I was having lunch with a friend a while back and the topic of investment came up. He had a full time job but was also an active investor in the stock market and had dreams of starting his own hotel business somewhere in South East Asia. The dream was to save money, make a bit in the stock market, and then buy some property. The topic of bitcoin inevitably came up.
‘Have you invested in crypto?’
A slight pause.
‘Ehh..No, it’s too risky.’
‘Why don’t you just manage your risk, then? The upside potential is significantly higher than any of these stocks you’re investing in.’
Mind you, I’m biased. I’ve been trading, investing and living off bitcoin for almost two years.
‘I don’t think it’s good for the environment.’
‘But you use services every day — cars, planes, trains… Amazon, Facebook, Google — just to name a few — that are bad for the environment. More importantly, many coins are moving towards proof-of-stake (Pos), so the environment issue won’t be a huge problem in the future.’
He was a bit uncomfortable.
‘Hmm, yeh. I guess. I’ll look into it.’
He changed the topic.
We talked about his new car that he bought recently. Only 24 payments left to go before he actually owned the car!
700x in two years…20x in one year…
Pretty damn good returns in crypto.
Would you rather have 0 dollars today or the chance at $500,000 in three years?
Hmm…let me think about that one!
Most people choose zero.
They don’t get crypto, which is fine. Honestly, I don’t get it either, but that doesn’t stop me from learning everyday.
They’ve lost money on crypto and are frustrated. That’s ok. Again, learning opportunity.
So they take the safe approach. The “tried and true” approach. Not investing at all. And that’s fine, they shouldn’t risk much. The space is changing so fast — who knows what will happen.
Maybe a hard fork renders your shitcoin obsolete and you didn’t get the memo so you wake up and it’s all gone.
Maybe your crypto exchange is shut down and you don’t have access to your funds after the founder is found dead with the private keys in his pocket.
Maybe you send money to that new ICO or STO but you don’t pay attention and send it to the wrong address and your money is forever lost in the abyss.
Plenty of good reasons not to invest.
Buy low, sell high is the motto but it’s much harder in practice, especially when you have all sorts of other issues that your ego is bringing to the surface.
Why not put 1% of your risk capital in crypto? Set your ego aside. That would get my friend a hell of a lot closer to his dreams.
A lot of retail investors have left the space, and the next bull run is going to look different than the last bull run — probably.
At the end of the day, people’s emotions are fickle. A large segment will always buy high and sell low.
They will always charge together in herds and only take action if other’s around them are taking action.
Ultimately it’s much harder to do the opposite of what the crowd is doing… and I don’t think (fortunately, for investors) we can change human psychology overnight.
Misha is a Tokyo-based crypto trader and blogger. He is the author of Bullish on Bitcoin: 37 Strategies to Profit in the New Crypto Economyand writes frequently about cryptocurrencies, technology and the future of work. You can follow his blog at https://mishayurchenko.me/