On the surface of things, it’s a tough time to be a crypto bull.
On top of that, crypto scams – costly crypto scams – are detonating left and right. Tens, if not hundreds, of billions in value are evaporating. First TerraLuna, now Celsius. You can they won’t be the last. Scams like this are a function of FOMO-fever and outrageously frothy markets, just like they have been for centuries.
I get it: it’s scary. But there’s a lot of reason to be optimistic, and even a couple of reasons to love a market like this.
SkyBridge Capital‘s Anthony Scaramucci is on the same page. He’s a guy I respect tremendously because he gets finance. Like me, was a big crypto-skeptic until the profits made him a believer.
Scaramucci just went on national television – CNBC – to tell the world he’d been buying the dip pretty much all along. And not just Bitcoin, but Ether, too.
The Carnage Is Going to End
Scaramucci pointed out, and he’s totally right, that BTC is more than 50% of the overall crypto market cap right now, which he said is a sign that there’s a flight to quality underway. I agree 100%.
He’s right that scandals like TerraLuna and Celsius are putting short-term selling pressure on crypto. People who only bought into crypto because it was going up at the time – FOMO – have gotten slaughtered and the survivors are heading for the exits.
Scaramucci’s telling people to stay unlevered, and I think he’s being polite there, so I’ll go even further…
If you’re trading crypto with leverage you’re probably doomed. You were probably doomed when the market started to soften up a few months ago. If you’re levered, it’s the easiest thing in the world to get wiped out. It can happen in seconds if a leveraged position moves against you.
Stay disciplined – and stay away from short-term charts unless you want heartburn. My own net worth is fluctuating considerably right now, but I’m not sweating it because I have long-term goals in mind.
Those are the reasons not to worry. Here are the reasons to be excited.
What I See Around the Corner
The “weak” money is getting crushed right now. By that I mean the scammers, the pump and dump artists, the people who were just chasing gains. All that weakness has been knocked out, or soon will be.
What’s left will be a stronger, more robust asset class.
Another thing tends to happen at times like this, and I hit on it the other day.
Input Output – the Cardano (ADA) people – chief Charles Hoskinson recently told Yahoo! Finance he finds crypto bear markets “quite comfortable,” and he’s got a really good point.
Bull markets are cut-throat. There is a sense of community, but it can turn harshly against people like me who might point out flaws. While the crowd is totally head over heels about some project or another, and you come along and say “Wait – I see a potential issue that could bite you in six months’ time,” it’s interpreted as “being a wet blanket” or a “doomsayer,” when, in reality, you’re just pointing out a potential issue. Nobody wants to cooperate during bulls runs.
Innovators like Hoskinson really get down to business during bear markets. They have the intellectual space to look at what just broke and figure out how to fix it so it doesn’t break the next time. As I mentioned the other day, ADA is getting ready for the “Vasil” hard fork that’s ultimately going to make the Cardano network faster, less expensive, and more efficient. I wouldn’t be surprised if ADA hit $1.50 over the course of the summer. That’s real value.
It’s not limited to ADA, either; I’ve told my paid subscribers about four small coins I just bought into because right now is the perfect time to invest in protocol, to go out and buy infrastructure. Plenty of quality coins are getting swept up in what’s now panic selling.
Where you see value that’s been oversold, buy it – you won’t be sorry. Continually balance your crypto portfolio, taking profits and cutting back deadwood – trade the chaos – and you’ll emerge from this bear market much better off, both mentally and financially.