9 months on...
It was about 9 months ago I made my last major purchase in cryptocurrency. On Friday night I went to an EOS meet up and recorded my thoughts of the event and my investment strategy ahead of the launch.
Mis-valued
I bought EOS when it was around 60 cents (0.0001 BTC at the time). It seemed too tempting a price not to. The market was valuing EOS at the end of the token distribution at around $600m. While Block.One had already raised at that point $1bn dollars. Around that time there was a lot of FUD around China banning cryptocurrency and Jamie Diamond calling cryptocurrencies a scam, so sentiment around EOS was low. Particularly as many people could not wrap their head around a token that was de jure worthless but de facto anything but.
I bought quite bullishly when the market sentiment was low. However I was more than prepared to double down should the price fall even further.
I hadn’t implemented my usual strategy of taking profits every time the price doubled. Instead I decided that I would hold until the token distribution had ended, then sell half ahead of launch (if the price had increased significantly).
Time for some action
So this week the time had come for me to pull the trigger and sell some EOS. If was difficult. I’m usually quite gung-ho when it comes to crypto. I’m also the internal optimistic when it comes to projects I believe in. However there comes a point where, no matter how you feel about a project, you need to look at things from a risk management point of view.
The cautious tale...
I’m not expecting anything to go wrong with the EOS launch; however there are a number of things that steer me towards being cautious.
Firstly, strangely enough, is over-exuberance. I’ve been to a couple of EOS meet-ups, mainly to gauge the temperature of the projects. It all seems a bit decadent. Free alcohol on tap, a massive over-supply of merchandise. I had a weird deja vu of some of The DAO meet ups I went to when that launched. Not that I think EOS will be anything like The DAO however I’d prefer the champagne to be on ice until after the platform has at least launched and delivered something!
Secondly, there are inherent risks with any blockchain launch. I think there is a disconnect between people’s expectation when EOS launches and what the launch and landscape might look like in the coming days or weeks. I spoke previously about the ‘messy’ births of blockchains. However I think there are lots of people waiting for EOS to prove blockchains can scale and provide usable applications out-of-the-bat. As oppose to laying the groundwork for what can be possible in 12-18 months time.
Thirdly, there are risks around the transition from the ERC20 to the Main-net. Both from a personal key management perspective as well as the blockchain.
Fourthly, there is a chance my funds could be locked up in EOS for a long period of time before I find a wallet I can trust with my private keys.
Fifthly, market sentiment towards (and the price of) bitcoin is relatively low. If bitcoin rallies for some reason, the risk of the crypto market could suffer vs bitcoin.
The win, win
The likelihood is that the EOS launch will be successful and the price reflect this somehow. Which would be great, not only do I win, but it's a great win for cryptocurrency. I would have locked in profit and my EOS portfolio would be very healthy. Also it would breathe confidence into the market.
However if something unexpected does happen, I’ve at least gone some way to mitigating my risk and what could have turned into a disaster, instead becomes a potential buying opportunity. I like to have ‘a plan if it goes up… and a plan if it goes down’ and decisions like this (to sell some EOS ahead of launch) go some way to helping me achieve that.