© Reuters. 22 lessons we learned from the cryptocurrency crises of 2022
Australian influencer and analyst Miles Deutscher shared in a series of tweets on Twitter, the top 22 lessons worth learning from 2022. In this article, we highlight some tips that we need as a weapon of knowledge for a better future in the world of crypto.
Miles Deutscher is a 21-year-old Australian cryptocurrency investor and analyst. He works as a crypto analyst with the Crypto Banter YouTube channel. The DeFi obsessed has amassed over 263k followers on his Twitter profile by sharing his 9-year vision of cryptocurrency.
Tips gleaned from the failures and achievements of 2022
In fact, the fall of Terra Form Labs in June 2022, and then the fall of FTX last November, was a shock to the crypto world. Especially since the two collapses caused financial losses estimated at 50 billion. Because of these losses, strategies have evolved and lessons have multiplied.
Especially since crypto-centric organizations like FTX and BlockFi don’t quite live up to the decentralized spirit of cryptocurrencies. Their fall reflected the greed of human nature, and the presence of flawed personalities at its centre. The failure had nothing to do with the underlying technology used.
Failure is always possible, nothing is greater than it, so be careful!
“Nothing is too big to fail.” Indisputably one of the Australian analyst’s most honest pieces of advice, LUNA cryptocurrency owner Terraform Labs was among the top 5 cryptocurrency ecosystems. But it collapsed in one week. As for FTX, it was one of the top 3 digital currency exchanges in the world, but it collapsed with one tweet.
So, don’t be fooled by appearances and don’t let the project’s size and media whirlwind mask its weaknesses. If the platform’s policy or some currencies are fundamentally flawed, the size and market value of these platforms will not prevent them from inevitable collapse.
Make sure you are investing in the right place, in the right mechanism, and with trusted people. And don’t let the market cap blind you to potential drawbacks. Especially since the famous phrase in the crypto world that “it’s not your keys, it’s not your coins” has proven true once again.
With many cryptocurrency exchanges and central lenders going down this year, precaution is more important than ever. You should then have access to a ledger, and always store your own assets.
Miles Deutscher argues that one must be wary of the elements that lead to individual failure, including systemic risk. This means that you should consider your options and evaluate the mechanisms of each ecosystem.
It is likely that most of the investors in Terra Luna would not have researched any mechanisms or would have caught the flaws early. Especially since Terraform Labs relied on one protection mechanism, and when it was dismantled, the entire system collapsed. Therefore, you must determine if the project is dependent on one or more variables, and be well aware of the risks associated with it.
Crypto leaders are investors seeking cash, not glorification! And beware of influencers
In all faculties of economics and commerce, the first lesson revolves around the foundation of the sector, which is “maximizing profits and minimizing costs.” Let us be clear that cryptocurrencies and crypto-derivatives are a business, led by those with power in the field of traders and investors, and their main objective is to make a profit.
Crypto personalities should never be glorified and revered. Because quite simply no one in cryptography is untouchable. The examples abound, in fact. The geniuses of Sam Bankman, Fred SBF, Do Kwon, Zhu Su and others have been hailed as crypto legends. On crypto Twitter, for example, they have often been talked about as crypto gods.
This glorification and reverence for these people has led to the omission of many people’s opinions about their own projects. But when they failed, their tokens went with them. And they turned from geniuses and creators into fraudsters and thieves.
Also crypto influencers are, first and foremost, content creators. Their priority is to grow and maintain their audience. Your interest and theirs will not always align.
So, my friend, beware of the “influencers” too. Many of them are in this field for their own benefit. Learn to let go of their influence on you, think critically, and extract from them the elements you need for actual success.
Australian analyst Miles Deutscher advises you to use Twitter and YouTube as a springboard to gain new perspectives. But not as the last step in the search for the mechanisms of success in cryptography.
Because social media like Twitter and YouTube do not reflect the sentiments of the market but rather the sentiments of content creators seeking multiple clicks and likes. Some of them have already tipped the market. Here we must definitely mention Elon Musk’s tweets about DOGE and BTC!
Content creators in the crypto space do more harm than good. Because they spread optimism openly while they are paranoid inside. Dear, do not follow the herd that follows them, look for the means of success and make your way knowledgeable and knowledgeable.
Timing the top (or bottom) is impossible. Diversifying your portfolio balance is absolutely necessary!
