A short-term bitcoin bear market yields buying power for players not fully committed to HODL (link to background section below). As the first ICO, Bitcoin sets the mood for the cryptocurrency market. As goes Bitcoin, so goes altcoins. With Bitcoin and well-known altcoins low, the exchange rate for new ICO entry gets you more bang for the Bitcoin.
Now is the time to review your ICO prospect list for favorable exchange rates. For instance, focus on those calculated with short-term Bitcoin values rather than fixed rates. In a bear market, Bitcoin performs like a commodity. Users need it to gain frictionless entrance into other ICOs not yet listed on popular exchanges. Popular cryptocurrencies like Ethereum and Litecoin behave in the same way.
Here are three suggestions for taking advantage of a Bitcoin bear market and diversifying your cryptocurrency portfolio. If you bought at the height of the market, consider still HODLing. If you’ve got extra cryptocurrency burning a hole in your wallet, consider the three strategies below. Be warned, ICOs can be risky.
Look for thoughtfulness indicators from new ICO providers: those with pre-release dates in the past few months, where their entry cost considers recent market underperformance and their whitepaper addresses the pessimistic outlooks prevalent in the market. These are cryptocurrencies not yet listed on an exchange.
Look for adjustment indicators from pre- or early market stage ICO providers: those who have adjusted their entry incentives to entice new entrants, usually shown with a bright red strikethrough in the release summary as well as a new press release highlighting the new incentives.
Look for stability indicators from established market stage ICO providers: those whose price graphs move counter to Bitcoin and operating premises containing valid blockchain initiatives. This is also a chance to consider social impact investing for coins in your prospect list with a mission.
HODL is an investment strategy first coined in a now epic December 2013 reddit post, “No s###, I should have sold. I should have sold moments before every sell and bought moments before every buy, but you know what, not everyone is as cool as you. You only sell in a bear market if you’re a good day trader or an illlusioned noob…so I’ve had some whiskey. Actually, on the bottle, it’s spelled whisky. Whatever, sue me (but only if it’s payable in BTC).” In December 2013, Bitcoin saw 5x growth in about one month, but then fell rapidly to about half within the first half of that month. Over the next 18 months, the price fluctuated on a downward trend until Ethereum came on the scene, setting the stage for the ICO market we have today, and giving Bitcoin HODLers a new place to spend.
MIT released the only economic analysis to date on ICOs. The researchers compare ICOs to traditional equity financing from an entrepreneurial standpoint, but say nothing of the risk in the current ICO market.
People fired from an ICO investment bank found 81% of ICOs were scams through their own musings, which lack any statistically appropriate analysis. For a fair assessment, research the offerors as well as the offering, consider any conflicts of interest, and check all of the source citations. A misrepresented summary quote is a simple key avoidance indicator.
(Citation: Catalini, Christian and Gans, Joshua S., Initial Coin Offerings and the Value of Crypto Tokens (June 25, 2018). MIT Sloan Research Paper No. 5347-18; Rotman School of Management Working Paper No. 3137213. Available at SSRN: https://ssrn.com/abstract=3137213 or http://dx.doi.org/10.2139/ssrn.3137213 ).
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