Where to begin? This is certainly interesting, yet something I believe we all should have anticipated. I want to make a few points, and bear with me if this is a little chaotic.
Perspective
November 1st 2017, the entire crypto market had risen to $199 billion. I remember I felt like a king. A month later it was $325 billion and it felt unreal. Then we had a dip down to $440 during christmas, then we almost doubled and topped off at $830 billion January 7th. So in about two months or so we've gone from where we are now, to 600 billion, down to 400 again, up to 850 billion and then down to where we are now.
Also, keep in mind we've dropped like this in January/February the past 3 years. Although not quite as hard as this. Last year we went down 34%. The year before 50%.
Now we are down more than 50%.
But remember, once again, that we've gone up just so much more in 2017 than any years before. From a market cap of 17 billion January 1st 2017 to a peak of 850 billion. That's 50x or 5000% increase in one year. That's pretty insane for a whole market. It is not the illuminati manipulating this shit - it just got overbought and overhyped too quickly. The technology didn't follow the expectations to a certain degree, but mostly it's due to other factors:
- Very young and inexperienced investors (average age 25-ish)
- Disruptive technology. Media, banks and governments fighting against it
- The year of mass adoption
2017 was the year of mass adoption
Like it or not, 2017 was THE year for Cryptos. If you got in early 2017 or even earlier your are still up massive amounts. Sure, it's not fun to watch half your investment gone (on paper) but in my case, I'm still up 350% for the year which is massive. I honestly didn't expect to be up 1000% per year. And what a year 2017 was. If it wasn't for my mother dying, it would have been the best year ever. Glad cryptos helped balance things out for me at least!
Now, the hard part remains. How are you hodling on? Are you losing hope? Are you forgetting the technology?
So, even if 2017 was the year of mass adoption, what does that really mean? Did everyone take up a second mortgage and jump from a bridge last week? No. A few people did that. In a world with 7,5 billion people. Media overhypes things. That's how they get readers.
In a recent survey done in Norway, which I wrote about yesterday almost 5% of all norwegians own cryptos. I don't believe those numbers are exact. Maybe 2% is more likely. But still. It's not that rare anymore. In South Korea an estimated 30% owns cryptos. That's big.
So make no mistake. If you invest $5000 dollars into cryptos even at todays price, you probably will never see those 5 grand turn unto a million. The threshold of making huge gains has increased.
Still not comparable to the magnitude of the tech bubble
I've argued before that in order for it to be a bubble in the same magnitude as the tech bubble of 2000 adjusted for money supply etc, we need the total market cap of cryptos to be somewhere around $7-10 trillion. So at $800 billion we were only 1/10 of that. When the tech bubble bursted it was 10% of the total world stock market in value. Cryptos need to be at approx $8 trillion.
So this peak at $800 is IMO temporarily. It is a correction. Seasonal or not - we will se much higher prices. This is a great buying opportunity.
But do keep in mind, and please be realistic about this. If you buy now, you can expect a 20x return the next two years. (If you time the market perfectly) And make no mistake, I believe we will see more corrections like this, and perhaps a huge blow off at 7-10$ trillion mcap. That's where I am going to take some profits. 20x these levels. That's when you take out some profits to pay off the mortgage or buy an appartment that you can rent out etc.
And then you keep hodling. Because after that, we all know what happens. Sure, the tech bubble burst in 2000..but where are tech stocks now? Exactly. About 100% higher. And that's your pension.
Not over yet
I don't think we've done correcting just yet though. If $400 billion doesn't hold, we could be looking at 200. And that's a real buying opportunity. I'll consider moving in a lot of Fiat if we hit those numbers. I doubt it though, so right now I'm just hodling. If you bought in at higher levels, I'd start considering to buy soon. But again, don't try to catch a falling knife either. Do your own due diligence.
Oh, and don't commit suicide or get so stressed out that you get a stroke. It's only money. It's investing. It's fun. One day you're rich, one day you're poor. Who gives a shit. Do some yoga, go for run. Hell, if we go down to 100 billion I'll sell my Tesla and buy a horse and carriage so that I can buy more cryptos. I will however not eat my own dick like Mcafee :)