Looking for a big score?
When a lot of people first get into crypto, they have dreams of striking it rich, no matter what they actually put in. I have witnessed several of my friends over the years buy some Bitcoin or some Eth, and then almost religiously watch the prices, looking at them fluctuate up and down, gain and loss. It doesn't seem to matter how much they invested, the emotions are still there, feeling good and bad, based on seeing a few dollars in the green, or a few dollars in the red.
And one aspect I find interesting is that it doesn't seem to matter what kind of person they are, as once they have bought some crypto, the dreams of getting that big payoff looms large. For instance, one person bought a couple of thousand worth of Bitcoin when it was at around 40K, back in 2021. They were happy when it went over 50%, and they were sad when it went down to 15K again later. But, rather than buying more at 15, they are just waiting for it to go back up again. Now, it is at ATH levels over 71K, and they are about 70% up on their initial investment. Not bad for sure. However, how far does it have to go in order to be significant to them?
And this is the thing, because they were able to put a couple thousand in a few years ago, but for it to be significant it would likely need to go somewhere like 10x on the purchase price, so up to about 400K. The reason is that at that level it would give them an amount that they wouldn't be willing to spend under normal circumstances, or at least, not without a lot of thought. How long will they have to wait until it is 400, is anyone's guess, but I guess it isn't going to make it there this cycle.
But even if it does, do you think my friend is going to be happy taking 18K, when he also realizes that he could have bought several more thousand over the last few years and put his stack of Bitcoin up by 10x due to the average price, and then gone another 10x on top of the profits instead? A couple hundred thousand is very significant for him.
One of the problems with the "big score" thinking is that nothing else needs to be done, that investing is a set and forget process and if you just wait, the good times will roll. In some cases this might be true, but it is going to depend a lot on luck, and then of course, the amount invested. Not many people have invested a small amount once, and then have it return very large - in the grand scheme of things. The reason is that most people will take the profit at 10x, 20, 100x, but not everyone is going to buy back in for when it goes 1000x, 10,000, or 1,480,000x like Bitcoin has over the last 14 years.
Sure, at that point it would have been possible to buy 100 bitcoin for $4.80, but unless you lost the keys and then rediscovered them, most people would have sold. Well, all except the people who believed in Bitcoin and are holding, and holding, and holding.
The fact is though, is that humans aren't built for investing, as our mindset is about getting that dopamine kick right now. We want our needs satisfied as quickly as possible, and we don't want to expose ourselves to potential loss, and we like to have what we bought in our hands, when we buy it. We are built to live in the moment, but we have built a world that in order to be successful in it financially, we have to think ahead, plan, invest, be open to risk, and be patient. The patience doesn't mean no activity whilst waiting, it means to be patient for the outcome that the activity leads to.
For instance, my set and forget friend while waiting, could have been building his understanding of the cryptosphere, getting familiar with the tech, considering the value propositions, and working out just why there is a level of inevitability to it. If he had, he likely would have been hooked like so many others who have dived deeper, and bought that dip. Instead, when it hits some magical number, he will tap that button,
for a single sell.
Taraz
[ Gen1: Hive ]
Posted Using InLeo Alpha
BTC goes up from $60K to $120K, your $100 fiat investment is now worth $200.
Heatsmith goes up from 1c to 4c, your $100 fiat investment is now worth $400.
Which of those do people find the most exciting? Strange isn't it.
There's almost an element of tribalism. It's not just how much you gained, but how well you identify with the winning team. (the one which gained $60k/unit).
I think the BTC maximalist for sure have that tribal element to it. Not many people are very committed longterm to the tribes they shill though :)
Groceries have gone 5x in the past 12 years and my 100 $ investment is now long rotten...
Many people also invest the money they would need in the near future. Thus, when the price has gone down, they have to sell it for not to be in much more loss. Eventually, this kind of investment ends up with disappointment and we saw it in the last three years in crypto stuffs.
Yes, it is silly to invest with what is needed soon. It is the pathway to ruin. I know a few who have done this, and are nearly always in debt. Don't invest what you need to eat with.
