### In early 2021, Elon Musk started tweeting about crypto and the response may have been more than he expected. People started ‘fomo-ing’ into crypto en masse. He stressed: “Don’t bet the farm on crypto!” We explore why so many people lose their life savings and a simple way to earn, with less risk.

So why did so many people lose their life savings in crypto, again and again? We think it’s a mix of good old fashioned greed with modern day tech-fueled FOMO. 

Do you remember coming across a post or two on reddit or twitter of someone who claims they made 100x their money? Whether those stories are true or not, the charts during bull markets are truly mouth watering. 

It’s not hard to find articles of people who made gains that would put a lottery to shame. For instance, CNN reported about a family in New York that pooled around $8,000 and bought the meme token, Shiba-Inu. At one point the $8,000 became over a [Million dollars](https://edition.cnn.com/2021/05/14/investing/crypto-shiba-inu-brothers-millionaires/index.html)! 

Halfway accross the world, newsroompost.com reported from Delhi about a person who turned $17 to $6.5 by buying the meme token, [Shiba-Inu](https://newsroompost.com/business/from-17-to-whopping-6-5-million-how-shiba-inu-holder-becamemillionaire/1440771.html).  The news items are great, enjoyable reads with a dangerous element. Anyone could be lured into thinking “I can do that too!” 

The problem with these reports is that they are anecdotal, sometimes unverified and don’t tell the whole story. As an anecdotal story, it doesn’t show the big picture. For everyone who gained money from crypto, we don’t know how many lost - at least not from the FOMO inducing short stories of getting rich quick. Some of the stories could also easily be made up by people wanting attention, likes, views or for others to use the crypto services they are hawking. 

In other stories, people watch their token values go up, but don’t cash out, thinking: it will still go up. Then, they painfully watch the coin value drop back down or even lower than what they purchased it for. The latter is rarely reported on the news or proudly shared on reddit and twitter. Aside from the stories of people getting rich quick, there are real, verified stories of people who earned a lot of money and whose lives changed in a sustainable way. 

But people rarely take the time to distinguish between people who got rich in crypto and those who got rich quick. We think the real pitfall is in the latter. Even in crypto, earning generally takes time; but, losing a lot is what happens in quick, devastating moves: there is a hack, a ponzi, government bans, liquidations and market cycles that can drop your investment by 90% in a few weeks. 

If we filter out all the ‘get rich quick‘ stories and focus on those who earned well in crypto, we can come up with some sound strategies. But, since they are all put together, we have a recipe for inducing, fueling and enabling high risk behavior. So, people do end up ‘betting the farm’, leaving too much crypto on exchanges, borrowing money, using leverage, and unfortunately, there are a few months within a bull market where even the most degen behavior is rewarded handsomely. Eventually, the bull market ends, the hype dies down and the prices come violently crashing back to earth. By then, those who embraced ‘degen’ investing strategies end up in a game like musical chairs - one by one, leveraged trades get liquidated. The sobering reality sets in. 

Those that listened to good advice, and didn’t “bet the farm,” can learn from the experience and return with refreshed and improved strategies. In fact, we noticed a trend among successful crypto YouTubers. Most of them got burned but stuck around long enough to learn how it works. “Time in the market is better than timing the market” is an often repeated phrase in traditional investing. The same applies to crypto. 

Aside from not betting the farm, we also believe it is important to apply sound investing strategies. Our favorite is cost averaging, but there are many others. Our bias toward cost averaging is also built on painful experiences, and on the advice (not just from Elon) that nobody should bet the farm on crypto. 

Cryptoflash.report's team members have experienced making badly timed purchases but have also experienced how BTC and other good crypto projects recover and grow, notwithstanding violent cycles of rapidly rising prices and rapidly falling prices. 

A big picture look at BTC shows that even with the violent price movements, it is still generally moving upward. That longer-term upward movement is what we are trying to ride - not the shorter ups and downs.


![chart](https://cfrimages.sgp1.cdn.digitaloceanspaces.com/Screenshot%202022-11-19%20at%2011.08.27%20AM.png)

(Source: Coinmarket Cap) With the violent movement of the price, it’s really, really hard for anyone to pick a good time to enter. 

We believe that a constant cost averaging strategy that can be maintained indefinitely is better than trying to time the market (not financial advice; DYOR). 

The main difference with a DCA strategy from how folks who got rich quick is that DCA is not meant to be quick. It is a strategy that requires time and patience. In exchange, the risk of loss is brought down, while maintaining a good chance for future gains. 

We also have a preference for BTC because the long term trend is up. Even if someone starts buying at the ‘wrong’ time (i.e. The price starts falling), BTC eventually reverts to its mean and resumes its general uptrend. 

Note though, that these cycles take years. Yes, you read that right. Years. We recommend you check out this YouTube video from 2011, made by a person who didn’t ‘bet the farm’ but was recommending people buy BTC when BTC was at $1: 

<iframe width="560" height="315" src="https://www.youtube-nocookie.com/embed/Cw29h7LhEuE" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

Forget trying to get rich quick, prepare for the long-term; and, most importantly, never bet the farm!

In early 2021, Elon Musk started tweeting about crypto and the response may have been more than he expected. People started ‘fomo-ing’ into crypto en masse. He stressed: “Don’t bet the farm on crypto!” We explore why so many people lose their life savings and a simple way to earn, with less risk.

Sat Nov 19 2022

Perspective: Don't Bet The Farm On Crypto

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Sat Nov 19 2022 Perspective: Don't Bet The Farm On Crypto

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Perspective: Don't Bet The Farm On Crypto