Feb 01, 2021

Wall Street Bets Hitting Crypto

WallStreetBets have now hit crypto. While the first target, DogeCoin was relatively small, retail group buying has now doubled XRP's value in one day, making it the 3rd largest cryptocurrency. Where do we go from here?

While retail groups driving stock prices is new, it is old news in crypto. The 2017 crypto price surge was driven almost solely by individual investors. The difference is now such spikes can happen much faster. Also, crypto valuation is more vague than stock, making it more difficult to understand when an asset is hitting a peak.

When volatility increases, your attention should too. Be very careful about new or minor cryptocurrencies - these are sometimes fradulently pumped and dumped by their management teams. If you happen to ride a sudden high wave for any crypto, you might want to consider a stop-loss mechanism - a sales order, when the price drops below a certain level. This will keep you from staying awake at night.

On a positive note the new groups of retail investors at least declare the intention to buy and hold assets. While it's easier said than done, more hodlers would only increase the stability and prospects of the whole crypto market.