In this article
I wrote, I go over several reasons why Patience is the key to Investing. I definitely recommend reading it if you haven’t already!
2. Gambling Rather Than Investing
The greed in this space is unlike anything we’ve ever seen before.
People are apeing into random NFTs, meme coins, and worthless tokens in hopes of becoming instant millionaires overnight. While the dream may be seductive, it’s a dangerous trap in which 99% of traders face significant losses.
Whether you have experience in the markets or not, you need to differentiate between gambling and investing. Investing requires lots of research and due diligence using logic, while gambling requires spontaneous emotional outbursts and delusional thoughts, which are often regretted.
For me, when there is only speculation, and no fundamentals or utility behind the token, it’s considered gambling. Almost the entirety of the crypto market has been pushed up due to extreme speculation, and greed, but this doesn’t last forever. We saw this play out perfectly in 2018 when almost all alts plummeted 90–99% after the Crypto Bubble finally popped.
Most of those alts don’t even exist today, and we now have a new wave of worthless tokens replacing them, which will undoubtedly result in thousands of bagholders after the crypto bubble has fully popped again.
Gambling looks like this:
- Buying cryptocurrencies willy-nilly
- Following a hot tip
- Purchasing the hottest token
- Trying to time the market (buying when it’s high, freaking out, and selling when it plunging)
- Deferring decisions to another and sticking your head in the sand
Investing, on the other hand, looks like this:
- Creating a financial plan based on your goals and risk tolerance
- Building a diversified portfolio, based on the plan
- Adhering to the plan until something changes
- Making decisions supported by your plan, not your emotions
- Taking a long term approach (gambling is all about rapid gains)
Having a plan is the key distinction. If you don’t have an idea of where you want to end up, it will be far more difficult to make the right decisions.
3. “HODL Forever” Mentality
The idea that one should “HODL forever” without ever taking profits has become a dangerous mentality that has been conditioned into the foundations of the crypto markets, mainly by big players, insiders, and institutions.
Ask yourself why CEOs of big projects, exchange owners, or some big-shot investor are urging others to buy and “HODL” forever? It’s a very simple concept and is because they want to front-run everyone else.
How would they be able to dump their bags if everyone else was too? The HODL narrative provides them with the necessary amount of stability, and liquidity to sell at higher prices.
Charlie Lee and The Litecoin Bubble
If you were around during 2017–2018, you may be aware of the scandal surrounding Charlie Lee, the CEO of Litecoin. He told his millions of followers, and investors to “hodl on for dear life!” at Litecoins peak.