Crypto Skeptics Vs Fanatics: How To Compromise?

As humans, we are hardwired to find patterns and assign meaning to them, often believing that they provide insight into the future. We've seen this over the centuries, from fortune-telling on coffee grounds to numerology, where numbers are thought to hold mystical meanings. Investing also has its own system for predicting future events based on technical and fundamental analysis.

Over the past year of the COVID-induced market mania, cryptocurrency gains have been so impressive that even Wall Street's most reluctant players have begun to pay attention. Bitcoin has been on a roller coaster ride for two months, posting a 40% gain in October, hitting its ATH of $69,044.77 on November 10th, and then falling by about 17% from there at the time of writing. A lot of people are now scratching their heads and asking, “Where's Bitcoin heading next?” 

Dyed-in-the-wool bulls await a Bitcoin BTC/USD price surge unlike anything they have seen before. Meanwhile, there’s also a healthy amount of skeptics who don’t expect much from BTC going forward, thinking the first cryptocurrency has already exhausted its potential to grow. 

Interestingly, doubters include high-profile investors who have the 2008 financial crisis on their forecast portfolio. One of them is billionaire hedge-fund manager John Paulson, who made his fortune betting against subprime mortgages in 2007. Paulson thinks cryptocurrencies are a bubble that might burst any minute now. Micheal Burry, the hedge-fund manager who made his name in The Big Short movie, complains few are paying attention to crypto's leverage, too.

However, one of the crypto world's most powerful and influential investors has a theory as to why 2008 Cassandras see Bitcoin is doomed to fail. Three Arrows Capital founder Zhu Su tweeted in early October that poor decision-making is caused by the need to be consistent with one's own beliefs. They are basically old guys who just cannot resist reenacting the last great war. But market forces don't give a crap about who you are. The market will still go its way regardless of what you do or don’t do. 

However, investors in cryptocurrencies should take price predictions with a grain of salt – God invented the concept of DYOR for a reason. There are basically two ways you can conduct your own research: you either factor in the expert consensus or become an expert yourself. 

My perspective as a CBDO at a crypto exchange is that one of the major problems with many crypto price predictions is that they lack sufficient analytical support. Analysis may be based on reasons that aren't fundamental or technical in nature. These analysts just want something to occur, so they interpret events to give the impression that it will. 

While it's really a game of "take your pick" when it comes to Bitcoin price predictions, some forecasts stand out as particularly mind-blowing like that of the late John McAfee who said Bitcoin would cost $1 million by 2020. There’s no need to go into detail about what he promised to do if it doesn't work.

People don’t generally tend to trust price predictions because the opinions and predictions of crypto experts are in conflict – who do we believe when one "trusted expert" says one thing and then another "bitcoin veteran" says something completely different? What does it mean? What does it all mean? Analysts can cite charts, numbers, and persuasive theories to support their claims, even if they contradict one another.

Even so, it's not all black and white; it’s still possible to find some decent forecasts. Looking back two years from now, we can discover some reasonable predictions about the situation we are currently in, such as the one below. 

In fact, Bitcoin is probably one of the most volatile investments you can make, and it’s impossible to exactly predict anything. When stock markets drop by 23% in a day, they call it Black Monday. In crypto space, it’s just your plain old Monday. You check the charts, sip your coffee, and go about your daily business as usual. Just exaggerating, but you still feel the vibe. With all the ups and downs Bitcoin traders have to deal with, a little bit of a couldn't-care-less attitude goes a long way.

In addition to keeping an open mind and not blindly following all analysts, one rule of crypto investing is to only invest what you can lose. Ultimately, blockchain and Bitcoin, as well as everything associated with them will change the way we live. However, let's be honest: it’s not all roses. So you've got to learn how to deal with that. You have to learn to take tumbling prices, scams, and bear markets as something that might happen at one point, whether it be soon or later on. 

Still, in their short existence, cryptocurrencies have exploded into a $2.6 trillion market, generated a flurry of innovation and spawned new industries like NFTs and others. 

Blockchain-based technologies are reshaping the world around governments, regulators, companies, central banks, and investors. Its growth and the mainstream adoption suggest it has staying power.

Yes, this is a young market, but it has already passed through the Wild West stage and has been embraced by a whole country. The situation is similar to the early days of the internet when hardly anyone could have imagined what opportunities it would bring in the future. We at ChangeNOW strongly believe that we are witnessing the advent of a new digital world that is already bringing many positive elements into people's lives, regardless of whether they are crypto enthusiasts or skeptics. And there's more to come.