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Rethinking Crypto Assets: Is There a Price to Waiting?

There is probably a reward for waiting, or for taking things slow, especially when it comes to investing in crypto assets. However, many crypto investors.

Posted July 12, 2021

Photo of a person thinking about something
Photo of a person thinking about something

There is probably a reward for waiting, or for taking things slow, especially when it comes to investing in crypto assets. However, many crypto investors believe that ‘taking it slow’ is counterintuitive in the context of crypto. 

This attitude could be problematic. Although the crypto space is ripe with opportunities, the media is partly responsible for shaping the culture and attitude towards crypto assets. This article takes a look at the current “crypto culture” and offers an alternative way to rethink crypto assets.

The crypto space is undoubtedly growing… 

Crypto investors, both retail and professional, know that there is so much potential for growth in the crypto space. Looking at history, the crypto space has changed a lot, and has evolved for the better. 

It started from the very first application of Bitcoin’s decentralised network to make a truly private peer-to-peer payment system. Ethereum is the first to offer a way to enable complex transactions on a blockchain, such as borrowing, lending, and trading, through the use of smart contracts

Today, many businesses that dabble with blockchain technology use alternative networks to solve industry-related problems such as logistics, supply chain transparency, and auditing. The creative industry is also experimenting with non-fungible tokens (NFTs) and immutable record of ownership on the blockchain.

Even whole nations are involved in applying blockchain technology to help its economy grow. Although some nations are developing central bank digital currency (CBDC) on top of their own centralised network, some countries are open to using a decentralised blockchain network to issue their fiat currency.

…but there is no such thing as risk-free growth

Based on the above facts, it seems to make perfect sense for today’s crypto investors to adopt the mindset of “invest now and invest big”. Many still consider the crypto market as if it were a steady-moving price escalator that anyone can ride on to get rich in the near future. 

The headlines are dominated by success stories of early crypto investors. A prime example was one about the “teen bitcoin millionaire” Erik Finman. Other news cover celebrities and tech investors who have at least multiplied their net worth with crypto assets. 

For some people, reading such stories could generate enough confidence to go all in on cryptocurrencies. But for every few individuals who had “struck riches” are thousands of people who had risked too much, who were desperate for quick gains, but only to incur huge losses due to impulsive behaviors.

The media continues to encourage impulsive behaviors

News headlines aren’t the only things that create fear of missing out (often shortened as “FOMO”). Social media is media for exuberant and passionate opinions. While many content creators provide useful and fair analyses of crypto developments, still many more are there to endorse their favorite projects.

The reason for this can vary. Some content creators may seek validation that they have invested in profitable projects. Others may try to increase social demand for that crypto asset, and to try to increase the asset’s value as a possible result. 

Communities that are heavily involved or at least are highly associated with a particular crypto asset may not try to induce FOMO on purpose. There is no doubt that the value of any asset is influenced by its network effect — the fact that the more people use an asset as a social tool, the more popular it becomes.

Crypto assets, in particular, are more heavily influenced by the network effect, since they do not attach their value to “real-world” valuables, such as currencies, commodities, or company valuation. They’re not commonly backed up by the world’s governments, which means there is no legal obligation to use them to pay for taxes and other debts. 

It’s not surprising that community backing is strong with cryptocurrencies. On social media, you can find ‘fan bases’ for different projects —  Doge Army, XRP Army, Bitcoin Bulls, and the list goes on.

This group thinking can result in market behaviors that do not stem from pure logic. For example, in May 2021, the price of the ‘meme cryptocurrency’ Dogecoin, which was initially created as a joke, soared by more than 500% in a single week after a couple of cryptic but seemingly endorsing tweets from Elon Musk, CEO of Tesla, Inc. 

Serious investors can tell the difference between a ‘joke’ tweet and an official announcement on the plans that a company is considering. If Tesla, Inc. were to accept Dogecoin as it did with Bitcoin back in February, then there will be a clear public message surrounding that.

Reminding ourselves that a great majority of crypto investors are retail ‘investors’ who still hold a trading mindset (i.e. buying and holding for a very short amount of time), it’s not surprising that the market could move in such a way.

The fine line between promotion and investment advice

As a crypto business, Easy Crypto wants to make buying crypto assets easy and safe. We’ve done our best to offer a safe platform to transact, and have fulfilled our promise of safety on our end.

However, buyers can forget that they must behave in a safe and responsible manner on their end as well, to avoid unnecessary financial losses. Part of our responsibilities as a crypto business is to educate.

We have spent time and energy into producing educational content on our site, precisely because we found that many people are still getting involved with crypto by blindly following others. 

Before publishing any content, we take a careful look at how our content would appear to readers. It is acceptable to promote a particular asset, given that the facts have been laid out coherently and thoroughly. However, if we write in such a way as to offer solutions to how and when to invest in a particular asset, this would count as investment advice —  which we do not want to offer.

Educational content encourages crypto investors to make informed decisions, and eliminates the emotional factors. Unfortunately, a few crypto companies have played around with the FOMO emotion in their ad strategy. 

An ad from a crypto exchange was banned from the London Underground, which has the message: “If you’re seeing bitcoin on the Underground, it’s time to buy”. It was banned because the ad does not include warnings that crypto assets are risky and volatile. The phrase “it’s time to buy” also appears as investment advice, since the ad tells the viewers when they should be investing.

Another ad from a crypto trading platform is circulating on Twitter without any further issue at press time. Many viewers find it entertaining and is of high quality from an artistic perspective. However, one should look at the ad message critically: “There’s a price to waiting / especially when it comes to crypto”

The ad includes a warning message about crypto’s volatility. However, wouldn’t the ad’s message count as investment advice, since it tells viewers how and when they should be investing?

Why is there a price to wait? The assumption that it would be too late to invest in crypto assets at a later time could be misleading. 

There are many cases where an investor should wait. During a global pandemic, life has been challenging as government restrictions limit many aspects of our lives and businesses. It would be wiser for an investor to wait until he or she has enough spare cash to invest in crypto.

The ad may follow regulatory guidelines by providing sufficient warnings about crypto assets. However, the underlying assumption behind the ad message could be harmful to some people who do not yet fully understand financial risk management.

Rethinking about crypto assets

It’s plain obvious by now that risking too much money into crypto assets is similar to gambling. Typically, a smart investor diversifies his or her assets into several investment vehicles, and sparing cash for emergencies.

While many new altcoins and DeFi projects have skyrocketed in price, particularly within minutes of its initial coin offering (ICO), many of them have also lost their value. Some of these drying ICO tokens lost their value because their issuing project has gone stale, while a few others turned out to be a scam.

Investing in cryptocurrencies for the long term forces investors to think long term. This means investors must research and invest in crypto assets that will continue to gain traction at least five years into the future.

Check the latest crypto rates: View the latest crypto prices with our live tracker.

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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.

Last updated October 18, 2022

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