Keeping Focus During Meltdown
There's a lot of doomporn out there and hyperbole as the crypto market crashes. Be patient and keep your eye on the prize.
Remember two days ago when I wrote about Terra’s stablecoin (UST) trading under $1? Well, it’s completely blowing up right now. When I wrote that piece, UST was at 95 cents. Right now, it’s at 40 cents. And if you think that’s bad, LUNA, which is the Terra token closely associated with UST is down 95% today.
This is a catastrophic decline for LUNA and that token’s bagholders. I don’t recall seeing something fall so fast in any market before. Maybe a biotech pharma company that has seen its only drug fail trails would be comparable. For full disclosure, I never held LUNA or UST. I had not looked into the Terra ecosystem at all but it wasn’t something that was generally exciting to me based on the little that I did know.
There’s a reason why I write this blog and why I’m launching a crypto-focused marketplace on Seeking Alpha in a couple weeks. Just because a coin or token has a market cap in the top 10, it does not necessarily mean it’s a good idea to buy it. Terra is proving that in real time. There is, of course, collateral damage to this Terra blowup. Bitcoin and many of the altcoins (like Zcash) are getting massacred as well. But if you believe in the long term thesis, today is an opportunity to stack.
This all feels awful in the moment but one thing you can take to the bank is I’m never going to share a token idea or a crypto unless I’m confident in it and personally putting my money where my mouth is. What we’re watching in real time is the utter meltdown of a stablecoin and there are blockchain sleuths who are claiming this was done intentionally by a whale - and you probably know the name. Why? I can only speculate. But this experience is going to potentially be the justification for some serious regulation of stablecoins and cryptocurrencies broadly. How convenient.
Block out the noise
It’s easy to get lost and scared reading the doomporn online. When you see tokens that you believe in strongly that are down 30 to 40% in one day while the market blows up it can be tough to watch. When you see industry personalities saying things like this:
It can be easy to get paralyzed or panic sell. But history has shown time and time again that when your outlook is longer than a few weeks or even months, buying these kinds of crashes can create serious returns.
Key Lesson
If I’ve said it once, I’ve said it a thousand times; manage your third party risk. The safest place to keep your coins is in a self-custodial wallet. Furthermore, leverage kills. It’s great when it works in your favor, but it will murder you when it goes the other way. No matter what you’re buying; crypto, gold, stonks, or jars of peanut butter… do not speculate with debt. It’s a disaster waiting to happen and it will wipe out your account on days like today.
Stay smart out there. Enjoy the rest of your week. And if you’re interested in joining my Seeking Alpha marketplace when it launches please shoot me an email.
Disclosure: I’m not an investment advisor. I merely share what I do and why I do it. You shouldn’t take anything I say as investment advice and always do your own research when making investment decisions. Cryptocurrencies, tokens, STONKs, and digital trinkets could all go to zero. I have no job and I live in my wife’s basement. I’m the last person on the face of the earth who you should listen to for financial advice or life advice. I’m long BTC and ZEC.
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