Cryptocurrencies – The End or Just the Beginning?

by FI Fighter on December 22, 2017

in Cryptocurrencies, Thoughts

So, everywhere I go these days, all the rage is: cryptos, cryptos, cryptos…

Right now, I’m in Manila, and it didn’t take me more than say two weeks upon arriving here before I met fellow cryptocurrency enthusiasts… and I’ve even been invited to join local crypto groups…

Yup, sign of the times, I suppose…

Anyway, I still remember the night I checked into SFO and scoped out the price action of some of the leading cryptos just prior to boarding…

OMFG… Holy shit!!!

I remember thinking…

When Litecoin (LTC) eclipsed $100/coin, I thought this “bubble” really couldn’t get much crazier… By the time I landed in the Philippines, next thing I knew, LTC was just on the edge of breaking through $400/coin

As readers may recall, I initiated my first position in cryptos back in September (on the dips), and basically just put in the “bare minimum” to have some skin in the game…

Yeah, just for kicks… and the next thing I knew, my “tiny” LTC position was on the cusp of scoring me my first ever ten-bagger.


Talk about some serious regret I was feeling there for not loading up some monster trucks back in September!

You really can’t make this stuff up…

Well, after a rip-roaring good time and a few euphoric tops on top of a euphoric top, it finally looks like the entire crypto space is undergoing a much needed consolidation…

From CoinMarketCap.

Naturally, everyone who tried to pile in at the top is now freaking out and screaming:

Was this the top!?!

Is the party over?!?

Should I sell!?!

Herd mentality at its finest…

No, I’m not writing this post to give cryptos a hard time… If anything, I’ve had to eat a lot of humble pie this year for greatly underestimating the growth potential in this new emerging sector…

But just as it applies to any asset class, usually the best time to buy anything is when fear is paramount and people are running towards the exit scared that prices will fall even further still…

With cryptos, I’ll admit that I have a growing interest to load up much more aggressively in the space… I mean, just being in Manila is already re-affirming many things that I believed to be true, but didn’t really know for certain until stepping foot outside of the United States…

For example, the other day I attended a local meet up, and like I always tend to do, I found a way to talk about clean tech/EVs and the impending paradigm shift that’s fast coming our way globally… But here’s the thing with stocks and traditional asset classes — They can be a pain in the ass to buy.

So far, the majority of the locals that I have met here have no idea how to setup a trading account, let alone think about venturing onto the TSX-V/ASX to buy some microcap junior mining stocks…

It’s just not the norm out here… and I’m pretty sure in many places across the globe.

And that’s precisely what makes cryptos so damn appealing to the “Average Joe” on the street… Cryptos are within reach of the masses, and it almost feels like everyone here in Manila knows how to setup an account and start trading (if they aren’t already doing it)…

Cryptos have (potential) mainstream appeal…

  • They are convenient.
  • Portable.
  • Divisible.
  • There are lots of different choices (alt coins) to choose from.
  • The barrier to entry (and fees) are low.
  • Etc.

Trust me, ain’t nobody here really all that interested in buying physical gold/silver bars, coins, jewelry… especially as it pertains to the millennial crowd… You can just about forget the mining stocks.

That’s just reality, deal with it…

Which means that once “big money” and “lots of retail money” starts to pick up interest in the crypto sector, things could start to get really, really crazy (no we haven’t seen anything yet!)…

Yes, it’s almost impossible to put a valuation on some of these coins, and right now all this upward price action is essentially being driven by pure speculation….

But if we’re talking “big picture”, the combined market cap of all cryptos, whether it’s $500 billion or $600 billion, is really just a tiny drop in the bucket… all things considered.

Look, before anyone attempts to rip me apart for being a total idiot (like I always am), please remember that my allegiance is to early financial independence… Point blank — I am a financial independence investor…

I don’t care to pick and choose sides… If I see an asymmetric bet that looks good to me (i.e. high reward with moderate risks), I’ll want to take it!

Real estate.


Junior miners.


Again, I really don’t care…

As investors/speculators, I think we do ourselves a huge disservice by dismissing asset classes entirely and operating under the impression that we think we know everything… I almost find it comical how some diehard goldbugs are wishing and praying so hard for cryptos to crash and burn… and in a similar vein, I’m perplexed to observe why certain crypto fiends feel the need to consistently bash gold/silver, calling them “relics of the past.

Dude, whether anyone wants to admit it or not, straight up, most of us measure our “wealth” in terms of fiat currency, anyway… I mean, as much as I like to bash the depreciating USD, I would be lying to everyone if I said I didn’t measure my assets: real estate, mining stocks, cryptos, etc. in USD…


At the end of the day, yes, absolutely, I want to increase my net worth (measured in USD) as much as possible!

All these assets are just a means to an end… and all asset classes go up and down like sine waves…

Never forget…

Financial freedom is the name of the (end) game.

And here’s something I learned from cryptos — When a major paradigm shift is occurring, having “just a little” is better than having nothing… There’s almost more risk in owning NOTHING than dabbling just a tiny bit… because you just never know for certain!

The first time I ever thought about purchasing Bitcoin (BTC) was in the summer of 2015 when it was trading for sub $300/coin… I was a very ignorant cat and chose to dismiss BTC entirely, thinking that I probably wouldn’t be missing out on much because I was going to place my bets on gold, instead…

Well, what a terrible mistake that was (with the benefit of hindsight)…

Live and learn.

