You See Blood In The Streets And Want To Invest In Crypto? Here Are The Risks

Just in time for Black Friday deals, crypto offers further discounts to anyone who can stomach the (increased) risk. Find out how to invest in crypto in the safest way possible for today’s market.

With the current state of the crypto market, many people are asking themselves:

~ Should I even invest in crypto at all right now?

~ Should I make a new crypto investment now while it’s on sale?

~ What is the best crypto to invest in right now?

~ Which are the best crypto exchanges to hold my capital in right now?

~ Should I keep my existing crypto trading positions that have lost ground?

While these questions are ones that we all must answer for ourselves, hopefully, this evaluation of the facts will be helpful in doing so.

Should I even invest in crypto at all right now?

Despite the devastating news about a core exchange collapsing (FTX) the fundamentals of cryptocurrency still hold strong. No doubt there are many changes and welcomed regulations on the horizon so the road will likely continue to be bumpy for a while.

For the true forecasters and visionaries, this is likely just as expected and right on time…. If you would like to delve deeper into the merits of cryptocurrencies and blockchain technology please read this extensive article I published last year: Lets Talk About Crypto

As is often the case in a situation like this where one or more markets are collapsing around us, people tend to begin clamoring around to find the best returns for their investment capital right now…… jumping from one investment class to another.

If that is you, please remember that there is not one single asset class in existence that can deliver profits 24/7/365+ yet we always seem to be in search of one?

Think about it, of all the asset classes that exist do any of them profit continuously?

~ stocks

~ bonds/term deposits

~ options

~ mutual funds

~ precious metals

~ crypto

~ commodities

~ forex

~ real estate

~ a business

The answer is no.

For those who will argue that a term deposit continues to pay out the promised interest years down the road, please remember that wee bit of interest almost never keeps up with inflation, and is absolutely losing ground daily as the value of your dollar continues to decline.

The “season” right now is clearly not reaping and if this perspective is taken, I think it can really take the edge off of both perceived, and real losses.

Should I make a new crypto investment now while it’s on sale?

Many people are asking about bringing fresh capital into the market at these lows, or starting new bots now while the market is down. Up until one of the pillars of the crypto exchanges collapsed (almost overnight) I personally was an advocate for both.

Should you bring in fresh capital and buy crypto on sale now?

If you can, I would say yes.

What is the best crypto to invest in right now?

More specifically, what is the best way to invest in crypto today? There are only two options I would personally consider right now in light of the increased uncertainty.

For those who want to actively trade crypto bots now:

I would only run bots right now using the Bottom Feeder settings from The Plan.

The Bottom Feeders have been paying out bot profit over the last 4-5 months because they were started at market lows, and the bots are in range most of the time.

The bot profits from the Bottom Feeder bots have been quite modest compared to this time last year when crypto was in a bull run. For me, these relatively small profits do not warrant the risk of being part of another exchange collapse. While there are currently no inklings of more trouble, these are very unusual circumstances and all gloves are off.

For those who simply want to own some crypto:

This is called HODLing and the absolute safest way to do it is by using a cold storage wallet.

This is what I am doing and it is flat-out the safest way to own crypto right now.

Which are the best crypto exchanges to hold my capital in right now?

For anyone trying to decide whether to keep their capital in an exchange or not, to be clear, the risk in doing so is the possibility of any given exchange failing.

Right up until the news broke about FTX, they appeared to be one of the strongest and least likely to fail which is partly why it was so shocking, and reaffirms that we simply do not know what is really happening, or the truth when we’re on the outside.

When Celsius collapsed earlier this year there were a few warning signs leading up to it yet almost everyone who had capital on that exchange lost it.

When Luna was attacked out of the blue and driven into the ground they issued a new token that may or may not rise up (in time) and make up for the huge losses people took.

With FTX there was zero warning that this pillar of an exchange was in trouble. The most basic explanation, from what I understand, is that while using their customer’s capital to invest on their own behalf (this was not authorized or disclosed), they managed to amass 7B in liabilities and had only 1B in net capital to pay out their customers who began to request withdrawals in droves at the first whiff of trouble.

Sounds like a bank run right? You bet and the reaction was just like a bank run too, halt withdrawals leaving people hanging and unsure if they will ever be able to access their capital in the future.

It is interesting and highly disappointing to know that while FTX froze customer withdrawals they found a loophole for themselves by allowing accounts or wallets based in the Bahamas (where they were based) to continue withdrawals. Not cool.

