Going Short vs. Going Long: The Crypto Investment Dilemma

While crypto continues to receive flak for not meaningfully increasing adoption, the jury is still out on whether this means crypto has found its bottom. However, everything depends on your viewpoint and whether you are an institutional investor, a private individual, or a day-trader who is somewhere in the middle – someone who knows there are benefits to this new tech but is not perhaps sold on the idea that it can revolutionize the world. How much you stand to make or lose (and how much you are willing to make or lose) also comes into play.

Consider this:

  • Most crypto investors are either just starting their crypto journey, have been playing the market for some time, or are sold on the promise of the technology.
  • Depending on the stage of the journey that you are in, you are likely to be either still learning about the technology, still somewhat confused by it, or are just waiting for the next bull run.
  • You have mastered the art of investment and know that it is not the bull run that represents investment opportunities but the market troughs that can give you the highest returns.

We can all learn from the players who fit in the last category. Here are some of the things we recommend you look into based on the investment patterns of large institutional investors.

  • Focus on the lows. Highly volatile markets are very risky, but if you catch the wave at the right time, the returns can be worth it.
  • Do not short the current market even though it looks like you should. Look at the risk and return profiles of projects you like and place your money accordingly. You don’t have to put money on all the projects out there; hitting a few at the right time is better than hitting many at the right time and many at the wrong time.
  • Look beyond the financials. How many GitHub commits does the project you are interested in have? Who is contributing to the team’s repositories? Does the project have checks and balances, QA, online forum activity, marketing outreach, social followers, and global meetups all in place? It’s not good enough to have a great idea; you have to sell the idea as well. Only the projects that are well-designed from a user perspective, even if they are not perfect but are marketed to a wide and eager user base, will survive the test of time.

While the world talks of crypto being saved by the entry of institutional investors, what we can tell you with confidence is that this market will survive with or without them. Yes, they may buffet the next bear market, and their entry may give the signal that those on the line have been waiting for since blockchain and cryptocurrencies first started making waves in the global media. However, the tech-savvy adopter knows that the utility and benefits that crypto projects can bring are real. The question is not “if” crypto is adopted and used on a global scale just like paper money replaced gold and silver and digital payments have come into common use in lieu of paper money. The question is “when.”