s no crisis if I lose it. So what happens if I HODL my still-falling coins? Will I reverse my fortunes and land another unearned victory, or will I prove my original thesis right by losing even more? We shall see together.
