Despite the soaring prices of cryptocurrencies before the recent crash, a lingering criticism remained unaddressed: the sector was entirely dependent on Bitcoin (CCC:BTC-USD). Where the original crypto coin goes, so too does the rest of the digital market. However, Holo (CCC:HOT-USD) represented hope that perhaps this old paradigm was due to change.
For one thing, the underlying token of the Holo Blockchain returned more than 35X returns between the beginning of this year till its peak price in early April. By comparison, Bitcoin increased by roughly 2.2X from the start of the year until its peak around mid-April.
Nominally, BTC was extremely impressive because it was closing in on the mythical six-digit price point. However, anyone who is remotely mathematically literate would rather put $1,000 in the Holo market than Bitcoin. It’s the difference between buying a fairly fancy car versus a modest down payment on such.
But it’s not just speculative fervor that has attracted investors to the HOT crypto token. As my InvestorPlace colleague Mark Hake noted, the fundamental implications behind Holo are incredibly compelling. He wrote:
“Holo wants to disrupt the crypto space. It distributes the blockchain on a peer-to-peer basis, instead of everyone having the same blockchain or ledger. Holo says this avoids the ‘fundamental scalability problem’ with existing blockchain platforms. By parceling blockchain ledgers out to many different people it can avoid congestion in both blockchain processing and storage.”
Over time, Hake adds, “the development of these kinds of apps will lead to a higher demand for HOT tokens and also the HOLO price.” Should bullish interest remain strong for the fundamentals, he believes the technicals will follow suit, leading to “at least 100%” profitability from here.
I don’t necessarily disagree with the potential upside. But the question is when?
Don’t YOLO with HOLO
As I write this, Bitcoin is attempting to regain the $40,000 level. From the charts, it got agonizingly close to reaching that point after a sudden rush of bullish sentiment. But the fact that — at time of writing — it didn’t get there is quite telling.
This is a crypto coin that was legitimately eyeballing the $100,000 level. Indeed, many other analysts and prognosticators were calling for $300,000 — some going beyond that mercurial target. So BTC’s apparent inability to capture $40,000 (a drop in the bucket compared to 300K) is worrying. It suggests that people are panicking and rotating out of crypto coins.
If that’s the case, the benchmark should be the Nasdaq tech bubble bursting in 2000. Because from this vantage point, it appears that the crypto market still has much more growing to do. Whether you’re talking about Holo or some other digital asset or token, everything is taking its cue from Bitcoin.
Now, some of the blockchain pedants will argue that I’m using the term crypto and token interchangeably and therefore erroneously. Let me just spare you the time wasted composing an angry email: I don’t give a flying crap.
It’s not the point of what’s going on. Rather, the Holo token (or whatever you want to call it) is currently pinging the classic sign of the collapse phase of the extreme boom-bust cycle.
Frankly, I think it’s very dangerous to buy into the Holo token at this juncture. I would avoid the YOLO (you only live once) aspect of speculative cryptos — or any of the majors. People are scared of losing their money. When that happens, humans do some very strange things.
Acting calmly and rationally is neither of them.
That means you shouldn’t go on social media to urge everyone to hold the line. If you have significant holdings, you should consider getting something out of it lest you risk holding the bag.
But Couldn’t Things Get Better?
Of course, the ardent bulls will probably go down with the ship. They may contend that Holo is a groundbreaking achievement, an innovation that makes the blockchain more accessible and efficient. That might be all true. But I’m telling you — in a market crash, it doesn’t matter.
Yes, over time, I believe a high probability exists that the Holo token could 10X from here. But I also believe there’s a strong chance that HOT could drop over the next few months. If it does, you could be looking at 20X gains for the same cash outlay.
The bottom line is that panicked animals are the most dangerous, akin to attempting to save a drowning person. Unless you’re a trained professional, Holo is a venture you should sit out on until the coast clears.
On the date of publication, Josh Enomoto held a LONG position in BTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.