Please click the link to listen to this episode of the crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Comments and critiques welcome.
Two Minute Crypto – Retail Crypto Investor’s Part Two
Last week I highlighted 4 of the harsh realities facing retail crypto investors and promised to balance the books the following week.
Reality check 5 – the books are not balanced.
No matter how you look at it – the average retail investor is handicapped when investing in the crypto market. However, in one key area, the retail investor has an edge. He or she is the master of their own destiny. They answer to no-one except themselves. Professional investors face many constraints, such as limited investment horizons, risk-averse management and multi-level oversight. A retail investor is entirely free of these limitations. Feel like going all in on Bitcoin – your choice. Change your mind – again your decision. As a retail investor, you set the agenda and indeed the time frame for investment decisions. Professional traders answer for all their decisions either before taking them or on review. Retail investors, however, spin to their own tune. Want to sit on the sidelines for 6 months – done. Want to deep dive into cryptography before making any investment decision – knock yourself out.
This one freedom can indeed give a retail investor a long-term market edge but it requires a rare mix of diligence and patience. By diligence I mean – you have the opportunity to research the market down to the finest detail. You may pick a project and spent many hundreds of hours researching it by whatever range of metrics you choose. Institutional traders need to put their assets to work and though they have better sources of information and support teams – it is still possible for a determined retail investor to delve just as deeply but just over a much greater period of time which brings us to patience – it is a rare individual who is truly willing to invest the time and ‘brain juice’ to out-research and outlearn the professional but it can and is done every day.
As you are investing and therefore holding over an extended period of time – an edge – however slight often pays handsome dividends. Let’s not forgot that for the moment at least most investors in crypto are retail – so the bar is therefore substantially lowered. How many people take the time to read a project’s whitepaper, study the underlying tech, research the team, stay up to date on the relevant social media platforms and study the market at large – surprisingly few. How many retail investors consider CoinMarket Cap, a YouTube video and a headline reason enough to buy or sell. I’d wager a lot – out investing these folks is a far more manageable prospect – staying ahead of the crypto herd is something almost any crypto enthusiast can do at least for the next year or two. When institutional money really enters the market in the form of hundreds rather, than a handful of enterprises, that edge will wither but we are perhaps a couple of years from widespread wall-street like dominance of the market.
Thanks for listening.