At this point in the game, I think anyone who’s long Floki Inu (CCC:FLOKI-USD) should brace themselves for impact. Usually, when you lose 23% of market value over a span of two days — as FLOKI-USD did between Nov. 15 and Nov. 17 — there’s a reason for it. Almost always, it’s not a good one.
Sure, you can tell me that 23% drops are nothing new in cryptocurrencies. Believe me, folks, I have lived through the blockchain experience more so than any other contributor at InvestorPlace. I’ve witnessed the highest of highs and the lowest of lows. I even punched a ticket to the American Dream because of it.
I don’t mention it to brag. Rather, I don’t write the stories I do about Floki Inu or any other crypto from an inexperienced position. Amazing things to the point of incredulity can occur with cryptos — just ask the Los Angeles Lakers. But I’ve also witnessed the dark side as well. You need to be prepared for both outcomes because the decentralized business is a cruel one.
Anyway, the thing about the 23% drop in Floki Inu is that it broke below a key technical support line. At the time-of-writing price of 0.00017 cent, FLOKI is stuck in a no-man’s-land, unfortunately. I’m hoping for the bulls’ sake that enough sentiment pops in to drive the token to safety, which is around the 0.00025 mark.
If not, we could be seeing another zero added to the wrong side of the decimal point. That’s because the most logical level of support lies around the 0.000062 level.
Of course, the culprit with the Floki Inu fallout lies with Bitcoin (CCC:BTC-USD), or rather the news that slammed the original cryptocurrency. Nevertheless, on a strategic basis, the meme token does have its place in the decentralized market.
Floki Inu is the Logical Speculative Wager
In my coverage of crypto miner Iris Energy (NASDAQ:IREN) for Benzinga, I mentioned that one of the risk factors for the recent initial public offering is that the company is levered to the Bitcoin price. That’s great if things are swinging favorably. However, few things are uglier than a crypto meltdown.
As well, I had this bombshell statement to make: “Both the potential and the pitfall of IREN stock points to a single controversial concept — the intrinsic value of cryptocurrencies. Unlike a coffee bean, which intrinsically offers caffeine — the world’s most popular psychoactive substance — as its calling card, a crypto coin in and of itself has no value.”
Indeed, “you don’t own a crypto coin in the traditional, intuitive sense. Rather, you own access to it, which is why protecting your private keys is vital.” Here’s why I mention this inconvenient truth about digital assets. Whether you’re talking about Bitcoin or something far more speculative, like Floki Inu, fundamentally, the end result is the same: neither one has intrinsic value.
But wait! What about the blockchain? Yeah, yeah, blockchain, shlockchain. Frictionless, decentralization, distribution, peer-to-peer, oracles and smart contracts. No one’s doubting their innovative prowess. However, because of their open-source nature, they’re not copyrightable concepts.
Anyone can develop their own blockchain architecture — and they do. You know what the real value of a particular blockchain is? It’s the people that use it.
So long as Floki Inu manages to maintain a critical mass of volume and engagement, I don’t see why the token can’t flourish in the long run. Further, if you have strong evidence that enough people will support FLOKI, it might be the better bet strategically than Bitcoin.
That’s because you can take a small bet and have the chance to win big rather than betting big and winning small.
Exercise Your Discretion
Now, I want to be very careful about the above: I’m not suggesting that Floki Inu is a great investment. In sharp contrast, it’s a lottery ticket. You scratch, you might win… Like the New York Lottery used to advertise: “Hey, ya’ never know.”
What I am saying, though, is that you’re deluding yourself if you don’t view Bitcoin — especially at a price tag around $60,000 — as a similar lottery ticket. Maybe it has a much better brand but at the end of the day, you’re dealing with digital promises, promises that are distributed and decentralized and thus facilitate no responsibility nor recourse.
If you think about it, that’s one of the core reasons why Washington is skeptical about cryptos. I don’t think federal agencies want to prevent people from doing stupid things with their money. Otherwise, the Securities and Exchange Commission (SEC) would have clamped down on special purpose acquisition companies by now.
Instead, the issue is that cryptos are not accountable to any authority. That’s the paradigm shift that big government can’t get over. But that’s the point I’m trying to make.
Whether you buy Floki Inu or Bitcoin or whatever coin, you’re dealing with pure speculation. In that case, you might as well take that smaller bet, considering that BTC and its high-capitalization peers have already reached ridiculous valuations.
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.