The Five Waves of Crypto Investing Hide Some Very Good News

The Five Waves of Crypto Investing Hide Some Very Good News

I met Jim in Florida while taking a break from work about a month ago. My friend Mike said I had to meet this guy.

“He loves crypto. You’re a bit of a skeptic of all things, Andy, but this guy is a true believer.”

And according to Mike, Jim has made a ton of money off crypto.

From the looks of it, Jim is in his late 20s. He founded a local brewery two years ago and probably makes the best sour beer in Florida (he gave me a six-pack). But he wasn’t really interested in talking about his brewery.

He wanted to talk bitcoin.

Jim wasn’t part of the original “true believer” club of developers, coders, libertarians, world-changers and cypherpunks. He’s been mining and investing in crypto for about 18 months – before crypto took off in early 2017 but way after the majority of original true believers got in around 2014.

“I talk to these true believers all the time,” Jim said. “They’re young entrepreneurs like me… they’re into craft beer and surfing – my two things – and they enjoy talking about their jobs. They’re very honest. They’ll talk about problems and progress, including pending announcements.”

“Meaning,” I said, “you see jumps in price before they happen. That’s convenient.”

Jim pushed back: “It helps, but believe me, I check on a lot of things before committing to investing in or mining their coins.”

I had fun talking to Jim, and he shared with me some of the message boards and crypto chat channels he uses to keep up with this incredibly dynamic investment space.

I’ve begun to use some of these myself (like And even though I don’t belong to the original tightknit club of young believers, I had no trouble getting people to respond to my questions and comments.

Can’t ask for more than that.

It got me thinking about the different waves of investors who have been discovering, following and buying crypto through the years.

Here’s how I see the evolution of different cohorts of bitcoin/crypto buyers…

  1. 2009 to 2010 – The creator and his following: Satoshi Nakomoto created bitcoin in 2009. In mid-2010, this tiny, obscure and mysterious digital coin was worth less than a penny.
    The very few who invested got lucky. Please don’t tell me they knew their pennies would turn into thousands of dollars. Maybe they hoped. Maybe they had an inkling. But there’s no way they could have known.
  2. 2011 to 2014 – The trailblazers: Bitcoin was still well under a dollar. These were the true believers.
    My colleague Adam belongs to this cohort. He began following bitcoin closely in 2012. And he began investing in 2013.
    Was it about the money?
    Well, it wasn’t NOT about the money. But it was much more than that.
    It was also about the trailblazers’ deep distrust of big banks and government and their symbiotic relationship that pushes public debt to higher and higher levels. Bitcoin was created to blow up that relationship. This cohort was young, idealistic, striving, frustrated and distrusting. They believed in change at its most disruptive. They thought of themselves as revolutionaries. And bitcoin was their weapon of choice.
  3. 2015 to mid-2017 – The early professional investors: Venture capital firms, family offices (like LDJ Capital) and angel investors began recognizing the disruptive power of crypto and the tech talent that was driving it.
    This was the leading edge of institutional money that continues to build as it waits for regulatory clearance to begin investing in earnest. Peter Thiel’s Founders Fund exemplifies this cohort. It bought $15 million to $20 million worth of bitcoin now worth hundreds of millions of dollars.
  4. Mid-2017 to early 2018 – The momentum/speculative investors: Attracted to the market by a combination of fast-rising prices and rapidly advancing technology, they’ve become the “weak sisters” of crypto buyers.
    When the market’s momentum slows or reverses, these are the investors who bow out the quickest.

  5. Early 2018 to the near future – The sweet spot investors: What’s not to like? Prices have come down to attractive levels. Scaling solutions are being addressed. User cases are multiplying. And the investing infrastructure is slowly but surely being built out.
    It’s similar to the stage where startups raise their Series A or Series B funding. A lot is known, including price, market fit and growth strategy. But it’s still early, and scaling usually awaits.
    All this echoes crypto’s current stage. There’s still risk, of course – every investment has some level of risk. But there’s much less of it now, and profit potential is still incredibly high.

I can’t say this enough…

It may not feel early, but it really and truly is.

Data from Coinbase shows that 95% of cryptocurrency wealth is held by 4% of the owners. That’s not surprising. It’s exactly what a nascent market should look like.

As the crypto market continues to grow year after year after year, those percentages will draw closer together.

You’ll see a relatively modest number of big winners grow and become a much bigger number.

If you’re thinking of investing in crypto, you’re right on time.

Good investing,

Andy Gordon
Co-Founder, Early Investing

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