As I see it, the risks of keeping capital in exchanges (either HODLing or in bots) are as follows:

1. Crypto coins can disappear, even stable ones (remember LUNA earlier this year).

2. The exchange could go under (think Celsius, now FTX and loads of smaller ones).

3. The exchange could halt trading or withdrawals (too many to mention).

Unfortunately, all 3 are very real possibilities in these strange times. The contagion and domino effect in the crypto market is unlike anything most of us have seen before and staying invested in bots and keeping capital on exchanges presents a higher-than-normal risk right now.

Should I keep my existing crypto trading positions that have lost ground?

The fact is, right now keeping bots running, or holding any crypto on any exchange poses a higher-than-normal risk of losing your capital in the coming months. This will not be the case forever.

The risk/reward scale today simply does not make sense, there is much more risk than potential reward at the moment. In fact, I would go so far as to say that there is VERY LITTLE POTENTIAL UPSIDE for taking on that level of risk (which would normally pay extremely well if it pans out).

This is why it does not make much sense to take on this level of exposure when you could easily move your crypto back into the market from your cold wallet once it turns back up, and enjoy nearly the same upswing.

For these reasons, it is my (limited and unprofessional) opinion, that there is very little advantage or point in staying in bots (especially deeply out of range) right now -or- leaving the capital on any exchange.

Since there is almost no upswing compared with going the safe route in cold storage, the only real consideration is the potential realized losses that may be incurred.

This begs the question, why is anyone still holding on to deeply out-of-range bots? To which there are only two answers:

1. You didn’t realize how bad this is and that FTX could be the catalyst of a much larger, yet-to-come loss.

2. You refuse to accept/take the loss your bots have incurred.

I consider Coin Breau to be a very reputable, highly knowledgeable source whose team has a far greater grasp on the crypto industry as a whole than I ever will. In one of Guy’s recent videos, he ended by saying in his opinion no exchange is safe right now (time frame mid-November) and strongly suggested that people move their holdings onto a cold storage wallet until the dust settles. He also projected that we could be in for a good year of potential uncertainty…..

Personally, I would rather ride out that year (or whatever it will be) with my capital in a cold wallet than on an exchange.

The risk of moving your crypto to a cold storage wallet:

~ Other than losing the wallet or your keys there is no risk in this if you use a legit wallet like Trezor or Ledger Nano (always buy direct from the manufacturer not off Amazon because the device may have been tampered with).

~ The downside here is that it may require you to “sell” a position and realize actual losses that may only be theoretical at present.

~ Also, in most cases crypto in cold storage can not earn anything. It’s like cash under a mattress.

What I did:

Around May/June I decided to take the hit and I closed all my bots/positions. The market today is not far off of where it was when I did that and I took around a 75% hit overall.

I put all capital in USDT and LTE with the intention of swapping it into BTC & ETH when I thought we were at the bottom of the market. I was still waiting for that when this FTX fiasco happened.

Somewhere around Remembrance Day I decided to make my move and swapped over to BTC & ETH and transferred all capital to my nano x.

I did this knowing the market will most likely go further down (I think this is a long way from over) and I will likely miss buying even lower. Yet I now have the peace of mind of knowing that my capital is safe, offline, and no longer at risk of an exchange or coin going down or being halted from trading or withdrawal.

For me this was the right call, but it might not be for everyone?

One of the biggest lessons/reminders is the incredible importance of only investing risk capital. To say to only invest money that you can afford to lose is not strong enough language in my opinion. It must be that small allocation of a person’s total investment capital that is earmarked for the riskiest of investments.


If you take away 1 thing from this analysis, let it be the following. No one can advise you, which is why you have not heard from someone like Dan Hollings or other influential people in crypto over this last year as the market crashed. We all knew the risks yet if you’re anything like me, the level of fallout with this latest failure has been shocking.


One thing to remember about The Plan going forward: the strategy clearly does not work in every single market condition – I think we can all agree on that. The fundamentals and strategy are still sound, just like HODLing is still sound. But these are very unusual conditions, in an extremely volatile market, that has unknown connections/dependencies/contagions THROUGHOUT the industry.


Unfortunately, there will most likely be more fallout yet once the market resumes what is normal for crypto, the strategies from The Plan will also resume paying out those passive profits we came to enjoy and expect.


Do your own research, make your decision and accept the risk.

Heather

The Expat Entrepreneur

P.S. Here are genuine links for the top cold wallet storage devices:

My Affiliate Link For TREZOR

Ledger Nano

DISCLAIMER: This is not investment advice. I am not a licensed professional and am not qualified to advise you on anything! You must Do Your Own Research (DYOR) and make your own decisions. This email is simply my take and opinion of the cryptocurrency market right now.