It’s tough out there right now. Crypto is in a real “s**t or get off the pot moment.” After hovering above 40k for a good chunk of 2022, Bitcoin has found itself in a tailspin. It’s now trading at an area of critical support (34K). When considering what to do next, charts make for a […] The post The Bob Ross Approach To Investing In Crypto appeared first on CryptosRus.

The Bob Ross Approach To Investing In Crypto

It’s tough out there right now. Crypto is in a real “s**t or get off the pot moment.” After hovering above 40k for a good chunk of 2022, Bitcoin has found itself in a tailspin. It’s now trading at an area of critical support (34K).

When considering what to do next, charts make for a fine muse. You can argue what we are seeing right now is reminiscent of July 2021.

You could also say it’s quite reminiscent of November 2018.

Truth is, whether your art is inspired by Hieronymus Bosch or Bob Ross, you’re probably just as likely to be right. 

Though, regardless of how things shake out, it’s unwise to fret too much. As they say, it’s always best to invest with a long-term timeframe. The idea being you can overcome the volatile day-to-day that way. Just invest in safe, and reputable companies. But how do you square being long-term crypto? After all, as they say, crypto doesn’t have the fundamentals the way equities do.

As far as fundamentals go, you can’t get more fundamental than a price-to-earnings ratio (p/e ratio). Good companies in a reasonable market are expected to trade at certain prices based on what their p/e ratio is. And for companies not yet profitable, you can hang your hat on what other similar companies have been able to accomplish. But therein lies the grift.

You have to have a leap of faith if you’re investing in Amazon over a decade ago. It seems like a foregone conclusion that they would become successful, but at one point AOL sure looked like a snowball rolling down a hill. Moreover, even companies with actual legit non-Enron kind of earnings have been trading way above their ratio since 2020. In sum, fundamentals in equities are as predictable as a dice roll — unless you’re Ken Griffin. 

Despite the fact that crypto projects can’t give you a p/e ratio to tuck you in at night with, it has its own set of fundamentals — arguably even more predictable fundamentals. In their place, you can use network growth. In fact, Raoul Pal does. And, he’s done pretty well for himself.

For whatever reason, the folks on Wall St. have yet to internalize how important network growth is for crypto. Despite the fact that so many tech companies like Google or Meta rose to dominance because of their network effects, because it’s not attached to potential earnings, that makes crypto riskier. But that just doesn’t stand to reason.

As we can see with the communities forming around so many crypto projects, those projects are building protocols with long-term utility. Think DeFi, NFTs, Play-To-Earn Gaming, etc. Same with crypto exchanges that are getting into staking and protocol governance.

When it comes to crypto in 2022, it’s not just about buying and selling anymore. Projects are building with a long-term view. What’s the consequence of said long-term view? Further and further investment from people that are incentived to hold and keep holding. And the more users that are added, the higher crypto prices go up.

So when it comes to considering why you should feel positive about crypto as a long-term investment, it might not be a bad idea to see the forest for the trees the way Bob Ross does.

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The post The Bob Ross Approach To Investing In Crypto appeared first on CryptosRus.