{"id":357322,"date":"2021-10-24T19:25:00","date_gmt":"2021-10-24T16:25:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/fear-not-investor-finding-stability-amid-crypto-market-volatility\/"},"modified":"2021-10-24T19:25:00","modified_gmt":"2021-10-24T16:25:00","slug":"fear-not-investor-finding-stability-amid-crypto-market-volatility","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/fear-not-investor-finding-stability-amid-crypto-market-volatility\/","title":{"rendered":"# Fear not, investor: Finding stability amid crypto market volatility"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a28b0086134d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a28b0086134d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/fear-not-investor-finding-stability-amid-crypto-market-volatility\/#Volatility_breeds_vulnerability\" >Volatility breeds vulnerability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/fear-not-investor-finding-stability-amid-crypto-market-volatility\/#Project_utility_and_community\" >Project utility and community<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/fear-not-investor-finding-stability-amid-crypto-market-volatility\/#Project_longevity\" >Project longevity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/fear-not-investor-finding-stability-amid-crypto-market-volatility\/#Assessing_project_longevity\" >Assessing project longevity<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Fear not, investor: Finding stability amid crypto market volatility <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvOGEwMjhkZGItMjIzOS00MmIzLTk5MmYtMzRkNmE0NWNiYjg3LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>In a calendar year, the total crypto market capitalization more than quadrupled from $361 billion to more than $1 trillion in January \u2014 reaching an all-time high of around $2.6 trillion in May. Just weeks later, more than $800 million was wiped off of the total crypto market cap, representing a decrease of over 33%.<\/p>\n<p>Volatility of this magnitude in the crypto markets is nothing new, especially for those battle-tested by market cycles of years past. However, research indicates that the global number of blockchain wallet users <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.statista.com\/statistics\/647374\/worldwide-blockchain-wallet-users\/\">increased<\/a> by more than 25 million since March 2020, meaning this is just the first roller coaster ride for 25 million new entrants.<\/p>\n<p>For newcomers, volatility can be downright terrifying \u2014 but it doesn\u2019t have to be. With well-researched positions and a long-term outlook, volatility can instead serve as an opportunity to gain exposure to assets with high upside potential at a discounted price.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>VORTECS Report: How volatility drove one crypto trading strategy to 280x Bitcoin&#8217;s gains<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Volatility_breeds_vulnerability\"><\/span>Volatility breeds vulnerability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>When the market is green across the board, everyone is a genius \u2014 lulling most into a false sense of invincibility and Warren Buffet-like investing acumen.<\/p>\n<p>On the flipside, however, bleeding markets not only make us doubt where we stack up in relation to Elon Musk, but they really make us feel vulnerable. Downtrends expose the trader, the level of research and, most importantly, the conviction for the projects invested in. When green candles aren\u2019t there to obscure judgement, projects are s<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/trip-and-travel\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Trip &amp; Travel\" target=\"_blank\" rel=\"noopener\">trip<\/a>ped down to their component parts and exposed for what they truly are. This initiates a moment of introspection for the trader, demanding a reevaluation of the overall investment thesis. If a project\u2019s strength and competitive edge remains clear following a sell-off, this volatility should be viewed as a buying opportunity.<\/p>\n<p>Conversely, if the first inclination amid a price correction is to panic-sell then, perhaps, conviction was tied more to price action than a project\u2019s strengths and innovations.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Project_utility_and_community\"><\/span>Project utility and community<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Always ask: Is the project useful, and who supports it? Few things are more telling about a project than its proposed utility and the community behind it.<\/p>\n<p>One interesting example to highlight is everyone\u2019s favorite: Dogecoin (DOGE). A quick stroll down memory lane reminds us that the controversial currency, which now trades at roughly $0.26 cents, was worth $0.002 in September 2019 despite having no perceived value. The critical word here is \u201cperceived.\u201d<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Building a better stock market: Tokenized shares bridge trading gap on blockchain<\/em><\/strong><strong><em> <\/em><\/strong><\/p>\n<p>Although \u201ccrypto purists\u201d fall into fits of rage defending the honor of \u201creal\u201d cryptocurrencies with \u201creal\u201d utility, Dogecoin did something far more innovative than most give it credit for: It leveraged the community as its utility. You read that right. Those who have invested in the currency did so for three primary reasons:<\/p>\n<ul>\n<li>To profit out of speculation.<\/li>\n<li>A shared community experience.<\/li>\n<li>To share in the joke.<\/li>\n<\/ul>\n<p>Although the utility of Dogecoin is simple, don\u2019t confuse it for having no utility. With simplicity comes ease of understanding, which has garnered DOGE massive mainstream <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>eal \u2014 a feat that many cryptocurrency projects still struggle to achieve even with strong utility. There\u2019s a low barrier to entry in terms of understanding and price, and it\u2019s easier to invest in a joke when Elon Musk and Mark Cuban are among those that find it funny.