I remember one day outside of class when I was in college I walked up to one of my philosophy professors and said jokingly “you’re breeding atheists!” . He responded very seriously “I just teach people how to think.” It is of the utmost importance when investing that we are critical thinkers. Crypto trading is no exception.
During the beginning of this year and to the present we’ve experienced a lot of downside to the gains that crypto currency made in 2017. I was watching the news and saw the famous anti-virus creator John MacAfee give a prediction that Bitcoin was going to go to over a million of the course of a few years. I read that another person is saying that based on the linguistic patterns they’ve decoded from search engines that bitcoin is going to spike to $34,000 in a few months and then somewhere around $64,000 before the end of the year. These predictions are certainly not limited to Bitcoin but they are rampant among the crypto enthusiasts.
What I would like to share with people in this article is to inspect the “why” of these predictions. If bitcoin is going to go to a million why would this happen? If steem is going to rebound and surpass its previous highs of over $8.00 why is this going to happen. Before you invest it is essential to understand the catalyst for the potential price action that would cause such rises. Taking someone’s word isn’t enough. What historical examples can you find that justify the theory, how relevant are they to the context of the cypto trade you’re researching, etc.
We need to use our critical thinking to find what is at the core of the price rise and if the gains are sustainable. Was the price rise caused by speculation? Why would a price hold at its current value? Why is this currency worth more than $1.00USD, what makes it more valuable? How much of the currency is held by the devs and initial investment group? We need to understand every aspect of what we are investing in and know this for ourselves by doing our own research.
Question everything, look at both positive scenarios and negative scenarios for your crypto trades. When one asset goes up another always goes down. I think that having faith is great, faith can go a long way in this world. On the other hand, wish in one hand and shit in the other, see which one fills up first…
Image source: Patheos.com