Bitcoin and Ethereum took the beating of a lifetime in 2021.
There has been a big pump in price earlier in the year, followed by the Elon dump that some say he did as a form of billionaire fun. The markets for cryptocurrencies led by Bitcoin and Ethereum are slowly rebuilding. A strong foundation in price and new users joining both networks is forming.
If the network effects of both cryptocurrencies continue as public data suggests, then a new supercycle is imminent. NFT gaming is helping to change paradigms in an industry that was thought to be years away from the effects of blockchain that is already reshaping finance, social media/news, and collectibles.
Axie Infinity is the most talked-about blockchain gaming project right now. It’s like the Pokemon game but better, except this time it has its own economy and creates real-world jobs for humans.
I’m bloody excited. This is 1996 all over again — right before the internet changed everything and forced my dad’s fax machine into the dumpster.
With inflation in many countries going well beyond the 2% governments promised, alternative investments are a must to retain purchasing power and protect the time you give up to earn money. Bitcoin and Ethereum are forming part of investment portfolios for average people, hedge funds, retirement funds, and even large businesses.
Here’s how to prepare for the next supercycle in cryptocurrencies led by Bitcoin and Ethereum.
Understand history to understand the bright future
Understand the history behind Bitcoin and Ethereum so you understand where things are heading. A must-read book is the Bitcoin standard. It explains many of the key concepts you’ll need for the next megacycle.
I see so many crypto critics who clearly have no idea what they’re talking about because they don’t understand why Bitcoin exists. Let me simplify.
Bitcoin was created after the 2008 recession as a solution to governments that create enormous amounts of money out of nowhere and give it to rich folks, who then invest it back into the stock market and push prices sky-high (see current stock market prices as evidence).
Ethereum was created to turn blockchain into a decentralized layer that enforces trust. Originally that was through smart contracts. Now Ethereum has hundreds of use cases and replaces most of the internet, including “the cloud.”
Big tech companies that dominated the last two decades of internet growth got greedy. They used our data and exploited it for their gains. The users (us) no longer own the internet. Companies and people can be literally switched off by a dude in a bro t-shirt working for a tech giant (or Zucks).
Ethereum provides a democratic layer of trust where consensus must be reached before a big change can be implemented. Each blockchain has its own rules. You can move from one to the other based on your needs and what you believe.
You can’t vote for your rights with big tech because they don’t let you keep your data. And they decide your fate, which is governed by their vigilante laws, not real laws we vote for.
Ethereum brings democracy back to the internet.
Take a long, hard look at smaller projects
Bitcoin and Ethereum will lead this next supercycle. Why? They have the most amount of usage, attract the most number of users, have the highest prices, and are adopted by well-established giants such as PayPal and Visa.
They’re not the only two cryptocurrencies that will see enormous success. A rising tide lifts all boats. Smaller blockchain projects will do well too. In fact, based on the last supercycle, smaller projects may outperform Bitcoin and Ethereum. The problem is risk. There’s no such thing as easy money.
What I’m preparing to do is put tiny investments into smaller projects. My criteria is as follows:
- What problem does the project solve?
- Who’s on the team?
- What investors are on board?
- How many customers do they have so far?
- Does the technology work?
- What do their customers say?
- Can they be easily copied by a better, faster, sexier project?
- Do well-known exchanges — Coinbase, Crypto dot com, Gemini — sell their cryptocurrency, or is it only shady platforms that are known to be dodgy?
Once I have my final shortlist of between 10–20 projects, I am going to invest $1000 or less into each one.
In the last supercycle, many of the smaller projects did between a 10X and 100X growth in price. Diversification, risk management, and small investments are key to taking advantage of this approach. But if you’re not already invested in Bitcoin and Ethereum, then you may want to look at them first before considering riskier projects that have less chance of success.
Save some cash
Cash is trash, yes. But cash helps you invest at discount prices.
Compared to where prices of major cryptocurrencies were a few months ago, there are still plenty of bargains. Saving money in preparation for the next supercycle helps you participate in the action if you choose. Otherwise, you end up doing what many investors do: borrowing money to buy Bitcoin and Ethereum.
Investing in crypto already carries risk. Borrowing money to invest in crypto is like throwing $100 bills at the roulette table and then walking away. Taking on debt causes you to spend money you don’t have. If a sudden dip in prices happens again — because Elon (or another huge influencer) crashes the price — you could be left to foot the bill.
