It is undeniable that Cryptocurrency provided some of the highest returns in 2017. The main cryptocurrencies yielded the following returns: Bitcoin +2,800%, Ethereum +8,500%, Ripple +109,000%. So, if you ask whether it is still worth investing now, let me share my perspective.

  1. Separate Fundamentals from Price
    Most people tend to focus on the price fluctuations, which can vary significantly day by day, sometimes by dozens or even hundreds of percent. As a result, many view this as a large speculative market or gambling. However, everything has its own fundamentals that we need to recognize. For example, the coin called Ripple is a technology that facilitates faster and easier money transfers compared to the traditional SWIFT system, significantly reducing transfer fees. Thus, to consider it merely speculation would be misleading if the technology can be effectively utilized and widely adopted in the future; that coin should have a very high value.

Another example is Ethereum, which offers technology that simplifies contract agreements, known as smart contracts, widely used in Initial Coin Offerings (ICO). If this system gains general acceptance, it could revolutionize the digital industry, much like the operating system from Microsoft did in the past.

Therefore, focusing solely on price movements may cause us to overlook technologies that could change the world in the future.
However, this is not to suggest that one should buy or sell any coins right now; I just want everyone to understand the fundamentals of what these technologies will be used for in the future and how beneficial they might be.

  1. Are the values of various cryptocurrencies overvalued?
    The term overvalue depends on individual perspectives, but if I had to guess, during a booming market, the chances of encountering overvalued coins are quite high.
  2. Identify the Winners
    I would like to reference the Dot Com Bubble in 2000, where many internet companies were significantly overvalued.
    Everyone knew that the internet would be the future, but among the many internet companies, there were also fraudulent ones that could not generate profits and eventually disappeared. However, many companies survived and thrived since then, such as Amazon.

The stock of Amazon dropped more than 90% during the dot-com bubble burst, but it later reached new highs and provided a tenfold return.

This teaches us that finding the winners and buying at the right time can yield substantial profits.
After a booming market, a significant correction will occur, sweeping away the fraudulent entities and leaving only the winners to dominate the market thereafter.

  1. Always have a Stop Loss when buying at high prices

Or use automated trading decision aids (Robots) to avoid getting swept away by the market, which could lead to significant losses when the market declines.

Trading cryptocurrency occurs 24/7, so utilizing automated systems or Robots is essential. This helps eliminate emotions from our trading, instills discipline, and allows us to remain in the market long-term, potentially profiting from such a volatile environment.

Dr. Tanapoom Damraks, CFA.

Article by Terra BKK Dr. Tanapoom Damraks, CFA.

Email: [email protected]