Tip 7 on the list of 22 tips by Miles Deutscher, and one of our favourites, is that “Timing the top (the upper price peak) and the bottom (the lower price peak) is impossible.”
Don’t buy out of fear. Not all short-term declines last for long. If someone bought a coin on the 10th of April (the pullback phase) hoping that prices would rebound, as of today, the value of your investment could drop by 59% even though the price at the time of purchase bottomed out.
There is no strict cryptocurrency law that says prices will not continue to fall. All summits that have been established are temporary summits, including the $69,000 summit. Because simply no one knows if the price will cross that peak again or not. The same goes for problem bottoms.
Simply put, almost everyone who has tried to predict the summit is wrong. Because the encryption is beholden to the macro environment. Nobody has an advantage over macros. Here we advise you to manage the risk, and stick to a plan that does not require market timing.
On the other hand, the trader should diversify the ecosystems to create permanent vitality for his digital portfolio. But beware of the symbols and tokens that are interconnected. For example, if you invested in LUNA, and also bought ASTRO and UST, don’t think you are “diversified”.
Because these symbols are related in one algorithm and when one symbol collapsed, it pulled the other symbols down. Same with FTX and SOL.
Liquidity is a guarantee, and strategies are indispensable in your trading. to focus!
There is no doubt that the Australian analyst is right when he advises you, trader, to keep some cash out of the crypto market. Liquidity in traditional currencies will be your safety if encryption fails you!
It is very important that you understand, dear, that you will not be able to do without central currencies at the present time. Also, there will always be more opportunities that call for some traditional liquidity. Always keep some cash on hand to pounce on opportunities when the time is right.
We have said that leaders should not be worshiped, but it can be useful to learn from some who are at the forefront. There is an abundance of knowledge on Twitter, YouTube and even on the websites of the platforms you are registered with. Make a list of people who are smarter than you and learn from them. Then try applying that new knowledge in your trading or investing.
In addition to all of the above, trader don’t sink into crypto blindly. Here we mean that you would do well to re-evaluate your investment on a regular basis. For example, review your portfolio every month and ask yourself why are you holding some tokens? Why would you invest in this symbol at this time? If you do not find reasonable answers to these questions, you still need to re-evaluate your position and you will need an investment plan.
The goal of planning, follow-up and strategizing is to chase real returns, not fake emissions. The questions that lead you to the knowledge related to your investment are certainly a gain for you and will save you a lot of effort and time. It will also make you a knowledgeable person who prioritizes finding the real return.
Don’t invest in crypto alone, you are not a unicorn! And remember dear, there is more to life than coding!
One of the most important lessons learned from this year is to “don’t code alone”. Community resources should be relied upon to make wise investment decisions. When things go wrong, as they frequently did in 2022, having a support network is also much better for your mental health.
In fact, many retail traders left cryptocurrency in 2022 because they were working alone. But don’t be an open book to your coding team. Save some distance.
Where we mean not to work alone: join the community, create research groups, attend conferences and meetings, form your knowledge network in coding.
Finally, it is always important to remember, dear trader, that there is more to life than crypto. Miles advises you, “The encryption isn’t going anywhere, but your relationships might if you don’t nurture it.” It can be great to protect your mental health and take breaks from coding especially after the bitter storms of autumn. Then come back with a plan for your future in the high-risk sector!
We chose and explained Miles’ best tips for you. But if you want to know the list of all 22 tips, they are as follows:
DeFi is the only way forward.
Nothing is too big to fail.
If a mechanism breaks down, it won’t work no matter how big it is.
Don’t move blindly.
Algorithmic stablecoins do not work.
Not your keys, not your coins. Do not give yourself up to platforms and systems.
Timing the top (or bottom) is impossible.
Chase real yield, not fake emissions.
Beware of single points of failure (systemic risk).
Don’t sanctify cipher characters. They are not gods.
Trading is not the same as making a profit.
Diversifying ecosystems is vital.
Do not lock icons.
Liquidity above all.
Confirmation bias is your worst enemy
Cryptocurrency echo chambers do more harm than good.
Beware of “influencers”.
When expectations align with investment, support your intuition and bet with conviction.
Learn from people who are on the cutting edge.
Do not invest in crypto alone.
Always think ahead.
There is more to life than digital currencies.
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