Why I’m Dollar Cost Averaging Into the Dip

The markets are tanking and everyone sh*tting their pants. Meanwhile I’ve been heavily dollar-cost averaging into ethereum and staking it, betting that in 1-3 years ethereum will hit $10-25k, and $50k+ in 5-10 years. Sure ethereum could still drop another 50+%. If that happens, I’m loading up even more, and would even consider taking on a little leverage even though that’s something I never do.

Who knows where crypto will go in the short-term, but I’m massively bullish in the long-term. I’ve already written extensively on why I’m bullish ethereum so I won’t cover that in-depth here, but I’ll just summarize it with:

  • The ethereum 2.0 “merge” will make ethereum deflationary, more “green” by reducing energy usage 99%, and increase the percentage of ether that’s locked up in staking
  • Layer 2 rollups on ethereum getting mainstream adoption will skyrocket usage and win back ethereum’s narrative vs. competing alt-layer 1s like Solana and Avalanche.
  • Ethereum will overtake bitcoin in market cap due to the above and in particular the “green” narrative (the “flippening”)
  • Institutional adoption of crypto (most institutional adoption right now is in bitcoin)
  • Network effects leading to one blockchain getting the lion’s share of the market

But what about the macro environment?

Markets are down due to interest rate hikes from the Fed, corporate earnings underperforming, and slowdown in Chinese markets. Growth tech stocks have been particularly hammered. Markets had been on a long, massive run, and if anything this correction has been long overdue.

In the short-term crypto would likely follow a market-wide selloff, but I’m not overly concerned in the long run because crypto and ethereum in particularly still don’t have much institutional ownership.

The argument for crypto going down in a market-wide selloff basically goes: “in a poor macro environment, investors sell risky assets in favor of safe assets. Crypto is a risky asset, thus will go down”. The flaw in this logic however is that it assumes that the same people who are bleeding are those holding crypto. The people bleeding right now are mainly institutional investors who don’t own much crypto. Anyone selling crypto right now is liquidating because they overextended themselves with too much leverage, bought too much crypto in the first place, or are just betting on a global recession and prices falling further. Long-term HODLers like me aren’t selling, we’re stacking up.

Again I still see crypto following a market crash in the short-term because fear doesn’t discriminate, so I do not recommend getting reckless. Don’t invest any money that you might potentially need in 6-12 months. Make sure that you have enough cash to not be forced to liquidate at these depressed prices.

But don’t trade emotionally. As the legend himself said:

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” -Warren Buffett

Play the long-term game. If you think ethereum will go to $10k+ over the next few years and achieve mainstream adoption, then none of this macro stuff changes that thesis. Markets tend to overcorrect to the upside and downside. Smart money buys when everyone is panic selling, and sells when everyone is FOMOing in. When it comes to bitcoin and ethereum, the smart money buys and holds over 5-10+ year time frames, outperforming all the traders wasting a ton of time and energy trying to time the markets.

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