Protect Your Portfolio when Good Digital Assets Go Bad
The #1 most important factor in determining if your crypto portfolio is going to make or lose money is the quality of the assets you own.
If you had a magic power to know exactly when the right moment to buy or sell was, that would be nice, but in the real world the only thing you can control – and the most important thing to control – is whether you are putting your money into assets that have strong fundamentals or not.
That’s what determines whether this asset has real-world utility and longevity in the market. I developed the 5T’s Test to analyze that fundamental value and decide which cryptos are worth our time (and risk).
But that’s not where the work ends…
There’s nothing stopping a fundamentally strong crypto from going bad and becoming the sort of asset that we want nothing to do with. We can see this happening using the same process we use to identify a good crypto – the 5T’s.
I watched one crypto in particular fall from grace, and it demonstrates perfectly what to watch out for…
A Token past its Time
Ripple (XRP) was a good idea once upon a time. When it was created in 2012, a crypto specifically designed to be used in currency swaps was a decent idea. The entire concept of cryptocurrency was new. Technically, Ripple has been around longer than Ethereum.
Unfortunately, it showing its age like Ethereum, too. Far worse, even – in 2017, a swap token would be incredibly useful. Now, though? It’s nothing special.
We can perform those kinds of currency swaps in many places like Coinbase and MetaMask – there’s no need to go through Ripple now that other options are basically everywhere.
Those are the Timing and Technology pieces of the 5T’s test at work right there. Ripple has gone from cutting-edge and in-demand to obsolete and pointless.
That brings me to the fifth leg of our 5T’s test — “Why Token?” – and with XRP, there is no good answer.
Crypto Corruption
XRP also fails in the Team and Tokenomics categories of the 5T’s Test. The developers of XRP started out trying to solve a real problem, but either they were hiding their true nature, or they were corrupted by their success.
Because eventually, they started giving more tokens to themselves and gave privileged access to favored market participants.
The team went from solid to crooked, and since they’re dishing out free assets to themselves, they’re debasing the assets of every other XRP holder.
I’m not saying that XRP is packed with nothing but sketchy slimeballs as far as their staff goes, but I expect any decent people still working there to have exactly zero influence on the direction of the overall project. That’s why I no longer recommend XRP to any digital asset investor who wants to actually make money.
In fact, I’m only talking about it here so you can take this warning: just because something was a strong asset once, doesn’t mean it always will be.
You can see my full breakdown of XRP’s fall from grace from October 4, 2022, right here.