Сrypto. Is that rollercoaster we’ve been on legit? There is no place to hide. It’s down, stocks are down, even home prices are beginning to fall in cities like San Francisco, Seattle, and Denver. Being an investor right now is not as glamorous as it once was because our portfolios are pretty much hanging on by a piece of thread. Personally, this downturn, specifically in the crypto markets, has me really excited. But back in 2017 and 2018, this is exactly what I saw. It was years of nothing and then boom, we saw a huge bull run in 2017, waking up every day to see your account doubling is extremely exhilarating. I’m going to go over all the craziness we’re seeing in the crypto markets right now and the top coins. You should be holding and accumulating in what I hate to say, but the bear market we’re hitting right now.
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So with the Nasdaq being down 30% and crypto being down 50% to 60% from its all-time highs in crypto specifically, we’re seeing a lot of cell pressure. When the markets start to turn and recession fears start to rise, people pull out of their most risky assets first, and in this case, it happens to be crypto. That’s one of the main reasons why we’re seeing crypto being down a lot is because it’s still very risky in people’s eyes. A16z, a big venture capital firm in Silicon Valley with over 28 billion dollars in assets under management, just released a 56-page report on the state of crypto and while I totally recommend reading this report because it was super interesting, the truth is no one wants to read 56 pages.
Right now we’re experiencing our fourth crypto winter, which is basically a very severe crash or crashes. The last time we’ve seen this was back in 2011, 2013, 2017, and now 2022.
They have a really great chart that shows when you zoom out and look at crypto as a whole, all you see is growth. You can see that the crypto market as a whole has a 270% compound annual growth, which means from inception or since birth, it’s been averaging 270% every single year on average.
Obviously, these crypto returns will slow down just like any company as it becomes more mature, but it’s exciting to see the growth crypto is having right now. You can also see that everything around the crypto space is growing rapidly as well, with 68% more developers entering into space every year, 62% more crypto start-ups being built, and 83% more social media content being around crypto. This really just goes to show that if you zoom out and see the big picture, these crypto crashes may seem scary now, but crypto isn’t really going anywhere unless. Of course, it gets banned by every major country in the world, which I highly doubt, but it’s here to stay. I personally think it’s a once in a lifetime wealth opportunity for our generation.
The report goes on to talk about DeFi and how it’s grown from nearly zero to over 100 billion dollars in less than two years, which is just insane. If DeFi were to be a bank, it’d be the 31st largest U.S bank in total assets under management, which is pretty insane. Because if you think about it, it’s only been around for two years, whereas these other banks have been around for hundreds of years.
Defi clearly has a huge benefit to the world, and if you’re in the U.S., you can’t really see first-hand all the benefits it brings because we take a lot of things for granted. 1.7 billion people in the world do not have access to a bank account. Let’s take a second to think about that.
The U.S. population is 330 million, so that’s five of us that can’t get a bank account. But of those 1.7 billion people, 1 billion of them have access to a mobile phone, and roughly 500 million of them have Internet access. This just goes to show that a lot of economies in the world simply aren’t established, and this is where DeFi can come in and be very powerful. As it becomes easier and more user-friendly for people to save money, get higher interest rates, and lend their access money out. So I’m keeping an eye out for any interesting DeFi project that comes on my table.
The report also goes on to show that we’re still so new to crypto when comparing it to the growth of the internet. This chart over here shows the growth between Ethereum addresses and the number of users on the internet. As you can see, just six years ago, Ethereum had less than a 100,000 monthly addresses transacting, and that’s up around 10,000% today. If ETH holds true to this gold line, you’ll see that Ethereum addresses will have a billion users in 10 years, but more importantly, crypto as a whole will have billions of users because if ETH has a billion, think about all the other crypto projects that will grow and emerge from that as well.
The future is very bright for crypto today. Ethereum leads the pack with the most active developers with about 4 000 people, which isn’t a lot when compared to something like Roblox, which has 345,000 people, and it’s a game for children. If you want to follow the money in crypto, you have to follow the developers because a blockchain is only as strong as its developers, and the more people working on the project in general, the more value it will bring as well.
Now that I’ve hopefully calmed your nerves a little bit about the crypto markets, I think it’s important to remember that while bull markets feel good when everything is in the green and you’re making money, it’s the bear markets that will really make you rich! When the markets drop and recessions happen, this is when the biggest wealth transfer occurs. People get emotional when crashes happen. They sell and settle people like me, brave fires which to be honest, I’m not even that brave, but when something is down and I fundamentally believe in it, if I liked it before when the prices were high, you best believe I like it now, when the prices are low. We’re losing money and our portfolios are down in the bear market, but we get to accumulate more for less. The bear markets always end, they don’t last forever. Bear markets are gifts, and you have to understand this because doesn’t it feel good when you’re at the store and everything is marked down 20%, you want to buy everything. You should feel the same way when the prices fall in the crypto markets because if the fundamentals haven’t changed, it’s no different from an item just being on sale.
