Where were you in the good old days… circa Dec 2017?
The market cap was over 800 billion, the birds were chirping, the sun was shining a little brighter and *everyone was making money. The chances are your Facebook and other social media friends began asking you about crypto and started their portfolio. Perhaps even a few family members. I’m talking about December, the crypto bull run 2017, we were up in the sky and then it all came crashing down (cue dramatic music). But, was that such a bad thing? To many investors expecting instant returns, yes, but to the overall health of the crypto economy, absolutely not!
From my perspective and many professional traders perspectives, we were in an extreme hype driven phase often seen in financial markets as they accelerate toward a local top. This acceleration drives an unsustainable torpedo where human emotion and euphoria takes over to the point where even the most experienced find it difficult to accept that it will stop (temporarily 😉 ). If we reflect on some of the most exaggerated circumstances – many ICO projects based on just a whitepaper and marketing showed massive percentage growth in a short period of time.
- There were multi-billion dollar valuations for companies with no working products
- Within one month, we had a cryptocurrency project grow from a $25 Million valuation to a $4 Billion valuation, a 16000% return in just 30 days – not too bad!
- At its peak Ripple was valued at approximately $380 Billion (taking into account the market cap of the entire supply of XRP coins). Let’s put this into perspective – it would have placed Ripple within the top ten U.S. companies in terms of market capitalization, beating giants like JP Morgan, Bank of America, and Exxon Mobil
The unfortunate parties
What comes along with hype is unfortunately some egregious offenders, some companies tried to take advantage and many successfully. Long Island Ice Tea Corp was perhaps the epitome of the hype cycle and saw its stock price soar over 300% after announcing a pivot to blockchain and a rebrand to Long Blockchain Corp – creating a sensation with many of its investors. In the following months they abandoned plans for the blockchain pivot which saw stock prices plummet and has been delisted from the NASDAQ exchange. NASDAQ stated:
“Public statements designed to mislead investors and to take advantage of general investor interest in bitcoin and blockchain technology.”
These are just a few examples of some of the most extended situations that played out during the bull run towards the end of 2017. We all learned our lesson and no one will make these types of mistakes during the next upward trend cycle…. right? Of course not! We will continue to be human, but there’s no reason you can’t add a little diversification and rationality to your portfolio.
What I mean by diversification and rationality
If we define legitimacy as being backed by credible investors, having a working product/protocol and revenue generating clients – then Factom is one of the most legitimate projects in the entire crypto space. Billionaire and entrepreneur Tim Draper led Factom’s series A funding round and helped the company secure approximately $8 Million. Factom Harmony’s release marked one of the world’s first blockchain based products available to enterprise customers – a solution that was designed to expedite and streamline the mortgage process by cutting out middlemen which has found success in the U.S. mortgage industry. The Factom protocol has also found its way into the U.S. government, and is in a stage of operational field testing with the Department of Homeland Security’s Customs and Border Patrol.
Factom was created in 2014 and has been quietly developing its infrastructure and planting roots in strategic sectors. The teams working within the Factom ecosystem have been focused on real utility, which is why it never truly consumed the interests of the traditional hype driven crypto investor.
Every crypto portfolio will have a range of projects; the moonshot, the hype coin, the gut feeling. If you’re looking for one with real and solid fundamentals, Factom might just be for you, it is for me!