Each person in the world is different and unique, and that is what makes life so exciting. This is evident in the cryptocurrency market where there are endless options of coins to invest in. One person will be a fan of Bitcoin, the next will feel that Ethereum is better, and so on, the debate is endless. What is right for you, may not be what I’m interested in, and vice versa. However, this is where the danger comes into play in the crypto market. It is all about the journey you take, and the decisions you make. By making just a few correct decisions in crypto, you could change your life financially forever. By making just 1 or 2 wrong decisions, you could see the value of your portfolio go to zero.
And so we are on our own crypto journey towards hopefully obtaining financial independence. Some of us are much further along on our journey, but we are still in this together. We all make the same mistakes and must learn from them, just like the people who entered the crypto market before us.
Innocent Stage
When most of us entered the cryptocurrency market we were innocent with our intentions. We simply were hoping to make some extra cash and thought this cryptocurrency market might be a good way to do it. We had only heard of the blue chips in the market such as Bitcoin and Ethereum. and decided to invest some money into these assets. We were told that the crypto market is incredibly risky and that any money you invest in it should be money that you’re okay losing. That there are only a handful of “real” crypto projects that will be able to stand the test of time. We were told that the crypto market is risky enough and so we should just stick to those safer assets such as Bitcoin and Ethereum. Even though they are pretty conservative when it comes to the crypto market. When compared to any other financial asset they are still incredibly volatile and risky.
We put money into these assets and over time we see great gains. We had doubled our portfolio or even better.
But we begin looking to the left and looking to the right. We are seeing that people who invested in altcoins are making significantly higher profits. That is the moment we decide to enter the Altcoin forest.
Altcoin Forest Stage
By this point, we had made profits with our Bitcoin and Ethereum and are starting to believe that we know the crypto market well. We notice that prices of all coins tend to be correlated to whatever BTC and ETH are doing. If BTC goes up by 3%, an altcoin will go up by 10%. So why not just invest in the altcoin instead?
After all, many of us felt that we got into BTC or ETH too late to be able to become rich off of them, and so our only method is by using altcoins.
And so we begin heavily investing in these altcoins while neglecting the blue chips that were mentioned above. Our coins begin to soar in value and we feel like geniuses. One of the coins that we bought has gone up by 10x. Thoughts begin to enter our mind, that if we only do this routine a few more times, we’ll be set financially. However, this was our first cycle and we weren’t aware that anyone can make money during the bull run.
We aren’t prepared for what is about to come next.
Losses Stage
By devoting a majority of our portfolio to altcoins, we amped up the risk of our portfolios by 20x. Now that we entered our first bear market we are beginning to see the giant mistake that we have made.
During our first bull run, we saw our portfolio’s value begin at $1,000 and rise up to $100k. But now, most of our altcoins are down more than 90%. Many of them will continue to go even lower. Many of these altcoin projects will either be abandoned by the developers or will never again see any level of hype that they once had. It’s over.
We look over at Bitcoin and Ethereum and they are also down 70%. However, there is one major difference between those blue chips and the rest of the altcoins. They will be around for the long haul and will recover much faster than your lottery ticket altcoin, which may never recover.
Risk Stage
Some of us will have learned our lesson with the extreme amount of losses that we just experienced, while others will dig their hole even deeper. Because they lost nearly everything, they are now dedicated to making it all back and soaring to even higher levels.
They begin trading with leverage but are quick to become liquidated. Next on the list is becoming obsessed with earning passive crypto income. Having your crypto work for you.
This sounds like a great idea in theory, however, the passive income earned often blinds users from the red flags right in front of them. Investing into a coin that has no real purpose, just because you can stake it for high-interest rates. Lending out your crypto to 3rd parties who may never return it. This is something that many people learned the hard way last year with so many of the crypto lending companies becoming insolvent.
Eventually, people learn the error of their ways. Even though that crypto is paying 20% to stake. 20% of a coin that has no value is zero. Earning great interest rates by lending out your crypto is great until they freeze your funds. It’s only then that you realize that you were trying to pick up pennies in front of a freight train.
Conservative Stage
This is a stage that so many are finally entering with everything that took place last year. By seeing their altcoins value drop by 95%, and having their funds frozen or lost on the crypto lending services. They have learned their lesson the hard way.
They now have come full circle in their crypto journey and have returned to investing in safer projects. All of a sudden projects like Bitcoin and Ethereum seem much more appealing. Projects that still have incredible potential, but will be around for the long term and will recover more quickly. They understand that taking self-custody of their crypto is a necessity and can no longer be put off. That it isn’t worth taking the risk of lending out your crypto when that interest doesn’t compare to the gains that both BTC and ETH experience during a typical year.
As I mentioned at the beginning of this article, we are all on the same crypto journey and have experienced these stages as well. I have gone through all of them as well and now find myself in the conservative stage.
How about you? Which crypto stage are you in?
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