Topic: Crypto Trading and Rationing Principle. A Guide to Reasonable Investment (Read 49 times)

Investing the surplus makes perfect sense, as it's just about not investing what you can't afford to lose. Making certain investment priorities is also okay, although in case of cryptos, I genuinely believe that it's safer to invest in Bitcoin than diversify and invest in some altcoins as well. I mean, someone might keep some funds in stable coins for convenience, but that's not an investment, and when it comes to investing, Bitcoin is the safest option because it has the most attention and the highest market capitalization among cryptos.

A lot of us even if we do not admit it are very ambitious which makes us very greedy humans are inherently selfish most of the time we want to take everything not really assessing the risks associated with our decisions


I agree but we still should not try to acquire too many investments as we might get distracted and we might not be able to focus on each and every investment

What you are trying to say can be summarized as:

 - You must diversify your investment.
 - Your investment must be from your profits, or you must not invest with money you need during this year, or you must have an emergency fund before investing.

These tips are essential before trading, otherwise your trading will be based on emotion, and I hope that the price will rise or make profits based on luck and emotion.
However, low risk means low profits, so you must know when to take a risk and the level of risks you will face, and then determine the mechanism for implementing it.

Bitcoin's market value is in no way tied to its security market (mining). Mining follows the price because miners only mine if it is economical. Alright that sentence alone ends the discussion with obvious finality, but let's keep just keep going... You're flipping it to try to say the relationship goes in the opposite direction, which obviously can't be true when the opposite is plainly true. Price in no way follows mining, therefore you can't calculate market value with anything to do with mining.

Same for Ethereum's minting. Ethereum's market value is based on the idea that crypto apps and smart contract stuff is going to take off. It literally has nothing to do with the cost of minting.


As with any currency, its worth as much as people think its worth. The market tells us what value that is. Bitcoin aint stocks, there is no 'underlying' thing you can use to try to calculate its value, and even with stocks that is only calculable based on the historically data about what is the appropriate factor between financial figures of the business and the market cap, it's nothing inherent, its analysts after-the-fact looking at historical data of what human nature has decided through market investment and saying "oh this is overvalued/undervalued".

Bitcoin's has inherent value in its capped supply (SUPPLY) and massive utility (DEMAND). That said, we COULD get bitcoin to follow mining prices (which it obvoiusly doesn't so far) if, like stocks and their company financials, we convinced the market that price should reflect mining cost by some factor. But that would just be a self-fulfilling prophecy of human nature at that point, and not saying something fundamental about mining/minting cost to appropriate market value, as you are trying to force. You personally can base your own appropriate market value perceptions on mining/minting cost, but there is absolutely nothing fundamental tying those two things together. And the only way you could get those two things tied together is by convincing the market as a whole to agree with you. So if that's your stated goal then keep up the argument haha, but the actual claim you are attempting to make - that market value and minting/mining cost are fundamentally tied together - is of course not true and there is simply zero argument for it.

rational investment

take any investment, then assess its underlying running cost. and then its production, then its market price to work out if its profitable
or in crypto if the market price is near value(mining/minting cost) or ATH premium

crypto is great because you can calculate the underyling minting mining costs and assess the market price in comparison
becasue its digital you can calculate how many devices(miners or minting validators) are involved using the stats and comparing it to current gen hardware. calculate total hardware cost over hardware lifetime to then calculate hardware per coin
then using a reasonable range of modern country electric costs of $0.04-$0.50 /kwh you can work out the total network electric cost too and then calculate the per coin electric..

for instance

bitcoins most efficient mining cost is ~$25k+
ethereums most efficient minting cost is<$70

now compare that to their market prices and you will notice bitcoin is in good value zone and ethereum is speculating away above its means

..
remember buy low sell high

Rational investment is the basis for healthy business existence.

Many investments have faced collapsed due to irrational investments. Sometimes when a business is faced with multiple investment opportunities that are juicy and enticing, investors like to grab all the available opportunities.

This singular act of wanting to get all the Business opportunities at a time, makes business owners takes the wrong decision of using the entire savings or capital of the business to grab all the available opportunities.

Wrong investment choices arising from such greed has left businesses face threats of collapse or has left to total collapse of businesses in the event of business failure.

Many juicy and enticing investment opportunities with massive reward or output are usually fake and fraudulent. Therefore a good business manager does not hope to empty business accounts to grab opportunities.

What they usually do is Rationing of investment opportunities. Many crypto traders or investors have made these wrong business plans over time , leading to the total collapse.

In crypto Trading and Rationing Principle, a crypto trader must rationalize his investment by creating an opportunity cost( which investment must be fulfilled before another. By this crypto traders will have the opportunity of hold up to something in the event of disappointment or business failure or loss of gain in most cases.

As part of the rationing Principle, a crypto trader should invest only his profit or surplus value from an investment deal.

Every crypto trader must know even as a beginner that, wealth is not made in a day and that is why rationing investments is important , the completion of one business deal leading to another on time schedules.

Feel free to state your opinion.