The cryptocurrency market is the last open frontier where anything goes. That is what makes it so exciting, yet so dangerous at the same time. As you continue to invest in crypto and gain experience over the years you will learn many lessons along the way. Lessons that must be learned to ensure your survival in this market. The crypto market is a battle of wills, only the strong live to see another day. Most of us have gone deep down the crypto rabbit hole and strongly believe in where the prices of Bitcoin and Ethereum are heading. It will be life-changing. We just need to survive in the market until that day comes.
There are dangers all around you. While all of the lessons that you learn in this market are important and will serve you well. However, there is one lesson that is more important than all of the rest.
No, it isn’t that you shouldn’t be trading with high leverage, even though that is a great lesson that we all need to learn. It also isn’t that Bitcoin is the crypto that you should first focus on accumulating before all of the rest, even though that is once again great knowledge to have. It isn’t even that you should only be investing what you can afford to lose in crypto, as that will help keep your sanity in this market intact and prevent you from selling early. Once again, essential wisdom to have picked up along the way.
Time after time, the most important lesson that you have needed to learn in crypto is “not your keys, not your coins.” There are so many ways to lose your money while investing in crypto, be it by using leverage, buying small-cap coins that have rug-pulls, or even being scammed or hacked. The crypto market is a market of greed. That often works in our favor, as it is probably the reason many of us got into this market and changed our lives forever. But, that same greed can make us forget what is really important.
While many of us are always on the lookout for how to make even more money and increase our portfolio’s value. However, our main focus should always be protecting what we have. Having our portfolios rocket up in value means nothing if we can’t protect it and then lose everything. This is a situation that has happened over and over.
Look back to the Mt. Gox hack. While that was a different time in Bitcoin’s history and wasn’t entirely correlated to greed. It was directly related to being negligent. The signs of danger were there, and users who simply took custody of their own Bitcoin were spared the heartbreak of losing everything. That was the first of many exchange hacks that we would see over the years.
Now, let’s fast forward to the summer of insolvencies that the crypto market saw this summer. These were all self-inflicted wounds caused by greed. The investing fund, 3AC, became insolvent because it took on too much leverage and lost on some of its biggest bets. Celsius was a similar story, where they were trying to fake it until they made it. Vauld and Voyager were equally irresponsible. But, these were funds and companies.
Average users saw the great returns they could earn by “lending” out their crypto to these 3rd party services and became hooked on the passive income that they began earning. They became blinded by this passive income and how easy it became to accumulate crypto. But, they forgot about the extreme risk that they were taking. “Not your keys, not your crypto.” The coins that they lent out were technically no longer theirs. They now had to put all of their trust and faith that the 3rd party would eventually return the crypto back to them.
Unfortunately, many people learned this lesson the hard way when their funds became frozen on these exchanges and could no longer make withdrawals.
It was a summer of pain that caused the price of Bitcoin to go lower than many of us ever imagined. We had hoped that it was a lesson that wouldn’t soon be forgotten. But, this week there has been FUD spreading across the market. It is a familiar type of FUD that gives me a deja vu feeling comparable to what I saw before the summer of insolvencies. There have been rumors of Alameda group, and perhaps even FTX being insolvent. Throughout the summer, FTX was one of the few places that were considered “safe.” However, we are now learning that the only safe place is holding your coins in cold storage. Sam Bankman Fried has denied the rumors, but who knows if this is true or not.
Crypto is a market where FUD and lies can easily be spread causing market-wide panic. This most recent round of FUD could be entirely false, or there could be some fire where there is smoke. One thing is certain, if you truly want to protect your crypto, you should not be putting it at risk. Trust me, you don’t want to feel the heartbreak that losing all of your crypto would make you feel. So until the market becomes a much safer place. We all need to become more proactive by taking our crypto into self-custody. At the end of the day, it could be an overreaction that wasn’t necessary. But, it also could be the decision that saves your entire portfolio.
How about you? What do you think of the recent FTX and Alameda FUD? Are you take self-custody of your crypto?
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