Staying Away From Volatility Is the Key to Creating a Prosperous Future
L1s Reign Supreme
A recent poll launched on Twitter asked participants whether they would rather hold ETH versus any other ERC-20 token over the next five years. Although not a large sample size, the results were 100% in favor of holding ETH. To me, this was an indicator of market sentiment around the power of a thriving L1 blockchain. ERC-20 tokens include major stablecoins like DAI, USDT, and USDC, as well as major meme coins like SHIB and PEPE. The combined market value of these tokens is in the tens of billions of dollars, and yet, they are all built on top of Ethereum, further ensuring the base layer’s significance with every transaction.
The same can be said of Ordinals on the Bitcoin blockchain. The BRC-20 token is — despite some criticism — increasing demand and usage of the Bitcoin blockchain, and any value accrued via Ordinals can only further assure the base layer’s significance. In some ways the Ordinals fervor could be seen as a DDOS attack, which the Bitcoin blockchain was resilient to. A DDOS attack is when a server is overloaded from repeated requests, and ultimately shuts down. This is typically performed with some type of bot. When the Bitcoin blockchain received a mass influx of activity, it was able to scale and process blocks per usual, with higher transaction fees.
One thesis is that if you want to win in the cryptocurrency casino, steer away from volatility. Statistics tell us you’ll always have better odds strategizing at the blackjack table than throwing your luck at the randomness of the slot machines. While you could win way more on one pull of a slot, the risk is exponentially higher. By understanding the risk portfolio of the crypto casino, you may make it out alive, possibly even thriving.
Just think of how cool it feels to walk out the door a winner…
Put Your Money Where the Odds Are
What this means is to steer clear of speculating on meme tokens, untested L1 blockchains, and rocketing ERC-20 or BRC-20 tokens that will (and yes some will) beat the base layer’s native token (ETH/BTC) in short-term gains. The conservative thinking is to get your money in the most secure locations of the casino — those which offer the players the best odds statistically — and HODL.
With each of these gambles (meme coins, Alt L1s, ERC/BRC-20’s) you’re adding risk to your financial portfolio, and as such statistically decreasing your potential for victory during this crab market. Some crypto economists suggest the next bull market may begin to occur around Bitcoin’s next halving cycle in Q2 of 2024 — macroeconomic trends notwithstanding. But until then, enjoy your beach anon, and bask in the joys of a crab market.
What Is a Crab Market?
A crab market can be defined as, “choppy, sideways moves, just crabbing along”. We’ve been in a sideways motion for a while now, and if you want to live to fight another day, the financially prudent should recall all of their value into the two most prominent blockchains, Ethereum and Bitcoin, which have proven over multiple cycles that they are your best bet to protect your future prosperity.
Bitcoin and Ethereum Are the Lowest Risk L1s
Bitcoin started in 2009, and has made it through every market boom and bust since, always reaching new all-time highs. Therefore, this token is the lowest risk asset with the greatest probability of returning profits to those who invest in it. Ethereum launched in 2014 and has made it through every boom and bust since inception, and, like bitcoin, ether has always resurfaced to greater all-time-highs. Holding these two assets, which are also the two highest-valued cryptocurrencies by market capitalization, constitutes the lowest risk bets available in crypto.
With over 1.1 trillion in value poured into the crypto market, it is safe to say that crypto’s roots have grown strong and its branches are coming in nicely. Do you want to be the next crypto millionaire? I don’t, if it means losing my shirt on a meme coin, a high-risk Alt L1 bet, or a JPEG that could suddenly become worthless. Instead, I’ll take modest profits on the two highest utility blockchains, year over year for a decade — thank you. If you want to secure your wealth with the highest potential of returning greater value than the energy you put into the market then your task is easy, anon, buy bitcoin and ether on a regular basis, and chill.
Within the statistical realm of this casino, and external market factors not-withstanding, and given the cyclical behavior of these markets, it’s my belief that anybody who sticks to this philosophy over the long term will be financially prosperous.
Trewkat is a writer and editor at BanklessDAO. She’s interested in learning about crypto and NFTs, with a particular focus on how best to communicate this knowledge to others.
Hiro Kennelly is a writer, editor, and coordinator at BanklessDAO, an Associate at Bankless Consulting, and is still a DAOpunk.
Feems is a DAO governance operator, creative producer, and community instigator.
BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.
This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.
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