I am by no means anti-crypto or of the belief that the rise of assets built on the blockchain are fads that will eventually collapse into obscurity. That said, I definitely let my scepticism around the role these assets will play in the future keep me from venturing into a market that has exhibited remarkable volatility when most of the markets I’ve actively traded have struggled for healthy levels of activity.
Looking back over 2021 (and previous years as well), it becomes clear that my long-term view of cryptocurrency assets clouded my vision of nearer term opportunities. Looking out 10 or more years from today, I believe that blockchain-based assets will hold an important place in the financial system. The security of transaction and the ability to clearly establish ownership represent exceptional values. Ultimately, I believe these assets will be integrated as something akin to a utility to the capital and fiat markets. And, as we find with most utilities, they are not particularly active markets for short to medium-term traders. This may be the future, but it is not our present.
When a new asset or market comes on the scene – which is not too often – there is an incredible amount of inefficiency as all market participants (users, investors, hedgers, commercials, etc) attempt to determine its place in the financial landscape. While there are certain companies that are accepting or paying out in Bitcoin and cryptocurrencies, its place in the system is still very unclear. Further, the regulatory environment is ripe for sudden changes that can cause a coin or asset to surge or collapse. In these early years, it makes sense that there will be a heavy influence of investors, traders and early adopters that are as interested in seeking fortune as to simply participate in a future transaction vehicle.
Looking ahead to the future, I hope to learn from my unintentional traditionalist tendencies and seek out the inefficient markets. Whether a new asset, a dramatic policy change, fundamental change on an economic level or some other seismic shift; there is opportunity to be found in the fog of determining true value. And, of course, it is time for me to move into the crypto market…