Progression, especially in the crypto space, is hardly linear. There is a tendency to overshoot – on the way up and on the way down. A conventional method in determining the value proposition will be its prevailing transacted price. In an imperfect marketplace where price discovery is poor, it is necessary to supplement technical analysis with fundamental analysis.
[ifpaid 0.0000025 BTC text=”Please pay 0.0000025 BTC to continue reading.” button=”Click here to pay using the Lightning Network”] It is from the fundamental analysis that the long term prospect of a value proposition can be more objectively assessed. This covers the key individuals championing the project, community and or ecosystem associated with the project. What is of particular interest is the stated mission (purpose in being) and vision of the project and hence the underlying core values of the key proponents – predisposed (declared) as well as exhibited. It is necessary to go down the rabbit hole to suss out the lay of the land to better appreciate the dynamics of the environment. By connecting the dots, it is possible to gain invaluable insights and to ascertain critical success factors that will sustain the project and for the project to be widely adopted in the marketplace.
The perception gap (reality versus potential) leads to poor price discovery. If the project exhibits potential and is gaining traction through key metrics, it is useful to play the long game. Short term volatility is to be expected especially if the underlying disruptive innovation is meeting robust push back from an incumbent market. Existing players are expected to put up fierce resistance even to the extent of talking down the value proposition of the said project.
Last mile gaps are particularly challenging to overcome and the ecosystem requires time leveraging on the network effect to win over the marketplace. Weak hands can be expected to drop out as they don’t make the effort to understand the intricacies of the play and are impatient for results. They come in expecting quick profits and when disappointed will exit just as quickly. When market penetration is expected to take years, price volatility in the short term is to be expected and here in lies the opportunity – snake and ladder game.