CoinLive's Take After Coinbase CEO Shares Words of Wisdom
Today, as we were scanning through the news, we felt compelled to share our take after the eloquent tweets made by Brian Armstrong, Co-Founder & CEO at Coinbase via Twitter. There is so much truth and gems of wisdom behind the words of advice he shares with the industry. Brian reminds us of the classic historical patterns of Bitcoin prices, which for those like Brian, involved in the industry for many years, the comment we'd like to emphasize is when he states:
"It can be scary the first time you see it, but to us who have been in the industry for many years, it feels like old news."
Since we estimate a decent share of the readership at CoinLive to have jumped on the crypto bandwagon in the last 12-18 months, we believe one can benefit tremendously from Brian's savvy commentary. Therefore, let's dive into the words of advice he shares in Twitter, followed by our own personal take. We found the timing of Brian's publication couldn't come at a better time, especially after we put out our own thoughts on the current Bitcoin's market cycle and how we might be approaching the point of maximum financial opportunity as despair and depression sets in.
- Brian: Shared the following message with the team @coinbase today
CoinLive Team: A picture is worth a thousand words, so here Brian hits the nail on the head illustrating what by now appears to be a recurring and familiar pattern, that is, bubbles followed by market crashes, rinse and repeat. The key during the down cycles is to arm oneself with enough doses of patience, there is no reason to believe we won't see this movie again, especially at a time when the inverted counter-intuitive moves continue, that is, Bitcoin's valuation goes down as the fundamentals of the industry go on a straight line up (lighting network, custodianship, ETFs, etc). If interested, one can visit our article titled " The Paradox: Bitcoin Keeps Selling as Intrinsic Value Set to Explode" for further insights on the current inverse trend between price and fundamentals.
- Brian: The crypto industry is like no other I've seen - lots of up and down cycles (reaching a new plateau each time). There have been 3 or 4 of these now. It can be scary the first time you see it, but to us who have been in the industry for many years, it feels like old news.
CoinLive Team: Brian's commentary portrays what has become, in his words, 'old news'. There is an absence of experience for those having to bare its first crash, which can understandably become an emotional rollercoaster, as opposed to the veterans where this one ride is all too familiar. If you are on the noobies boat, now is the time to arm yourself with patience and be detached from the daily swings. You may have probably invested in tokens at a fairly high price than current levels, so don't let the all too common psychological emotions trick your mind. Those that have or are thinking to bail out may fall into one of the usual traps: 1-They were in for a quick buck without endorsing nor understanding the technology, which leads to an ability to riase above the current negative conditions, hence unable to generate the sufficient motivation (more below) 2-They invested way too much and feel pressured to rescue whatever is left in desperation.
- Brian: When there is hype, people are irrationally exuberant. When there is despair, people are irrationally pessimistic. Neither is true. Reality is always somewhere in the middle, more correlated with real usage (transactions per day) than the price.
CoinLive Team: At the risk of sounding repetitive, Brian is telling us here, in a more concise format, what we explained in our Bitcoin market cycle article yesterday.
As we stated: "In our opinion, a period of depression, which leads up to disbelief might be the most accurate terrain we find ourselves at this moment in time, especially after the harsh sell-off resumption seen ever since mid-May. We can best define this period as the one that sees a consistent loss of hope, with investors no longer expecting a significant upward correction in the near future that may get them out of the deep hole they find themselves in. A significant portion of market participants gives up on the idea that their capital has been wisely invested. We seem to have entered a phase where investors aim to save whatever funds left in desperation even if they realize that cutting the losses for whatever capital is left will still represent a major setback. This phase leads to a potential paradigm shift in their belief about the underlying fundamentals that they first considered so disruptive, or they simply come to the realization that the only reason they invested was out of an adrenaline-led hype vs a proper understanding of the technology and its revolutionary consequences to advance society as we know it. This loss in the overall interest keeps prices at depressed levels, which tends to coincide, at times, with the lowest point in the current cycle."
