I made a trade under the influence of FUD (Fear, Uncertainty, Doubt) over five years ago. I haven't given it much thought until now. The trading gurus usually say 'Don't trade because of FUD', FUD being Fear, Uncertainty, and/or Doubt. This is for a good reason. Emotions can blind you to rational reasons. I certainly fit this category at that time.

On 1 August 2017, Bitcoin (BTC) had a hard fork. The main reason for this hard fork was a disagreement over the size of transaction blocks. One side wanted a larger block size to increase the speed at which transactions were processed. The other side wanted to keep the original, smaller block size to allow nodes (which validate the block chain) to be run with less resources.

The two factions could not come to an agreement. A fundamental difference of what Bitcoin (BTC) should be lay under the dispute. The faction wanting the larger block size saw Bitcoin (BTC) as a medium of exchange. The faction preferring the original block size viewed Bitcoin (BTC) as a store of value. Compromise was not possible in this case.

After the hard fork, holders of Bitcoin (BTC) received an equal amount of the new cryptocurrency Bitcoin Cash (BCH). The two chains would thereafter have different transaction block chains. Miners would have to change software to accommodate the larger blocks of the Bitcoin Cash (BCH) block chain.

The FUD before the hard fork was mostly on which chain would survive, even if either would last, in an environment that included many competitors, including Ethereum, LiteCoin, Dash, and many others. Bitcoin (BTC) could continue to lag in processing transactions, due to its smaller block size. Bitcoin Cash (BCH) may not be adopted by the mining community or the crypto community in general. Either coin could be dumped, depressing its price.

It was in this FUD environment that I made my trade. On 21 July 2017, I traded 2.56 BTC for 31.57 ETH. BTC was at ~$2651 and ETH at ~467. Those prices don't really matter as I traded BTC for ETH directly. What is important is the value of ETH today, compared to the value of BTC (and its forks) today. How did trading on FUD hurt me?

Today (18 January 2023), BTC is trading at ~$20,760 and ETH at ~$1525. Some simple math, price times quantity to get value.

BTC: $20,760 * 2.56 = $53,145.60
ETH: $1525 * 31.57 = $48,144.25

That means a loss of $53,145.60 - $48,144.25 = $5001.35. In percentage terms, that is a loss of $5001.35 / $53,145.60 = 0.0941 or 9.41%. Less than 10%, so not too bad.

But wait, it gets worse. Remember that all holders of Bitcoin (BTC) would receive an equivalent amount of Bitcoin Cash (BCH). The Bitcoin Cash (BCH), 2.56 coins, would now be worth $121 * 2.56 = $309.76, so that has to be added to the $5001.35 loss from choosing Ethereum (ETH) over Bitcoin (BTC). There are also other forks on Bitcoin (BTC) and Bitcoin Cash (BCH), such as Bitcoin-SV (BSV), but I am assuming they would not change the percentage significantly. I am also ignoring the EthereumPoW (ETHW) coins that I received from the Ethereum fork.

Now the total loss is $5001.35 + $309.76 = $5311.11, yielding a percentage loss of $5311.11 / $53,145.60 = 0.0999 or 9.99%. Just a hair under 10%.

Now, at this point, you might be asking yourself, well, those are today's prices. Was there any time in the past where the trade was profitable?

(Source: bittrex.com)

Looking at the BTC-ETH price chart, there are some times when the BTC-ETH price exceeded 0.081, the price at which I traded Bitcoin (BTC) for ETH (the leftmost blue triangle on the chart is the trade). But the trade has been underwater for most of the past five years. Of course, I do not still have all the ETH I received in the trade. Some was traded for other altcoins, some even bought some Bitcoin (BTC).

Looking to the future, I think ETH may be better positioned for some slow gains. Bitcoin (BTC) may end up being a store of value, just as that faction wanted. If I didn't have to pay gas fees for trading ETH, I would rebalance my portfolio from 90% ETH / 10% BTC (I'm not counting other altcoins) to a 60% ETH / 40% BTC split.

Of course, this is not financial advice. Do your own research (BYOR) and check your emotions that you are not under the influence of fear, uncertainty, or doubt (FUD).