Most of my DCA goes to Splinterlands, where I can see the APR and rewards earned each month. I get the same satisfaction from staking cryptos like SOL, ADA, and MATIC. Since I'm no longer swing trading, I try not to look at my holdings every day unless I'm getting ready to take some profits or ape back in at some perceived lows. Hanging around through 2018 and 2022 has taught me to temper my reactions.
Have you ever calculated how much you have put into Splinterlands, and what the value is now? For me at least, I am down still, even with all the drops etc.
I haven't kept track, but there is no doubt my collection value is below my invested amount. But I try not to put a price tag on the entertainment value of the competition.
I'm not even sure I could back into the amount I've spent on my cards and assets. I've brought funds into the game in so many different ways -- BSC, credits, venmo/paypal, even trading Magic the Gathering cards for in-game assets. Honestly, it's probably better I don't know.
Boy math is not knowing the amount spent on cards, but all profits generated from the game is free money!
I am surprised by how hard it has been for me to get folks to go in. They talk about diversification, but only diversify among fiat supported stocks. They can't see any value in diversifying in currency types. Their loss!
It is crazy - just imagine them putting a couple percent consistently into crypto the last 5-7 years.
They simply will not do it at all. It's very easy to do, too, on coinbase. But they've heard it's a waste, that it will go nowhere, and always ask "what can I do with it?" which is a question I have a hard time answering. I remember, however, that when Venezuela went really bad five years ago, the folks with bitcoin were still able to buy stuff. I think south america is far ahead of the US in terms of businesses that accept it. YOu can get a slice of pizza in acapulcho with BTC.
You might think it's crazy but in the meantime they know they're being sensible and that you're the crazy one and they are definitely going to "win" while you're definitely going to "lose" eventually XD
That's kind of how most of my inlaws are. They were gifted some BTC and they are just holding it waiting to sell it. They don't really care about it, they don't care how it works, they just are waiting for me to tell them when to sell it. I think most of them are cool with a 10x, so if it hits 170K ever, then I will have to figure out how I am going to get them out of it!
If it hit 170 for sure - but if they have 1700 worth now, would they be as happy? The thing is with the smaller amounts for many people, is that once it is up, they will wish they put in some more.
They have pretty much forgotten about it. Every now and then they will say, hey, how is our BTC doing. I usually say "your BTC is worth $20 more than it was, my BTC is worth much more because I bought much more!".
You are on a roll! A thought provoking post - you highlighted the "shortcomings" of humans when it comes to investing so accurately. Like what some say, awareness is the first step. I do think it's possible to rewire ourselves and think different from the majority of crypto investors, have a plan on our entry and exit points, and then stick to the plan as closely as possible. I have made some of these mistakes back in 2021 cycle, and I hope I am better prepared and can do better this round. ;)
Shortcomings is a good term for it! shortsightedness.
It isn't always easy t know what to do - all those years to plan, still don't feel I have planned enough...
No plan is perfect I guess, but it's always good to have something to work with.
What a thought-provoking post!
Your insights on the mindset of crypto investors really hit home for me. It's so easy to get caught up in the idea of a quick win, but you've reminded us that true success in investing requires patience, understanding, and a willingness to learn.
Thanks for sharing your perspective, it's definitely got me thinking differently about my own approach to crypto.
I think it is the same with everything of value - it generally takes time to learn about it, and build it. But, it also takes effort - energy, money, sweat.
Imagine how much sensible people are out there that HAVEN'T HAD THE COURAGE to enter crypto yet.
That's how early we all are. That's why I think that we are only at the beginning of a very bright crypto future.
I have entered - but I have been far too sensible! :D
It is interesting to see people be hesitant to buy BTC when it was at the 16k, but are buying it now. Imagine how much they would be up now if they bought back then. I am hopeful that BTC is still low now and that it will moon after the halving.
People will follow the herd, because they aren't willing to think for themselves.
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STOPGain is always followed by loss I think. They both follow each other. Sometimes You get gain and sometimes have sudden loss.
This was quite an informative post. I would just take few things from this as I do not have the investment to begin with soon I'll have. will keep these in mind
That’s why we see that most newbies always want to invest in some meme coins so they can make over triple of their money but at the end of the day, it is mostly rugged
Coming to crypto with the mind of getting rich is good but not expecting yourself to be rich overnight
That is why people need financial education. Otherwise it's all just for that single sell and nothing more.