Why it is rational to be long crypto for 2018. Let’s take the following three scenarios:
Crash with -70% (Crypto was just a bubble)
Stagnating -20 ; + 20 %
Similar or better growth than 2017 x30
If you have no idea on probabilities of each case let’s assume it’s ⅓ each. That makes an expected return of x10. Everyone in crypto knows there is a strong bias toward crypto adoption. It is a self fulfilling prophecy. If a growing number of people recognize crypto as a new store of wealth it will become a store of wealth.
In case of something goes wrong you can track data such as exchange volumes or web traffic (for example https://www.alexa.com/siteinfo/coinmarketcap.com) to make sure the trend is still strong. Currently coinmarketcap.com is #44 in US and #145 in the world with a daily time on site of more than 9 minutes which is more than google, youtube, twitter, wikipedia, nytimes …
On top of that you have free advertising everywhere
If you reassess the probabilities of the scenarios you could see, you can note that worst case is monitorable and that best case is more likely because it is a self fulfilling prophecy.
Prices are strongly correlated to adoption. A -50% with growing traffic figures is a compelling entry point while an increase in prices with decreasing volume is a bad sign.
Of course there are risks, you can have your money stolen on an exchange, a coin affected by a hack, but if you learn how to mitigate your risk by good practices you are exposing yourself to the best performing asset class ever.
As it became a mass market an increasing large portion of participants will stay with a poor understanding and expose themselves to the worst coins while if you do some research you’ll be able to understand that everything revolves around bitcoin which is the safe haven and you can choose better coins with some insight.
(For instance there will always be a natural demand for privacy coins such as Monero/Zcash, Platforms coins such as Ethereum/NEO/Stratis will be bought because applications are being built on top of it, Exchange coins with dividends such as KCS have a real value by creating a revenue, Crowdfunding social decentralized network coins such as Steemit/Musicoin have a chance to be widely adopted. And of course bitcoin is the main entry point and the main trading pair. Its dominance can decrease when most altcoins are in bubble mode but that is the only coin with a very certain future.)
Conversely new hot coins built for hype are very dangerous. (Bitcoin cash does nothing new but attempt to steal bitcoin hashing power, Bitconnect is a ponzi, Qtum, Tron, Cardano are benefiting of undifferentiated influx but will have to deliver to keep these relative valuations)
Icos are dangerous because it’s an easy way to scam but they will also facilitate emergence of innovation. It just became easy for a team of developer to bring an application on the world market without going through the tough job of getting financing. Most of what you see right now will disappear but some will stay.