As you all know, the crypto market has been on a brutal slide recently.
Here’s where I see it going and how I recommend handling it.
As we’ve been saying for a while now, I expect bitcoin to outperform altcoins over the near term.
I recommend moving cautiously into altcoins during this correction (this includes ethereum). Invest in small chunks over time. We don’t know how long the correction will last.
The good news is there’s a catalyst on the way. Institutional investors are lining up to enter crypto markets. And when the final regulatory hurdles are removed (the clock is ticking on that), we’re expecting a massive flood of new money into the market.
If you’re looking to put money to work right now in the altcoin space, I especially like decred (DCR). Decred’s unique proof-of-stake ticketing system (where you can lock up your decred and receive “dividends”) should help keep a floor in place on this coin. I also believe it will be particularly attractive to institutional investors as they move into the market.
I strongly believe that the altcoins that weather this storm will come out of it far stronger. Our portfolio is well-positioned here. While most of our coins are down significantly, I don’t think any of them are in danger of falling apart. They should be among the best performers when the bounce happens. (As I write this on August 15, 2018, Nano is up around 35% on the day.)
We are also carefully watching for new altcoins that stand out in this market. We’re looking for coins that continue to improve their product, build their community and develop real use cases. If they can keep their momentum going during one of the worst altcoin markets I’ve seen, they have a great chance at taking it all the way. As the old saying goes, pressure turns coal into diamonds.
We see this clearly in the tech investing world, where many of the best companies start during recessions (Google is the classic example). They are forced to keep costs low and often end up stronger than competitors that started during boom times. I believe we will see the same thing in crypto.
During a correction like this, many crypto “bandwagon” investors and entrepreneurs are jumping ship. This is not a bad thing. The short-term folks were bound to get shaken out at some point. We’ll be left with the true believers and “hodlers” – and the quality of the average cryptocurrency launch will increase dramatically.
I will keep researching the best opportunities in the altcoin market, and as we find them, I will recommend moving into positions slowly (in small chunks).
For now, I recommend adding to your bitcoin position if this appeals to you. We have near-term catalysts (Bakkt, ETFs and financial chaos around the world) that should offer excellent price support for bitcoin.
The altcoin market will come back (without many of the low-quality coins), but for now we’re in the midst of a downtrend. So we’ll hunker down for now, play it cautiously and watch for the amazing opportunities this market will inevitably present.
Good investing,
Adam