Where things stand today, I feel like I am sufficiently hedged across many asset classes: real estate, mining stocks, USD.

What I really lack in my portfolio is significant exposure to cryptocurrencies…

So, yes, I think we are closer to the beginning than the end for cryptos, and I will be looking to increase my holdings (on the dips) in the near future…

What if cryptos crash and burn?

Big deal.

Like I mentioned, I’m sufficiently hedged elsewhere… and I won’t be putting at risk any more capital than I’m comfortable with losing entirely

With that said, I’m trying to learn from my mistakes, and I think having zero (or close to zero) exposure into an asset class that may very well change the world is a mistake too…

I will re-emphasize again — Frankly, I think there’s more risk in not having any exposure to cryptos than anything else

Life-changing gains have been made in cryptos, and this may indeed go down as “the greatest wealth transfer in human history.

So of course, I don’t want to be the sucker who misses out completely on this!

Yes, volatility is insane and off the charts…

So, you just have to try and pick your entry points carefully and not get too caught up in chasing any asset that is heading to the moon… which explains in a nutshell why I haven’t added to my crypto portfolio since September…


But I’m watching… and waiting.


Class A real estate.

Clean Energy/EV metals.

Precious metals.



I want to win as much as possible! I think by having exposure into each one of those sectors, I will at any given time increase my odds for overall portfolio success…


How do I define success?


I’m trying to increase my net worth (measured in USD) as much as possible! 🙂


Fight On!

{ 9 comments… read them below or add one }

1 AdamNo Gravatar December 22, 2017 at 6:01 am

I think with crypto there is no logical basis for valuation apart from speculative frenzy. If someone can tell me a way to calculate a value for it then maybe i’d be interested but until then I can’t convince myself.

Index funds, mining stocks, real estate, these can all be valued based on future income yield.

Still, nothing wrong with having a punt as long as its not going to hurt too much.


2 Yin ChoiNo Gravatar December 22, 2017 at 8:46 am


All the future cash flows are best guesstimate when valuing traditional assets. How do you value Tesla when it bleeds money every quarter? How do you factor in probability of the cash flows disappearing in the future? No one knows. Traditional valuation model only assumed the asset can generate x amount of cash forever and we know that’s not always the case (Kodak/Blackberry/Nokia).

I am not justifying the sky high valuation of cryptos- just saying traditional valuation model has its flaws.


3 thedudeNo Gravatar December 25, 2017 at 12:14 pm

Valuing cryptos as you would value a company does not make sense. Valuing a company is essentially looking at the present value of all future cashflows (to oversimplify).

If you believe that cryptos are currency, then they should follow the quantitative theory of money: MV = PT. To find the long term value of the currency, then rearrange the equation to solve for P.

Using the total supply of BTC fixed at 21MM and using a velocity of 10, the portion of the equation that you must guess is the total market of BTC that will transact divided by 210MM.

If you believe the total amount that will transact on the platform will be 1T, then the valuation of BTC would be $4761. If your believe system was that cryptos were a better system that gold for storing value (I’m not suggesting this!!), and the total global market cap for gold is around 7T, then the value of BTC would be $33k.

These are of course just back of the napkin calculations applying basic macro Econ calculations. I’m not convinced that traditional valuation methods apply.


4 JNo Gravatar December 22, 2017 at 4:28 pm

Now is the time. Then let it ride.
Regarding the poster’s query about valuation I think it’s all about supply and demand. Prices going up as adoption grows.


5 HRNo Gravatar December 25, 2017 at 9:58 am

I had invested too heavily into miners anticipating a future boom, while missing out in the crypto space. I’m in red with miners, with hindsight, its a pretty painful pill to swallow knowing I would have had drastic life changing gains with crypto.


6 JPNo Gravatar December 29, 2017 at 7:40 pm

It’s not too late. You may have missed a few home runs, but there will be more. Hindsight is 20/20. My uneducated guess is ripple will take off and the big ones will correct.


7 GarethNo Gravatar December 29, 2017 at 12:17 pm

Anxious to hear your analysis on this space. I do think this is just the beginning. I liked your take on blind dart investing and I think it can apply here. The question is deciding which set of alt coins have promise.


8 JCNo Gravatar January 1, 2018 at 4:34 am

Back in November I finally reached the same conclusion as you that not having exposure to the crypto space is a bigger risk than having none. How does all of this play out? I have no clue. But I’m willing to throw a little bit of money at it in case that things really take off. I only have a little bit of BTC right now but I’m hoping to start adding in some of the alt coins throughout 2018.


9 theFIREstarterNo Gravatar January 20, 2018 at 5:08 am

Came to exactly the same conclusion as this just before it all crashed in December! Bad timing but I’ve added more and averaged down so still just about in the green. Wish I’d been more investigative when I read your post about litecoin months ago though. Would be nice to at least have a good cushion of gains to fall back on in case it all tanks again!

However reading what you’ve said about Manila, this makes you realise how big and global this phenomena actually is. So hopefully it is just the beginning!

From my point of view I feel the same. Read loads of your mining posts but never got involved as it seems such a pain in the A to get all of that set up (not even sure it’s possible at all in the UK in fact?) But cryptos after an initial steep learning actually seem pretty easy to get involved with. Even got me a few alt coins on binance now.

Cheers and good luck 🙂


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