My Cryptocurrency Discovery

For my first official post, I will provide a high-level and overly-simplified rundown on Cryptocurrency and Decentralized Finance in general.  Then, I'll discuss my personal experiences and the specific data points I analyzed with Ethereum.  I'll try to keep this and all future posts as objective and digestible as possible, as there are hundreds of resources out there by industry experts that go into greater detail than I can.

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Without getting too involved, I see the 2020 and continuing sociopolitical climate as a strong advertisement for crypto and decentralized finance (DeFi). For the sake of smooth conversation, I'll refer to both as exchange systems for digital assets not reliant on banks and other institutions.  A simple phrase I've seen online I like that summarizes these systems well is "wild west" as they are still very experimental and lacking in regulations resulting in high volatility.  

I will preface with the sentiment that the volatility involved with cryptocurrency is its greatest attractor and greatest deterrent.  To be completely candid, I mentioned in my previous post that I originally became interested in crypto while watching Bitcoin experience a seemingly-impossible growth.  Every post I saw on twitter (Shout out to the Winklevelli and Pomp) was Bitcoin Bitcoin Bitcoin.  The noise was loud and the charts and graphs were impressive.  From start November to end December, Bitcoin went from approximately $14,000 to almost $28,000.  As someone who had zero interest in crypto but major interest in data, I had to take a look at what was going on and to determine if an investment opportunity was present.  

I closely monitored Bitcoin's trading activity and market capacity and it appeared the numbers were slated to continue shooting up, also supported by the large increase of crypto app downloads (Coinbase, Gemini, Binance to name a few).   As a new investor, I didn't feel comfortable investing in something so expensive.  Therefore, I shifted my vision towards the number two crypto Ethereum.  

End December, Ethereum sat around $730 a share, a fraction of Bitcoin's price.  However, everything I was reading online indicated Ethereum could receive the same treatment as bitcoin.  Specifically, I figured that there would be other individuals like myself researching Bitcoin, those who also missed out.  Further, I theorized that a second round of stimulus payments (printing more money, devaluation of the USD as a direct shoutout to crypto) could result in an influx of new investors entering the crypto world just as it did for me.

Let me put some numbers out there to match the theory.  

If an extremely conservative 1% of all eligible Americans receiving stimulus payments invested 10% of their checks into cryptocurrency, that miniscule fraction alone would account for hundreds of millions of dollars entering the crypto circulation.  Another important factor to consider is the very-real human nature to see and expect repeatability and patterns in numbers.  The laundry list of pros for an Ethereum increase seemed to (in my opinion) far outweigh the list of cons  At this point, I decided I was satisfied with my research and I decided to jump in head first.

My initial approach was to cash-in and cash-out. However, I soon and rapidly realized that my approach would need to be adjusted, as the Ethereum and Bitcoin prices seemingly moved predictably and in tandem.  

One factor I used to support this claim was social media presence, news and formal media coverage. I tracked influential accounts and users online that spoke out about the crypto activity that could not be ignored.  It appeared that moments after influential figures spoke out, prices rose.  

I then watched Bitcoin and Ethereum price movement by the hour, day and week.  Specifically, they seemed to have the greatest movement outside of regular business hours (Between 4:30 PM and 8 AM) and on weekends.  Further, one key component to consider is that cryptocurrency is a 24/7 365 day and global operation.  This meant that prices were not only under the influence of US markets, but also in additional markets such as Asian markets that operate about 13 hours ahead of that here in EST.  As a result, I engaged in three cycles of price tracking, buying and selling.  I've included a chart below showing prices, dates, purchases and sales.  

I think the biggest takeaway here actually doesn't even pertain to cryptocurrency but life in general.  It's easy to write off and ignore things we do not understand, meanwhile those really could be lost opportunities.  Speaking for myself, I definitely fall victim to this, but I'm trying every day to expand that mindset.  

In further posts, I plan to speak further about the further of cryptocurrency in general, as well as Ethereum and its related altcoins.  Stay tuned!

All opinions, ideas and viewpoints expressed here are mine and do not reflect those of my employer. 

 

*I am not looking to make any money with these posts and I am not a financial advisor of any sort.  All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, or stock picks, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies. I will not and cannot be held liable for any actions anyone takes as a result of anything read here.