The New Wave: A Look into the Changing Face of the Crypto Investor
By: Gareth Ward
Tags: Masternodes, Cryptocurrency, Investors, Crypto, Blockchain

Like all people, crypto investors change. They live, they learn, and they apply their experience to the markets they frequent.

But why does this happen? What caused the shift in thinking that created a level of maturity the cryptocurrency market had yet to experience?

The Old Guard

Early investors in cryptocurrency are split into two separate factions. The inexperienced lucky few and the HODL crowd.

The inexperienced lucky few are those that got into cryptocurrency, predominantly Bitcoin, in its earliest days, before realising that they owned a fortune. We’ve all heard the stories of the lucky few, like 50 Cent, who found Bitcoin they didn’t even know they had. These are people who are invested in the system but have little to no idea how the crypto market works. They’ve managed to make their cryptocurrency fortune entirely through luck and often cash out to fiat at the earliest opportunity.

The other group are the HODL generation, aka the “true believers”. These are the people that have followed blockchain tech since the beginning, have stayed staunch in their belief of its value and lived through the highs and felt the heart-ache of the Mt Gox-type falls. They wear badges of honour like soldiers that fought in the trenches. It’s these battle-hardened crypto investors who stay in the combined ecosystem of the different crypto assets, even after they’ve made significant returns on their investments, some of which earning hundreds of thousands, if not millions, of dollars from crypto.

The Tipping Point

Then came 2017, where a new type of investor joined the fray. With Bitcoin symbols filling their vision as they read all the success stories, a highly speculative market coaxed the inspired to part with their money and the crypto market boomed. The price of Bitcoin soared from $900 to $20,000 and alt coins followed suit, rising from $2.2 billion to $350 billion in market cap. Coinbase reported the addition of 100,000 investors in a single day as cryptocurrency raced towards its peak.

Quick Decisions

Now, there’s an old saying (about 6 months old) that ‘a year in crypto is like 10 years in traditional finance’. The growth of understanding and experience is compressed in to a much shorter time period in crypto but, with that fact, comes pressure. Pressure to adapt and move to the speed and volatility of the market meant many investors sacrificed personal and work commitments to chase the peaks and troughs of a market that doesn’t sleep.

As the increase of newbies arrived, the ICO market expanded along with it and, coupled with the intense nature of the space, ICOs were closing with tens of millions of dollars in mere minutes. This highly twitchy energy meant even the most nascent investor remained wired to their computer till the early hours of the morning, whilst the next big ICO launched its crowdsale. Stories of ICOs closing out at over $17 million in minutes with merely an ETH address and website were commonplace. Naturally, that industry model and the associated investor’s lifestyle were unsustainable and things needed to change.

The inevitable January correction was that change.

Paying your Crypto Tuition

Bitcoin’s price dropped massively in the first few weeks of 2018, with a $44 billion loss in market value. Other coins, like Ripple, nearly halved in value over the course of the same time period and the market as a whole is still correcting.

After such a monumental leap, critics were quick to jump on the medium as failing, however this only spurred on those left in blockchain.

Losing money on crypto the first time you invest is similar to paying your tuition for entry into the system. Many investors lose money when they first get involved in crypto, and depending on the level of risk, this can sometimes be all the money they have.

The Shift

Initially, ICO investors were investing in products that simply looked good or products they were passionate about and wanted to support. Unfortunately 46% of ICOs failed in 2017, leaving these investors paying a lot of that crypto tuition.

But it’s these initial losses, before finally making a positive result, that has led to a smarter and more informed investor across the marketplace.

Since then, these investors have been a lot more mature about the projects they support and have developed a taste for responsible investing. They invest in viable projects at ICO stage, or on the open market, and then implement a carefully considered approach to their portfolio and how to balance it appropriately. The move to placing some investment in managed crypto funds has become a hedge for their portfolio.

Looking to the Future

We can’t say with any exact certainty who the average crypto investor will be in the years to come. Yet, with regulation around the corner, a more mature market will evolve and reward the educated, hedged and savvy investors. As institutions move in to the space, the long days and nights of trading at retail level will diminish to a more considered approach to working with those experts that can do the hard work for you. A very mature prospect indeed.