Mistake #2: Tribal thinking and emotional trading
After TheDAO Incident, Ethereum Classic was born. Being a true Ethereum fanboy, I was grossly offended by its mere existence, and as a matter of loyalty, pride, and yes, moral imperative, it was my duty to dump all my ETC as quickly as possible for more ETH.
So I did. And three days later the price of ETC quintupled from an organized “marketing” campaign by its chief proponents. Bloody Hell. My blind devotion to a project that owes me nothing cost me dearly.
Later that summer, Monero gained some notoriety by being an acceptable currency for a popular darknet market site (you know, where you buy nefarious items via Tor sites in the name of ‘freedom’). Privacy coins became all the rage, and Monero and Dash started seeing daily gains in the neighborhood of 30% to 70%.
Surely this was a mistake, as these were shitcoins compared to BTC and ETH, right? Right?!? Well, what goes up must come down, I thought. So I dusted off my Poloniex account, click the Margin Trade tab, and went to town selling Monero and Dash.
Whoops again. $10k later I was licking my wounds and wondering what was wrong with the world. Turns out nothing. Markets be markets, and traders be trading. Once again, my tribalist mindset of BTC and ETH maximalism thrust me into some really shitty trades.
Moral of the story: Don’t be a tribalist butthole. The market doesn’t care about your favorite team.
Mistake #3: Buying the hype
Any prudent investor will tell you that diversification it’s a good idea. In fact, I hear if you try to buy a few stocks with the intention of beating the market, Warren Buffett himself will come to your house and slap you in the face for not buying index funds.
But alas, there are no index funds in crypto. So in late 2016, I figured it would be a good idea to take a bit of Ether and Bitcoin and spread it around to other crypto projects.
But what to buy? Well, this one time, Vitalik Buterin himself said he liked the work being done by the Synereo team. So I bought some Synereo AMP. It’s like Facebook for blockchain or something. And… AND… they just happened to be having (another) crowd sale. Lucky me! There was also a nice bonus for contributing 10 BTC or more. Yep, this was a sure winner, so why not?
Then a bunch of internal drama happened with the Synereo team, and the lead developer left to go start a new blockchain project. AMP bottomed out while everything else started to recover in early 2017. I sold all I had for a measly 3 BTC.
Moral of the story: Don’t buy something because other people say it’s cool. At least read the website first.