Fortunately the aforementioned Next price collapse did not last long. By the time I found my 173 NXT in my Cryptsy account the morning after I sent them, the price had completely recovered and I quickly sold them off at a far higher price than I paid for them. Had I waited until the afternoon I would have gotten an even better price, but I didn’t want to take the risk of the price collapsing again. One thing I have learned about day trading profitably is that it’s rare to buy at the lowest price and sell at the highest price. It’s those who greedily hold out for the opportunity to do so who most often get burned. My goal was to not lose money, so the fact that I actually gained a few thousandths of a Bitcoin in the process is a bonus.
The price of Devcoin showed some upward movement that same day. Because of the usual delay in getting my Next transferred from DGEX to Cryptsy I missed the opportunity to buy Devcoins at 12 sat and instead had to settle for buying them at 13 sat. I made that concession gladly. A few hours later I saw the price had climbed up to 16 sat and then back down to 13. For the previous few days the Devcoin price has been a near flat line, so it was good to see some movement even though that movement was short lived. I wouldn’t mind the price continuing to stay low for another couple weeks or so, giving me some more buying opportunities, but honestly I’m ready to watch it soar again. I’d like to see it go all the way back up to over 100 sat. If the price only climbs to 40 or 50 sat, then I will have some decisions to make about whether or not I sell or hold out. I’m likely to do a bit of both–take some profits at the intermediate price but still hold out some for a better price which I’ve already seen before.
I read some parts of this very interesting alt-coin analysis on the Devtome yesterday, and of special interest to me was what it had to say about NXT. Basically, those who bought an actual stake in Next before it launched (and there were only 73), and then sold at the right time may very well have earned close to $40,000 off a seven dollar investment. Not bad. I did not get in as a Next stakeholder, however I was able to purchase quite a few for less than 1,000 sat each, a price I have not seen since. If I had not purchased shares of DGEX and could sell off my initial interest at today’s prices I could easily get six or seven times my original investment back. Even with the DGEX shares having dropped in price, I could potentially make back three or four times my initial investment if I liquidated the DGEX shares, then sold off the Next.
I’ve decided that it’s time to look for an opportunity to at the very least recover the Bitcoin I invested into NXT. Because I sunk all my NXT into the DGEX asset, I have to deal with two variables: the price of DGEX and the price of NXT. If I cash out the Bitcoin proceeds then I also have to consider the price of Bitcoin. The reason I put all my NXT into DGEX was because after investing half of my NXT into it initially I found the dividends to be much more profitable than what I would get forging. But I didn’t adequately account for the possibility of the shares themselves losing value. Since the shares did lose value, I’m in the awkward investor’s no man’s land where I could get a very good price for the currency but I will have less of it to work with if I liquidate the shares.
This is a good lesson to learn, and it’s especially applicable in the cryptoworld. If I buy an alt coin, and then use that alt coin to buy an asset denominated in that alt coin, I should reserve some of the alt coin to keep it liquid so I can take advantage of the next profit taking opportunity. If I tie up all of my coin into an asset, then I am not able to take advantage of profit taking opportunities unless the price is right for both the asset and the coin at the same time.
The main reason I failed to observe this advice with my NXT was that I was thinking of my NXT itself as a means of earning, rather than as an asset which could appreciate or depreciate. The feature of NXT which most excited me was the 100 percent proof of stake concept where just by having a certain amount in my wallet and keeping my wallet open to the network I could “earn” additional NXT through the forging process.
But forging didn’t work out so well for me because the wallet clients were very buggy in the beginning. Even now, whenever there is a major feature upgrade to the NXT network, the old wallet (which may only be a couple weeks old) quits working and I have to update it. This meant I went through many periods where my wallet was not forging. I then discovered the NXT Blacksmith Workshop which operates as a forging service. I deposit my NXT with them and then I get credited with a portion of the forging proceeds. I held half of my NXT there for a while, but then I saw that DGEX paid so much more in dividends, so I sunk the rest of my NXT into it. I still get the weekly dividends, so my original purpose is being accomplished. But I no longer have a liquid asset and now have to be patient for the right opportunity to take some profits.
I have to hand it to NXT and everything it entails. I think it is a pretty decent investment. Despite all the things I’ve done wrong, despite all the issues I’ve had with wallet clients not working, and despite my inexperience with trading and investing in general, at no time since I bought my NXT has there ever been a point at which I would have lost money if I’d sold. If I chose to liquidate everything now, I would still come out with two or three times my initial investment. The fact that I haven’t gotten completely annihilated on this one says a lot about NXT and everything it stands for.
I’m not going to liquidate anything today, but I am watching both the DGEX price and the NXT price. I know that profit taking is possible and I want to do it soon. But I also feel OK about staying in for now. NXT is growing and innovating and this creativity is serving my little position well.