Should I Invest in ICOs During a Cryptocurrency Fall?
The last few weeks have seen the crypto market collapse, with some coins losing over 60% of their values. Even a top coin like bitcoin lost over 56% of its value in this crash. This leads to one fundamental question: is there any point in investing in ICOs when cryptocurrencies are making us all nervous? Well, the answer is yes, and here’s is why.
Remember the Main ICO Advantages
For starters, when putting money into an ICO, you have to understand its fundamental strengths. This means that you are not investing in it with the hope of speculating for the short-term. You are looking for long-term value growth once the coin hits the market. You want to see what value your tokens add to the blockchain ecosystem. That’s why when the market is in a downturn, that fact alone should not be your primary concern when putting money into an ICO. Approach ICOs the same way venture capitalists approach startups.
They don’t look at the overall sentiment in the stock markets, but rather the quality of the startup they are eyeing. If I remember correctly, top-quality companies such Uber and AirBnB were born at the height of the 2008 recession. That’s the approach you should take with ICOs. Have you done your analysis and concluded that the ICO you are looking at has some fundamentally strong features to it? Go ahead and invest!
Fall Down Seven Times Get Up Eight Times
Secondly, the crypto market, like every other financial market, goes up and down all the time. As such, anytime it goes down you can always be sure that it will move up in the long-run. That’s why market movements should not be a factor when looking to invest in an ICO. Again as stated earlier, your primary concern should be the quality of the ICO you are looking at. If it is a high quality project, chances are better that it will rise in value when the bull hits the market.
Improved Anti-Scam Protection?
On top of that, it is during a cryptocurrency market fall when you can tell a good quality ICO from a scam or low quality one. You see, during the Bull Run, when optimism is high in the market and anything and everything is on the rise, a lot of low quality ICOs also get hyped. That’s a risky time to invest in ICOs because you can end up losing your investment once the market discovers that the coin you are holding is actually not worth much.
However, if you consider investing in an ICO cryptocurrency during a downturn, you should be careful about what products you are investing in. At such a time, no one wants to put their money in a coin that has nothing much to offer compared to what is already available in the market. This makes downturns the best time to invest in ICOs. That’s the time when whatever ICO is receiving serious market attention has something important to offer, and has the potential for value appreciation in the long-run.
Investing in ICOs during a cryptocurrency fall is also quite sensible, given that they are valued at a lower price when quoted in Ether. In a downturn, when Ethereum is depressed, then for every dollar spent you get more Eth. This also means that you get to buy more tokens for a given number of dollars that you are holding. The situation is quite different when investing in an ICO during a bull-run.
During bull runs, Ethereum is very expensive. In essence, for every dollar that you are holding, you get a certain number of Eth and by default, a lower number of tokens in the ICO you are looking to invest in. It therefore makes sense to invest in an ICO during a downturn and get a higher number of coins. This, in turn, means you will get to enjoy higher returns once the market makes its way back up. And again, you will get an excellent opportunity to advantageously buy tokens when cryptocurrency falls again.
ICOs and Cryptocurrency Falls: Verdict
Lastly, investing in an ICO during a cryptocurrency fall is simply financial common sense. Veteran financial market investors such as Warren Buffet always argue that the trick is to buy low and sell high. ICOs are no different. When you buy into an ICO during a market crash, you are buying low for you to sell high later. Going by this simple investing logic, buying into an ICO during a market high is the wrong way around it.
It is clear that there is a lot of sense to ICO investing during a market crash. The primary consideration should be the fundamental quality of the ICO you are looking at. To help you understand how to analyze an ICO, check out the Trudex blog on ICOs.
Written by Nicholas Kithinji