- Brian: After many years of this, I've come to enjoy the down cycles in crypto prices more. It gets rid of the people who are in it for the wrong reasons, and it gives us an opportunity to keep making progress while everyone else gets distracted.
CoinLive Team: What Brian shares in this last comment is extremely important and we'd like to break it down from a three-angle perspective. Firstly, one must embrace 'down cycles' as that's the phase that gets the smart money the most interested, which leads to the points of maximum financial opportunity, as the market reverts back to the mean, that is, the fair value of an asset. For an investor to enjoy these periods, it really must make a conscious effort to reverse-engineer its mindset to perceive a bearish market in a fundamentally strong and disruptive industry such as cryptos as an opportunity, applying an analogy, to get a better deal at an auction. Secondly, imagine someone who ended up stuffed after heavy junk food binge, who do you think this does to your body? and what needs to occur next to get back into a state of health? The answer is Detox. In Bitcoin, the irrational exuberance was the market getting ahead of itself (junk food binge), so a period of detox correction occurs to re-align the market (body) into an optimal state once again. This process will help the industry transition into a healthier phase where bad actors and unwanted individuals with no genuine interest or uneducated have two choices, either they go for new pastures or they recycle themselves, get properly educated, and come back transformed with the right mentality/attitude. Thirdly, during a bearish market, a large share of market participants no longer show the same interest, which creates opportunities in various facets, namely, to keep developing the technology while your competitors sleep on the laurels, to engage in averaging down the prices of your favorite crypto asset at cheap prices. All these actions will give entrepreneurs and investors in the industry a genuine advantage.
- Brian: We use the down cycles to build a strong foundation so we can thrive in the next growth cycle.
CoinLive Team: Again, we couldn't agree more. Those projects best positioned during a bear cycle will be the ones to enjoy the most growth once large crowds return back to the market. Google searches for Bitcoin and other crypto-related terms are at the lowest for over a year. The general public currently shows very low levels of interest, which obviously has an impact on the business generation and trade volumes, which leads to acting with more complacency. Those projects that keep improving their services will no doubt yield the best results. Find below a chart of the google searches.
- I want to encourage you all to ignore the price of crypto and the headlines which will inevitably start to come up. Our job is to rise above that, finding our own intrinsic source of motivation, to come in and do our best work, regardless of what other people think.
CoinLive Team: Brian refers to being undeterred by the classic FUD headlines that we will see popping up during a bearish market, which can easily trick one's mind making you believe crypto is heading to zero. Here is where an education about the underlying technology behind Bitcoin and blockchain is important because is by having a strong foundation on the revolution that it represents that one can find the motivation, as Brian mentions, to rise above that FUD, and stick to one's conviction. Those able to not lose sight of the forest for the trees will get to enjoy the next bullish movie, which Brian has come to know quite well over the years. CoinLive's article titled 'Crypto Twitter Community Reacts with Sarcasm to BIS Negative Report' was our latest response to the constant FUD the industry is attacked with. The establishment keeps denying the undeniable. Fortunately, the illiterates are the ones they can temporarily convince. Educating the new generation is vital.
- We'll win in the long term by listening to our customers, and building what they want, just like any great company.
CoinLive Team: Some lessons from an event for startups and VCs that just took place in Sydney could read the following advice: “Your customer will tell you everything you need to know in order to sell to them. You just have to ask the right questions.” This is precisely what Brian refers to in this comments. Ask the right questions and pay attention. You are a servant of their needs and can benefit handsomely in the process, both materially but most importantly, in an unmaterial sense by the satisfaction that it provides making a difference to the lives of hundreds of thousands, in the case of Coinbase, as a renderer of services a growing number of the global population and institutions need.
Top resources to gain further insights into Bitcoin's cycles/adoption shared after the tweets include:
- Speculative Bitcoin Adoption/Price Theory
- Bitcoin and Blockchain: Adoption, Price, and HODLing
- Logarithmic Non-Linear Regression Chart
- Crypto and bitcoin adoption — How far along are we really in this rally?
- Bitcoin’s price isn’t a bubble, it’s an adoption curve
- The nature of the crypto technological revolution
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