January 7, 2018
We’ve all heard the saying:
“You’ll recognise a financial bubble when your taxi driver shares ‘inside’ information about the future price of an ‘investment of a lifetime’ with you.”
In the case of crypto…this happens to be our lifetime.
The ‘bubble’ word seems to have died out from mainstream media in the past few weeks. The media wanted it to pop, but it certainly didn’t happen in 2017 so it’s so typical of them that they’ve decided to deny ever mentioning it. There was profit-taking just before Christmas, consolidation and pullbacks sure, but there was no bubble. Empty Bucket is bullish on crypto and the odds are in favour of the exact opposite of a bubble. 2017 was just the beginning of a very long journey of profit-making. Just watch this space.
We have always been advocates of buying and holding but our conviction was really being tested right from the outset as its price dropped by 50% to below $6 over the following few months.
During that period, I was attending a wedding in India. My trip coincided with Modi, the Indian Prime Minister’s, unprecedented step against corruption to ban overnight the ₹100 and ₹500 denomination of the Indian Rupee (INR). Just my luck as I had exchanged a bunch of pound sterling for ₹50,000 in cash two days before the ban. My cash instantly became worthless.
This loss, however, was excellent news for our crypto investment. It was ever more evident how much our society needed a new monetary system, decoupled from dubious and autonomous economic-political decisions. All shadow-economy money hoarded in lofts across the country had to be money-laundered to avoid such draconian measures.
Three hours into the wedding and after a bunch of cocktails, shisha and amazing food I was passionately introducing a bunch of millennials to the crypto dream. Provided that everyone at the wedding had just lost a substantial amount of their family wealth overnight, they were keen to know more.
Fast-forward to June 2017, ETH had peaked at $400 amounting to what could have been a 3,000%+ return. Shortly after, I received a text from one of the guests at the wedding. This rang a bell, as I clearly remembered thinking – ‘mate, this is a sign of a bubble’ not that I was complaining. I ended up being greedy and feared missing out so much so that I kept changing my mind on my exit points. Reality hit me pretty hard as I didn’t end up reaching that ‘go to’ number. Instead, the value of ETH began a month-long bearish correction back down to $140. That was a very painful month especially having seen astronomical returns right at my doorstep.
I’m no different to a lot of other investors and speculators out there. This is classic human behaviour where we accentuate losses more than gains. I was well aware of the concept of irrationality having learnt it at uni, yet I still consciously decided to ignore my Empty Bucket business partner who sold at $360.
Sure, the nature of assets has changed over time. It used to be a tulip, a radium, a tech start-up, an MBS, an index. All of these possessed real, tangible, intrinsic value, and the law of demand and supply applied. What hasn’t changed is human behaviour. We are creatures driven by emotion and our brains’ wiring hasn’t evolved materially for the past century that has had its fair share of bubbles.
So when my taxi driver told me that I should get in on an investment of a lifetime, I knew that he was right. Each and every generation is faced with an opportunity to change their lives. It’s about spotting the opportunities early, and having the conviction to carry them through both in the good times and the bad.
Crypto just happens to be the investment of a lifetime for my generation and shortly it will change my life so much so that I will never look back.
Here’s to a happy 2018.
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