The recent bitcoin bounce to over $5,000 got the space buzzing again, attracting many individuals and businesses that left the space during the 2018/19 bear market. What frustrates me more is that the media, including shows I enjoy watching like Crypto Trader by CNBC Africa, are all obsessed with the price again, claiming (seems more like hoping) the bear market has come to an end (and I don’t blame them as their goal is to provide information that is of value to their audience)
Well…is the bear market over? I speak to enough people and am in a great position to know the answer! Or at least that what’s the press and other stakeholders believe as they barrage me with the same useless time-wasting question.
1. Stop wasting your time listening to expert predictions as NO ONE knows!!
When one of the world’s smartest investor Warren Buffett clearly states “I never have an opinion about the market because it wouldn’t be any good” and Peter Lynch sums it up with his quote that he “can’t recall ever once having seen the name of a market timer on Forbes’ annual list of the richest people in the world”; who the hell is ANYONE, including myself, to pretend they can time the market! Market timing is entertainment for crypto enthusiasts & traders the same way sports & Netflix is for the average person with nothing better to do.
People tend to overestimate the short term impact of innovation (leads to hype) and underestimate the long term impact, so if you want to make the most of the innovation brought about by Bitcoin, fasten your seatbelt as you’re in it for the long haul.
Don’t get me wrong, I’m not against leveraging hypes to build your business and profit, but focus on creating value and building a name in the industry as the value this will bring you, in the long run, is significantly higher than the money you are making now.
And don’t trade Crypto! If you are, don’t tell me about your predictions as I don’t give a shit!
2. Don’t Go All In On Crypto
I’ve seen many talented well-intentioned entrepreneurs lose a lot as their business suffered during the bear market, even though they had a solid team and a great product. There are many reasons that could lead to this and timing is the most prevalent (I talk about this a lot in my videos as it applies to all start-ups, watch Bill Gross’ TED speech). I’m a big proponent of hedging your risk, a good entrepreneur MITIGATES risk and the average millionaire has about 7 streams of income.
Even though I founded one of the largest blockchain agencies in the industry helping businesses raise capital, as well as a blockchain VC fund, and being a partner at a blockchain law firm, most of my revenue is still outside of crypto. I made my millions outside of crypto and will never make the mistake of neglecting those streams of income. This gives me and my team the advantage of withstanding the crypto bear market (and future bear markets) as competitors that have no other revenue streams and limited cash reserves collapse.
Now if you are an entrepreneur with nothing to lose and plenty of time, than going all-in is not a bad idea, as long as you are ready to be patient and create value. Don’t make short term revenue your only goal!
I am NOT saying that making a return and cashing up is a bad idea, it’s paramount to allow you to survive and strive over the long run, I’ve been profitable day 1 since I boostrapped my first company from nothing back in 2012. Always remember for every Jeff Bezos or Elon Musk, there are thousands of successful entrepreneurs with the same talent and abilities who fail due to bad timing or luck (yes luck! A lot of literature on this, a popular one is Malcolm Gladwell’s Outliers). If I was you, I would hedge my risks.
3. Why I don’t care, but am forced to by the market sentiment…
I’ve talked about the main reason I don’t care, and that’s because it’s impossible to predict. I also talked about the importance of being in it for the long run, but don’t mistake this attitude with recognizing and reacting to the present reality!
Most of the people in the space do care and make decisions based on market conditions, this includes traders, entrepreneurs, lawyers, even some developers! The market represents the sentiment of the people, and the sentiment is affected by the market, and this vicious cycle impacts everything from fundraising methods to the interest of enterprises in the technology. Personally I don’t think they should, but I don’t give a shit about what I think and neither should you, instead focus on facts!
If the bear market is over, start-ups will again get into crypto to raise capital (as seen with the recent IEO hype), enterprises will again notice the space and potentially experience FOMO, and of course, traders and opportunists will flock to the space. A smart business person will notice these changes and react rather than act as if the market does not affect them. For every Amazon that flourished after the dot com boom, there’s an eXcite that failed (they skipped the opportunity to buy their competitor Google for $1m in 1999). Don’t be binary, observe the market and react accordingly with a long term perspective for your business.
My conclusion: Ignore predictions off the FUTURE, focus on CURRENT market conditions to understand the sentiment, and act accordingly with a focus on creating long term value.
P.S. I remember the days an ex-Hollywood actor and self-proclaimed crypto expert was giving advice to everyone he spoke with about the next coin to buy (always BUY never recommends to SELL!), and what shocked me is that smart developers and practitioners (many well-known names) were actually interested in what he had to say and asked him for advice! Almost everyone I spoke with was trading the market, FOMO was difficult to avoid even for team members at my company IBC. Despite my ban on any discussions regarding market predictions and the price of various cryptocurrencies, I knew they were all possessed by FOMO throughout 2018, and I know this will happen again. FOMO is one of the most powerful and unavoidable cognitive biases, and those who recognize and control it have an edge over everyone else.