Lately, I’ve been troubled by the pain of poverty for a long time, but I don’t think trading cryptocurrencies is a good way to gain wealth. Especially short-term operations and various leveraged contract trades.
The cryptocurrency world is like a casino filled with the temptation of money, with major exchanges and various DeFi Dapps being the games on the gambling table. Gamblers might win or lose money, but ultimately, it’s the casino that makes money. Very few gamblers can leave the table unscathed.
Smart people only treat cryptocurrencies as a financial tool, allocating a portion of their disposable assets based on investment nature. Long-term operations can be considered investments, but short-term trading is just gambling.
The fundamental reason for this phenomenon is that no one can predict the market trend.
Many people like to analyze the market changes with sound reasoning after they occur, discussing the favorable news, technical trends, and cyclical patterns. The biggest commonality of these analyses is that they are all retrospective. Before things happen, no one knows what will happen. Look at the several black swan events in the past year; how many were predicted by economists or blockchain scientists?
The reason is simple: no one can predict the future.
Moreover, if those self-proclaimed quant masters and market trend predictors really possessed the wealth code, why would they reveal it? Why are they eager for everyone to know? It indicates that they are just guessing, and the benefits of increasing their popularity outweigh the profits from the so-called wealth code.
From an investment perspective, the returns from cryptocurrency trading are quite limited, yet it requires bearing extremely high risks. Compared to traditional funds and stocks, the fluctuations are much larger, but the volatility of cryptocurrency markets is still far from the level that would make someone wealthy overnight. Perhaps ten years ago it was possible, but if you went back ten years, would you really dare to buy?
It’s easy to see everything clearly from the peak of history, but as a participant in history, it’s very difficult to be ahead of the times, requiring extraordinary vision and courage.
Additionally, the wild development of cryptocurrencies has somewhat deviated from the realm of value investing. The rise and fall of the market and the bull and bear cycles are not due to changes in people’s perception of cryptocurrencies themselves, at least not in recent years. They are mostly influenced by the Federal Reserve’s monetary policy. In other words, the current cryptocurrency market is only this big, and unless the market capacity is expanded, new chains are just competing for market share with existing chains.
Therefore, the opportunities to expand the crypto market lie in Web 3.0 and the metaverse. More people from non-crypto industries need to participate in the crypto market.
The only way to consistently profit from trading cryptocurrencies is through insider trading, which requires sources of information at that level. KOLs (Key Opinion Leaders) can influence the market to some extent. If a KOL has a huge number of followers, they can guide their followers to concentrate on a certain point, which is also a form of market manipulation. Ultimately, those who follow the trend are not the ones who profit, making it unreliable.
As for why it’s important to care about trading cryptocurrencies, it’s because work itself cannot make you wealthy. Working can be a process of accumulating wealth, but it won’t result in sudden wealth growth. It’s necessary to think and look for opportunities that can bring more returns.
Regarding the logic of running a business, typically, a company starts with investors’ money and then returns the profits to shareholders once it becomes profitable. Companies often have multiple product lines, and as long as the overall revenue exceeds the costs, the company can survive.
In fact, companies are also conflicted when it comes to layoffs. If due to profitability issues, a product line needs to be cut, the dilemma lies in whether to endure this difficult period, hoping the product might bring more profits in the future, or risk more losses by not cutting it in time. If it’s directly cut, more costs will be incurred to develop such a product line again in the future.
Another dilemma in layoffs is when one person scores 60 in field A and another scores 80 in field B. Now, if the entire product line of field B is cut, all people in field B are laid off, meaning the company loses more capable people. Therefore, layoffs are difficult and are closely related to the company’s operational situation and strategic direction.
In conclusion, trading cryptocurrencies is not advisable, and blindly relying on the company where you work is also not advisable.