<\/p>\n<p>To that end, every crypto project should be able to simply communicate its value proposition, yet most projects cannot. Investing in hype is far more tied to price action than project quality or utility.<\/p>\n<p>DOGE\u2019s utility can be easily understood and simply articulated, and it brings happiness and fun to its community. Regardless of investment strategy, those aforementioned three factors are not to be overlooked or underestimated.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Project_longevity\"><\/span>Project longevity<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Project longevity is key. Projects don\u2019t need to be sustainable at first but, to survive for the long haul, sustainability is critical. When exploring a project, it is worth evaluating the plan for sustainability, or a revenue mechanism that could be leveraged at some point (e.g., Uniswap).<\/p>\n<p>It is equally important to be aware of which projects demonstrate plans for sustainable revenue models or value capture. All (or most) projects aren\u2019t sustainable early on, which is to be expected. At the time of writing, Uniswap is averaging <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/cryptofees.info\">over<\/a> $3.5 million in fees per day, with none of this value accruing to token holders. This will (hopefully) change at some point, and if not, Uniswap governance token holders will be forced to reconsider their investment thesis. MakerDAO is one of the most profitable and sustainable projects in the entire space, raking in <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/messari.io\/article\/makerdao-valuation\">over<\/a> $63 million in profits in the first half of 2021. While it\u2019s difficult to find this degree of profitability elsewhere, it is certainly worth considering when evaluating investment opportunities. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Assessing_project_longevity\"><\/span>Assessing project longevity<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>When evaluating a project\u2019s long-term potential, it\u2019s critical to ask the question: Does this project <em>really<\/em> warrant a blockchain solution?<\/p>\n<p>Similarly, can this open-source project be forked easily? Could you have a more efficient marketplace for whatever the project is solving <em>without<\/em> a token? Blockchain is a consensus mechanism, but it\u2019s also a database. And, contrary to popular belief, it\u2019s one of the most inefficient databases that we use at scale.<\/p>\n<p>To justify leveraging this massively inefficient solution, you better be solving a problem that is <em>really <\/em>painful. Financial problems, for example, merit this type of inefficient consensus mechanism because of significant problems like double-spends, lost transactions or the government printing fiat currency into perpetuity.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Survivorship bias has led to an imbalance in the crypto ecosystem<\/em><\/strong><\/p>\n<p>In all reality, there are relatively few use cases outside of finance for which blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> is truly required. So, once a pain point is identified that is so egregious that it merits a blockchain solution, make sure that there is a coordination problem embedded within so that the consensus mechanism has a value-add impact.<\/p>\n<p>This is all to say that volatility in the crypto markets is here to stay, and objectively evaluating projects amid such volatility is no easy feat. Despite these challenges, understanding the utility, necessity and long-term viability of projects can help inform more effective investments to confidently hold in the long term. <\/p>\n<p class=\"post-content__disclaimer\"><em>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/em><\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Doug Leonard<\/strong> is the CEO of Hifi Finance, a fixed-rate, fixed-term lending protocol built on the Ethereum blockchain. Doug holds a B.S. in information systems and a master\u2019s degree in management information systems, both from Brigham Young University. Before being named CEO of Hifi Finance, Doug spent a year as a senior software architect at Mainframe.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/fear-not-investor-finding-stability-amid-crypto-market-volatility\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Fear not, investor: Finding stability amid crypto market volatility &#8221; In a calendar year, the total crypto market capitalization more than quadrupled from $361 billion to more than $1 trillion in January \u2014 reaching an all-time high of around $2.6 trillion in May. Just weeks later, more than $800 million was wiped off of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":357323,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvOGEwMjhkZGItMjIzOS00MmIzLTk5MmYtMzRkNmE0NWNiYjg3LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74863,74983,74868,86883,75541,70610],"class_list":["post-357322","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-cryptocurrencies","tag-decentralization","tag-defi","tag-dogecoin","tag-volatility","tag-finance"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/357322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=357322"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/357322\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/357323"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=357322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=357322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=357322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}