For those of you paying close attention to the crypto market, you’ve no doubt noticed that volatility is increasing fast and a lot of altcoin market caps are skyrocketing. While I would love to be helping you all double your money overnight with timely altcoin buy signals, I regret to inform you that I have literally no clue why any of these coins are going up and down so rapidly or which coins are going to pump next.

What I can tell is that this all feels very, very familiar.

Back in 2017 when I was still relatively new to the crypto market, the allure of 25-100% overnight gains was too much to resist. I was reading whitepapers for new coins on a daily basis and trying to find the hidden gems that were going to make me rich. At one point, I had 15-20 different coins in my portfolio, and I was in the green on ALL of them.

It wasn’t until I started comparing these cryptocurrencies’ marketcaps to those of established companies that I realized it was all a load of bullshit. There were coins with nothing — absolutely nothing — other than a whitepaper and a website that were valued in the billions of dollars. Imagine having some half-baked idea for using a blockchain in a somewhat new way, writing a 20-page paper about it, and then suddenly being in charge of a project worth as much as Dropbox, Foot Locker, or Mazda. It was insanity.

In early 2018, it all inevitably came crashing down and we entered a multi-year bear market. And, although I first got into crypto with bitcoin, it wasn’t until that painful experience in 2018 that I became a “Bitcoiner”. 

As this current bull market began, I really hoped that the crazy overvaluations and unfounded hype for all of these altcoins wouldn’t happen again. But it has, and it’s probably going to get a lot crazier before it comes crashing down.

I imagine that many of you reading this are in a similar position as I was back in 2017. You might be watching DOGE go up 15,000% in a year and thinking “if only I had put in $1000, I’d be set right now.” In hindsight, I obviously wish I would have done so as well. If I put my entire crypto portfolio in DOGE instead of owning none of it and cautioning others against it as well, I would not be working right now.

But the point I really want to drive home is that if you go after those gains, you have just as great if not greater odds of getting the rug pulled out from under you and losing most of your money. There is no point to dwelling on missed gains unless you can learn something useful from it, and in this case the big takeaway as I see it is simply that markets can be very irrational sometimes. Not exactly world-changing news there.

Oh, and one other thing you should know. A lot of supposed “expert” crypto traders giving advice on social media are really just paid shills. Here’s the most recent example I’ve seen, but this is a very common occurrence.

All of that said, if you’re tempted to throw some money at altcoins you know nothing about in the hopes that you’ll catch one of these crazy pumps, I can’t blame you. I’ve been there. In November of 2017, for example, I wrote an article about Tron (TRX) days after it launched publicly. I seriously considered throwing some money in because it was generating a lot of buzz in China, but ultimately decided against it since it was pure vaporware. About a week later, it shot up from $0.002 to $0.2. I could have multiplied my money by 100x in less than a month if I had just invested in this stupid project and sold at the right time. 

But nowadays I don’t stress much over trying to find the next altcoin that’s gonna blow up. I’ve made my decision to play the long game and focus on accumulating as much bitcoin as I can, and that’s made my life much simpler because I actually believe in bitcoin’s value proposition and not just that it will pump and I can exit before it crashes. For those of you getting into altcoins, I just hope that you keep it in the back of your mind that this current market is not sustainable, and the crash will be painful.

A Quick Note on Bitcoin vs. Ethereum

I still think it’s very likely BTC will surpass $100k this year, maybe even in the next 2-3 months. Based on how things are going, I expect some altcoins will outperform bitcoin during the remainder of the bull market as well. And since the top altcoin people ask me about after BTC is usually ETH (Ethereum), I’ll share my personal opinion on Ethereum specifically.

First of all, I think there’s fairly good odds that ETH is going to outperform BTC in the short-term. However, I haven’t added to my ETH position since 2018 and won’t do so now for two reasons. First is that I’m lazy and don’t want to spend the extra time and effort following daily events going on with another coin. And second is because I’m still not convinced of Ethereum’s long-term value proposition enough that I would be confident holding it through a bear market. 

While the value proposition for bitcoin and the narrative propelling it up have been fairly consistent over the years, ETH is in a seemingly constant state of change.

Bitcoin is a solution to many very obvious problems (inflation, corruption, authoritarianism, censorship, exploitation, and lack of accessibility to financial services and assets, among others). On the other hand, Ethereum seems to be a solution in search of problems.

If you take mostly-overhyped NFTs, cryptocurrency trading, and extremely high-risk lending services out of the mix, there’s little left to speak of in terms of Ethereum’s present-day utility. Meanwhile, hundreds of millions of dollars are being lost because writing bug-free smart contract code is extremely difficult. The more money comes pouring into the market, the more incentive there is for people to find these bugs and exploit them. 

This is just like 2017. Cryptocurrency prices are going way up beyond reasonable valuations based mostly on speculation of future potential. There is enormous risk but it’s being increasingly ignored as the hype continues to grow. Prices going up will attract more and more beginner investors looking to get rich quick, and they’ll eventually be the ones left holding the bags when it all comes crashing down. But that is likely many months away still. ETH could easily get to $10k or even higher before then. 

If you’re making a bunch of money with altcoins right now, I both congratulate you and caution you. The advice I would give to my 2017 self is this: take profits regularly when coins pump, make sure you’re saving enough from those profits to cover your tax bills, and when the market gets really hot just sell all the altcoins and use the money to buy BTC in the bear market a year later.