Stay away from debt aka leverage. Use savings to invest.
Decide what risks you’re willing to take
Some of us are comfortable taking more risks than others.
For example, when Bitcoin and Ethereum dropped by more than 50% in price multiple times, I didn’t blink an eye. That’s because my risk tolerance has adjusted to crypto markets. You can’t have 200% year-over-year gains in an investment like Bitcoin or Ethereum without enormous volatility.
Volatility equals growth.
My risk tolerance is still lower than most. I know people who have all their money invested in cryptocurrencies. I’d never go that far because it’s not part of my investment principles.
To prepare for this next cryptocurrency supercycle, you have to decide what risks you are or aren’t willing to take. Here are some questions to guide you:
- How much money can I invest without being stupid or risking everything?
- How much money can I afford to lose if a black swan event occurs and prices plummet?
- How much can I afford to lose if I misplace my digital wallet that stores all of my cryptocurrencies?
Have solid rules around risk. Whatever you do, don’t break them — otherwise, you risk going from being an educated investor to a straight-out gambler.
Research future trends
Former Goldman Sachs investment banker and the CEO of popular finance education provider Real Vision, Raoul Pal, thinks community tokens will be the next trend in blockchain. This is where companies create their own currencies like what Facebook is doing with their cryptocurrency project Diem.
Then there are trends like aggregators. Spotify aggregated music. Youtube aggregated user-recorded videos. TikTok aggregated people dancing to music. Apple aggregated the place we buy apps. Amazon aggregated books.
The first decent blockchain aggregator is in the gaming space. Yield Games Guild (YGG) is looking to aggregate NFT games.
Then there’s the trend of decentralized social media. Right now we still predominately use traditional platforms like Facebook and Instagram to connect with our friends and stay in contact.
What will replace Zucks?
That’s a question worth researching. Research helps you learn what to invest in during the next supercycle, and what platforms to join so you can replace your crappy centralized Web 2.0 apps.
Let’s replace Zucks with zero f*cks given.
Here are some killer resources to help you research:
Choose your news outlets wisely
Many news channels that report on Bitcoin and Ethereum are biased.
Why? They seek to pump and dump the price to support their investments. We’ve even had certain news channels promote cryptocurrencies in return for payment. This behavior has existed on Wall Street for years and is now in cryptocurrency too.
I get my crypto news from Ivan On Tech, Twitter personalities like Michael Saylor and the Winklevoss Twins, and BitBoy Crypto on Youtube.
Explore the options and choose your news sources. Beware of clickbait. Look at the owners of the news channels to see if they have any hidden biases. Look for kind acts, such as what Ben Armstrong of BitBoy Crypto did by forgiving a loan he made to a friend who accidentally went from being an investor to a gambler.
Dare to take a crypto course
This one is on my list for the next supercycle. Blockchain and cryptocurrency have many complicated concepts to get your head around — yield farming, staking, Eth 2.0, Proof of Work, etc. I’m still learning how to use particular features of an iPhone, so I’m hardly a tech genius.
Investing in a Web 3.0 education is how you take advantage of the opportunities that will come from this next wave of the internet.
The bizarre thing you can do before the next supercycle
Many people don’t know you can actually get a Web 3.0 job. Moralis, for example, are hiring loads of people to build the future of tech. The Pomp Crypto Job Board is another place you can find Web 3.0 jobs.
Being in Web 3.0 every day will give you an economic advantage over those who wait until later in the supercycle to finally join the adoption. And those who continue to say crypto is a scam will fall on their own sword, the same way critics of electricity and grandpas who refused to give up their fax machines for emails did.
Get paid to learn Web 3.0 for free as part of your day job to prepare for the next supercycle.
I can’t wait for the next supercycle of Bitcoin and Ethereum.
Owning our data, having a democratic say in the tech we use, freedom of speech, and earning money that can’t be created out of thin air are all problems that need to be solved for society to continue to prosper.
The Web 3.0 revolution led by Bitcoin and Ethereum will change the internet as we know it. Start preparing by opening up your mind to a world of possibilities and making a few small investments in blockchain, based on your research and risk tolerance.
If you have no idea about blockchain then start with the safer options: Bitcoin and Ethereum. History shows you’ll be on the right side of the revolution if you do.
This article is for informational purposes only, it should not be considered financial, tax, or legal advice. Consult a financial professional before making any major financial decisions.