Having an investment strategy to reduce the amount of risk you’re taking in a bear market is key, and that’s why I suggest using DCA, or dollar cost average. All this means, instead of saying, “I’m going to invest five thousand dollars into a coin, “You’re going to say, “I’m going to invest one thousand this week, one thousand next, and one thousand in the weeks coming forward.”
What this does is spread out your investment and your risk, because maybe you put in $5,000 and the next day the coin drops 10%. If you were dollar cost averaging, that means you had some extra money lying around and then you could buy this. This means you can get more coins for less money. This strategy will also instil good investment practices because you’ll never stop investing. So it’s pretty much a win-win. You’re putting your money to work for you, and you’re guaranteed to hit all those lows anytime they come now. The coins I’m holding and picking up more of as the market keeps falling and falling are not bitcoin in the theorem, because these coins are already so established. I’m looking for more risk and more return for my investments. Plus, when bitcoin and Ethereum fall, all the other altcoins fall just as hard because they inherently are more risky. So there’s a lot more upside to make money with all coins and that’s what I’m looking for.
So now I’m going to go over my top three coins that I’m holding and picking up more as the prices continue to fall, but before I do that, I want to share with you a couple things that I look at in terms of a crypto project before I buy it, especially during this crypto time.
The first thing is funding. When the markets start drying up, fewer investments are being made because people generally have less money and interest rates are increasing, so it’s more expensive to borrow as well. Because of this, less money will begin to flow into crypto and projects simply won’t be able to keep the lights on, pay employees, and inevitably just die. When a bear market comes around, companies are simply trying to just survive because they know that just by surviving this will give them more market share as others die out. So that’s the first thing I look for funding.
The next thing I look at is whether or not I can make some sort of passive income from it. So, like staking the coin, passive income is extremely important to me, and having coins that can yield me money in two ways, such as capital appreciation and essentially dividends, is really big.
The last but not least, is the company’s revenues. If a company isn’t producing any income yet, it’s going to be a lot harder for them to make money in a bear market as people will be more stingy with their money now. This isn’t to say that great things aren’t built in downturns, because huge companies like Microsoft, Uber, and AirBNB were all built during recessions. The point I’m getting at is that it’s just more likely the company just won’t survive. If it’s at least making some money to keep things running and pay employees, it’s much more likely that it’ll beat this bear market and come out on top in the next crypto bull run.
So keep these three things in mind when looking at all the coins to pick up during this crypto winter: do they have proper funding to survive? Can you stake the coin or earn some sort of passive income from it, and does the company actually make money or is it just an idea?
The first coin I’ve been accumulating in this bear market is Solana. I’ve been putting an absolute bag into this coin as the price has been going lower and lower. Solana has about 335 million dollars in funding from big names like A16z, Polychain, and many others. Solana currently does about 1 million dollars a month in revenue, and this past year it has done 20 million dollars in revenue.
Now I stake Solana on exodus for about 5.2% APY, which is basically just free money to me since I’d be buying it at these prices regardless of the price. I think there’s definitely room for Solana to take more market share as the company’s been hiring a lot more developers and has about a thousand at the moment. And I think this space is going to have multiple winners just like any other asset class. Solana is also a great crypto to transact NFTs with and use DeFi with. And as we see more and more money coming into the spaces, I expect the number of users in Solana to increase with it as well.
Now the next coin, what I’m going to be holding and accumulating more of right now is avalanche. Besides loving the team behind Avalanche, it’s clear developers are choosing to build dab on Avalanche, with 478 projects on the network already and some of the big ones being Trader Joe’s Ave and many others. Avax also has a funding of 255 million and is reporting another 350 million, so I’m not too worried about them surviving this crypto winter. And on top of all this, I can stake Avax for roughly 9.2% today.
If we’re looking at the revenues back in l1, you can see that Avalanche did 14.4 million dollars last month and 127 million dollars this past year, which is second only to Ethereum in monthly revenue. So this project has a lot of potential to stay and it got absolutely hammered this past month. So with it being a big player in the space already, there’s a lot less risk of it dying out this crypto winter.
The last coin I’m holding and accumulating more of is FILE coin. FILE coin is really interesting to me because I can see every business using something like this in the future. Every business needs to be able to store data, and having centralized servers is not the safest way to do it because what if a tornado hits that server? And, on top of that, it’s definitely not the fastest way, because what if your server is all the way across the country? I’d go more into detail now, explaining all this. But FILE coin probably has the coolest website I’ve ever seen, and it lays out everything perfectly with some awesome illustrations. So, if you want a better understanding, you can check out their website. They do an awesome job of explaining everything. You can also stake your FILE coin on Gemini for about 7.25% APY, which I love because it’s giving you more of that passive income. Looking back at the revenue chart, follow coin makes a lot of money. In the past month they’ve made $5,000,000, and in the past year they beat out Avalanche to be at the number two spot with $167,000,000 in revenue, which is pretty crazy. If you think about it, this coin only has a market cap of 1.8 billion when compared to Solana’s 17 billion, and it makes eight times more revenue. Definitely, something to keep in the back of your mind. But that’s all I had for you today.
[This article is a transcription of a video made by Faares Q]
Original video: https://youtu.be/daBLEw0hxIo]