Developing blockchain solutions since before it was cool and I’m in Auckland, NZ
If you got your start back at the beginning of the crypto wave, then everything was new and you weren’t the only one making mistakes. Today, we’ve seen that it’s far harder to turn a profit.
But the outlook is not all bleak. There are also a lot more resources, wallets, tools and exchanges with hand-holding features to help you learn what to do in a murky market – the kind of stuff that I wish existed back in the heady days of late 2017 when the charts all looked like hockey sticks.
Here are some key differences between the experiences of first-time crypto traders in 2017 and today.
More Coins, More Confusion
That was no small task three years ago, but it’s about four times harder today.
In 2020, you have a far greater risk of investing in a crypto coin that goes up in smoke than you did back in 2017, and you’ll need to learn about far more currencies before you can make an informed choice about the marker as a whole.
Mastering Higher Trading Volumes Is Challenging
When you’re new to trading, this activity can easily be overwhelming. You’re still trying to spot trading patterns and learn which events are significant and what those events might signify. When trade volume is so high, you have to put in far more effort to sort the wheat from the chaff, at the same time as keeping track of overall market trends.
The good news is that there are more tools today that can track and analyze trades for you, identify patterns, and monitor the high-level ebb and flow of the markets to help you to cope.
A Higher Market Makes It Harder to Turn a Profit
In 2017, bitcoin had its price explosion. Until then, it was a niche trading option, and the markets in general were low. Today, millionaire hedge fund owners are investing in bitcoin. Additionally, general worldwide uncertainty and fiat volatility has made many rush for crypto.
Together, these trends have pushed the crypto market far higher, so that any further rises are smaller and less frequent.
Although there are more exchanges and investment vehicles to help you buy whole or partial bitcoins today, it’s more challenging to turn a profit. In 2017, an initial $1000 investment might have made a 10% profit in six months, but in 2020, it would only make a 5% profit in the same timespan.
When markets were low, it was possible to approach crypto trading in the same way as some people approach stock markets – invest a certain amount of money and wait patiently for the market to rise as the asset matures. Between 2015 and 2017, the crypto market trended steadily upwards, enabling the crypto noob of that era to overlook the fact that crypto trading is essentially speculation, requiring you to make decisions fast and trade fast, and succeed in making a more or less passive profit. In 2020, it’s less forgiving.
Strong Crypto Messaging Fuels Unrealistic Expectations
Crypto evangelists who want to encourage more people to take crypto seriously and invest in it, combined with rising media buzz in the wake of the 2017 bitcoin transformation, can often create unrealistic expectations among crypto noobs.
Before 2017, coin traders were primarily motivated by curiosity and enthusiasm. They were in it for the long haul. But newbies coming to crypto in 2020, after years of hearing all about the potential of the market, bring different assumptions.
New crypto traders are misled into thinking that they can get rich quick by buying altcoins, sometimes deliberately by unscrupulous crypto hypesters. No one who reads up has those expectations about the stock market or investing in gold, and it’s a machine that simply didn’t exist until the end of 2017.
2020 Is a Year of Uncertainty
Just like the stock markets, crypto trades are affected by economic and political events. It’s hard to remember a year as volatile as 2020, so it’s inevitable that crypto prices are more unpredictable, more uncertain, and more volatile than they were three years ago.
In 2017, when the price of bitcoin and ethereum rose, it turned into a crypto bubble that popped in early 2018. Sure, 2019 saw it rally slowly, but it’s too early to say whether we’ve entered another bubble. We’ll only know for sure when (or if) it pops.
However, the community of respected big-picture economists does believe that the mainstream financial markets are in a bubble, and crypto tends to be influenced by major market trends.
On the other hand, if central banks’ efforts to keep their currencies afloat start to fail, then it’s possible that altcoins will suddenly see surges in adoption for transactional use cases.
2020 is a Tough Year to Enter Crypto, but It’s Not Impossible
All in all, 2020 is proving tough in a number of ways, and crypto trading is no exception. As well as the unknowable impact this unpredictable year could have on the crypto market, crypto beginners today have to master far more coins and a higher trading volume, overcome unrealistic expectations, and struggle to make a profit in a higher market.
It’s not an easy time to enter the crypto market, but there’s plenty more support available to smooth the way.
Disclosure statement: The author has no relationships with any of the companies mentioned in this article.