This is a different update compared to my first two updates written about Q3 and Q4 of 2020. I've spent the first six months of 2021 fully focused on growing my crypto portfolio. That's why this Q1/Q2 2021 update is one written for my friends and partners. They are part of the same group of friends, with people we've known for the bigger parts of our lives.
I hope to work with a lot more friends in the future. Maybe be able to invite a few of them to join the board of Sonvela. I've been having good conversations with some friends about forming a large investment group in the coming years. This vehicle would allow us to invest in talented founders and companies in Cabo Verde.
Investing in the crypto market is a way for me to grow the funds to start investing in Cabo Verde without depending on partners. Now that I've been learning so much about investing and blockchain, I'm thinking about the way to bring the two of them together in this new project. Whatever happens, I see interesting blockchain use cases that could positively impact Cabo Verde.
For now, I can honestly say that I'm very happy with the support and confidence of my current partners. I work hard every day in order to become a better investor. Although the market has had a tough time in these last weeks/months, I'm convinced BTC, crypto, and blockchain, in general, have a very bright future.
The start of 2021
BTC continued to go up in the first months of 2021, after finally breaking its all-time high of about $20.000 in December of 2020. There was huge news about Tesla buying BTC as a reserve asset. This was partially the work of Michael Saylor, the 'big' CEO of a publicly-traded company who was the first to make that decision.
Since Saylor stepped into the world of BTC, I've spent a lot of time listening to the various podcast appearances he's made. Anyone looking to learn more about the space, and why investing in BTC could be a smart thing to do, should listen to a few Saylor appearances.
Mistakes
The periods of consolidation in the market, are very good for evaluating what happened and what I need to learn from that. There was practically no profit-taking during the whole run-up. I kept buying dips instead of making my gains real. After thinking about it, I understood it was because I didn't have a plan for this situation.
That allowed me to get kind of trapped in the emotions of an 'up-only' market until it all came crashing done. By the end, BTC had lost more than 50% (!) of its value. My portfolio was down more than that, thanks to the altcoins that lost up to 75% (!) of their peak value. This is why you take profit when you can. Lesson learned (hopefully).
What Now
People who miss the conviction to hold through tough times often sell for way lower than they bought in. Unfortunately, this happens to new investors a lot, who buy tops and sell bottoms. FUD, fear, uncertainty, and doubt can play a major role in this type of selling by less experienced investors.
There was news from Tesla, with Musk showing concerns about BTC's energy usage. Not sure what happened there, but I think Musk was under pressure and had to make a certain decision. It fueled the old discussion about PoW (Proof of Work), and how it destroys the environment. We also saw a new type of FUD, one which is normal in traditional markets.
With institutional investors coming in, we'll see the market change. A great example of this was the attempt of an investment firm to push the price down. The CEO of the firm had said in an interview that he believed one BTC would be valued at $400.000 in the future. This was before he was able to start buying. When the CEO was ready to start buying up BTC, he was quick to give another interview in which he stated that BTC was going all the way down to $20.000 before going higher.
Again, this happens all the time in traditional markets. It's all part of the game, whatever we may think of it. Other negative news influencing the price came out of China. The country forced large numbers of miners to close down operations. The decrease in mining activity saw the hash rate drop very significantly. Miners moved to places such as Kazachstan and Texas fast to continue operating and securing the network.
Conclusion
For an investor true conviction comes from knowledge and experience. FUD is simply a part of the game, and it's up to us investors to figure out what threats are real to our investments. Luckily, there was also some good news in the first six months of 2021. El Salvador passed a bill to make BTC legal tender in the country. This was immediately followed by rumors that Paraguay was also working on the same thing.
With everything that's happening behind the scenes, only looking at price moves is not going to help you. This has all been a fine example of how price (markets) and value can become decoupled during a crash. Unlike in the traditional markets, it happens in crypto regularly. The volatility can be a huge problem for those who take on too much risk, but for many others, it means a lot of opportunities.
I expect that we'll continue moving up to reaching € 100.000 per BTC, possibly even during 2021. BTC has months where it does nothing and then moves up very fast. The trick is to stay in the game long enough to capture those moves. It's time to be patient.
