Just over a month ago, this writer posted an article that mooted the strong possibility of a trillion-dollar crypto market.
At the time, the bulls were firmly behind the wheel. Under rosy skies Reddit’s co-founder predicted $20,000 bitcoin sometime this year; there were promising signs that Ethereum’s developers were successfully addressing some of the scalability issues associated with the Eth network; IOTA gave the world a sneak-preview into Qubic; and the market looked good, having recouped nearly $200bn in value since the start of April.
The sector felt it had successfully steered itself through the soul-wrenching first quarter and like the Bob Dylan song, the times were a-changin’.
However, into the second week of June the optimism all but evaporated. The highly-awaited EOS mainnet launch got off to a very shaky start with bug issues and a series of delays; the South Korean cryptocurrency exchange Coinrail experienced a hack; as other exchanges, including Kraken, face increasing scrutiny by US authorities into allegations of price manipulation. The mainstream media continues to run screaming headlines about the terrible fate awaiting the prudent investor… plus ça change, plus c’est la même chose.
Over the past 24 hours, the crypto market has taken another big hit. With a current valuation of $276bn, according to CoinMarketCap, this recent slide has taken the sector to depths not seen in over two months.
Why has this happened and why, time and time again, does the market flap like a freshly caught fish between rockstar price rises and crushing collapses?
In The Bleak Midsummer: A Crypto Futurist Interpretation of Tolstoy
(Editor’s note: surprisingly brief, actually.)
War and Peace, an epic written during the middle of the nineteenth century, explores the personal experiences of people living through Napoleon’s invasion of Russia back in 1812.
What makes Leo Tolstoy’s magnum opus unusual is that he disputed the invasion of Russia being caused by Napoleon, or that the series of conflicts during this period were called the Napoleonic Wars. He argues that doing so makes it easy to disregard the untold millions of people who also participated in the conflict as little more than pawns on a chessboard.
According to Tolstoy, what lay behind the successful repelling of the French was not the genius or leadership of Russia’s leaders but rather the acknowledgment that victory could not be attributed to one or even a group of factors but quite simply, everything. To Tolstoy, the role of the individual in history was inevitably subservient to the greater panoply of events within which that actor operated.
The book’s General Kutosov perfectly encapsulates this. The Commander-in-Chief of the Russian army, Tolstoy’s Kutosov does not see the struggle as a personal one between himself and the French Emperor, but rather an event influenced by a plenitude of known and unknown factors – morale, the weather, the temperature of the stew – which can only be observed and reacted to.
Not-so-spoiler alert: Russia succeeds in defeating the French who are then forced to retreat in the bleak mid-winter.
But what on earth does this have to do with cryptocurrency?
(Editor’s note: fair question.)
To justify the claim that a trillion dollar crypto market was really “coming soon”, this writer looked at positive statements and developments from high-profile people and projects, respectively.
However, the cryptocurrency is a varied and often contradictory, marketplace. There are well-over 1,500 crypto projects out there; people who bought bitcoin at $20,000; others, like the Winklevoss twins who got in at $0.08; hulking great-big corporations in financial centers like Hong Kong, London and New York preparing $20m OTC buy-ins, as well as middle-aged dentists in the American Midwest injecting $50 into obscure coins that they think might well have a chance.
This may give an indication of just how complex the market is, but in actual fact, it barely scratches the surface. No two investors are alike, all have different motivations, commitments and financial thresholds, which will influence when they buy and when they sell.
It is all too easy, from a cocktail of marketing campaigns and community hyperbole, to expect way too much from projects on the cusp of launching. Price rises during this period soon begin to reverse as investors lose faith in projects and sell, which often has a destructive cumulative effect, leading to a strong drop in market prices.
There can never be a singular cause or saving grace that will take the crypto market up to a trillion dollars. Positive news certainly helps, but pinning hope (and money) on projects for a singular reason, or even buying the news on something as important as fair and open regulation, is doomed to failure and disappointment.
This may all sound very bleak, but the purpose of this article is to be a reality check. A trillion-dollar crypto market is possible, but only on strong, sturdy foundations.
Success doesn’t come easily or instantaneously. The sector’s investors should learn to take the rough with the smooth: no FOMO, no panic selling and, as Crypto Briefing says repeatedly, do your own research.
There is no clear route to success, but there are reasons to be positive, even in a down market: like Tolstoy’s Russia, in its darkest hour, crypto can still come out on top.
Disclaimer: The author is not invested in any cryptocurrency or token mentioned in this article, but holds investments in other digital assets.