Being Early - The Daily Gwei #182

Being early is great, but don't forget to get out before it's too late.

Being early in crypto has paid off handsomely over the years for people who have truly believed in the mission and had a low time preference. If you had bought BTC or ETH during their early days and just held, you would have beyond life-changing money today. Of course, this is infinitely easier said than done!

The crypto markets are a volatile beast - one day they could be in a state of euphoria and then the next day everyone could be licking their wounds (remember the COVID dump of March 2020?). Because of this volatility, it’s incredibly hard for most people to invest their money into a project that they believe in and stick to that investment over the long-term. I’ve personally seen plenty of people make big investments into something only to sell at the first sign of trouble because they get nervous or fall into a “pump and dump” trap that whales/large traders love to set for the less experienced investors.

Generally, being early to a new crypto project comes with a lot of risk and there’s no guarantee that your investment will pay off. You could invest in a project that you truly believe will change the world but on any given day it could drop 50% for just about any reason (or no reason). Imagine buying ETH at $15 in mid-2016 and then watching it go to over $20 because of the hype for TheDAO only for it to drop to $6 over the course of the next 6 months due to TheDAO hack. All of this happened at a time when Ethereum had only been live for 1 year - would you have held your ETH through the brutality of Q3/Q4 2016? I know many that didn’t but if you did you were rewarded with a $1400 ETH just 18 months after the hack.

Given that we are currently in a bull market, the mania can lead people to feel like they are invincible and that they “can’t lose”. This can go on for a while (months usually) and the more frothy it gets, the more money people tend to throw into it because of the concept of “fomo” aka fear of missing out. Though of course the music always stops at some point and there is always someone left “holding the bag” - your job as an investor is to not be that person but don’t get me wrong, it’s very hard and takes great discipline - I still feel fomo all the time!

Of course, none of the above should be taken as investment advice but there is a reason that most people say to just “hodl” - especially if you don’t have the time to invest properly in this space. I personally use ETH as a benchmark when I make my DeFi investments because if I can’t outperform ETH then there really wasn’t any point in me investing in a particular token. Though, of course, hindsight is always 20/20!

Have a great weekend everyone,
Anthony Sassano

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All information presented above is for educational purposes only and should not be taken as investment advice.