Cryptocurrency traders are a special lot. They are, after all, a new breed, and the markets they trade in don’t totally act like the stock markets, nor do they totally act like the forex markets.
And the “buy and hold” folks seem to be in the minority, at least if you trust the chat rooms on places like Poloniex.
To wit, the activity the past 24 hours or so shows some serious red numbers. Dropping like flies, those “altcoins.” The sky, she’s a fallin’.
You could be like the guy on this all-too-real Reddit post from yesterday.
I have been a BTC hodler for about 3 years now. Things were good and I believe in bitcoin a lot. When the price was dropping and dropping I kept on buying and buying, for the simple reason that I believe in Bitcoin.
Enter a few days ago: Ripple was on the rise. I thought I could increase my BTC-stack a bit by following the ripple trend. I was stupid and went all in… I should never have gone all in on anything. I’m not all in on bitcoin, so why would I put all my hard earned btc in something I do know little to nothing about, right? Well… enter the greed I thought I had left behind me a long time ago.”
Let’s just say it didn’t end well. A cautionary tale for the day traders and trend riders. And those who don’t hedge. And those who don’t buy and hold. And…
Enough Already: Get to the Headline
Oh yeah, that. The headline today asks “How’s Your Bitcoin?” because that has been the dominant news this week. Yes, even above some of those other coins that seemed to come out of nowhere and jump up by 2x or 3x – I’m looking at you, ZCash – Bitcoin’s rise to above $2,500 each is rather thrilling. Cool, yes, unsettling, maybe.
The BRED Portfolio, which we started tracking on April 1 (it’s ONLY been two months? Really?), takes four of the currencies – Bitcoin, Ripple, Ethereum, Dash – and puts them in equal parts into a basket, with an initial investment of $10,000. (We went back to January 1 so we could look at this from a YTD standpoint, and we’ll give further updates on the 1st of each month.) Its growth has been staggering – but the growth has actually been mostly due to non-BTC assets.
Meaning that Bitcoin is back in the spotlight at the expense of some gains in the portfolio.
So, even with the attention on Bitcoin, the BRED Portfolio is still dominated by the growth of XRP, which is still more than half of the overall $195,821.24.
Is there a lesson here?
Maybe: diversification is good. Riding the waves isn’t. Buying and holding, probably also good – unless this entire portfolio and the crypto universe turns out to be a house of cards, in which case we’re all spinning our wheels.
A broader point, though, is one that we should make: Bitcoin is still “dominant” (this gets tracked – Bitcoin as a percentage of the overall cryptocurrency marketplace, which, according to Coinmarketcap.com, has fallen to 49.3%) AND is still the gateway currency. If you’re getting started, or if you’re trading for the first time, the odds are that you’re trading Bitcoins for whatever you end up with.
Bitcoin is the gold standard, or the world’s reserve cryptocurrency.
Whether it will remain that way for a while? That we’ll wait on.