Smart investing strategies in turbulent crypto markets | AWM Insights #211

Riding the waves: What crypto market cycles really mean

Every few years, crypto returns to the limelight. 2018, 2021, and now again, the markets heat up, and so does the chatter. “Everyone’s going to be telling you how amazing it is and how they’re all in.” You hear it from friends at backyard barbecues, from barbers, even from relatives who never mentioned finance before.

The hype can be blinding, but the seasoned know that with every rally comes the risk of staggering downturns. “If you did buy Bitcoin in 2016, you’ve done very, very well—if you’ve been able to hold on through the multiple 80% downturns.” Most who jump in at the height of euphoria face harsh lessons as projects collapse, with “a lot of Ponzi schemes and...rug pull projects” taking investor capital with them.

Crypto’s volatility—its massive drawdowns and sudden spikes—is not accidental. These cycles attract speculative energy, creating an environment where ill-prepared investors can lose everything just as quickly as they joined. For a family with long-term goals, composure always wins over emotional swings.

Speculation versus real investing—where value is truly created

The difference between speculation and investment is like a “picks and shovels approach." Rather than relying on crowd buzz or shiny tokens and NFTs, we focus on investing in companies that equip, enable, and service the crypto ecosystem.

Companies like Nvidia “actually did make a lot of money in the cryptocurrency space by producing a product that a lot of people ended up using.” Leasing space to crypto miners, or building hardware and software solutions for crypto’s core infrastructure—these are opportunities where tangible value is created. The same discipline applies in private markets: asset tokenization, streamlined blockchain operations, and real-world applications command our attention over speculative bets.

“We do not want to speculate on things that we cannot truly value, whether that be gold, that applies similarly to Bitcoin as well.” Maybe Bitcoin evolves into a “digital gold,” but absent cash flow and inherent utility, patience is the watchword.

Utility, innovation, and risk—balancing promise with protection

Not every area of crypto is noise. Stablecoins, benefiting from new regulatory clarity and actual asset backing, stand out as a use case with real-world traction. Blockchain’s backbone—the ability to transfer, track, and tokenize assets—is its true innovation, and where real value may ultimately emerge.

Risk remains, regardless of excitement. “If you buy a cryptocurrency and your wallet gets hacked, it’s not stored properly…that is a massive, massive risk factor.” Traditional investments sit securely in a brokerage account, but digital assets demand heightened security. Hacks, technical threats, and emerging technology like quantum computing’s uncertain future all pose a threat to capital in ways traditional investors rarely face.

“Many coins lack clear fundamental value—without cash flows or inherent utility, their prices reflect speculation more than substance.” Useful innovation exists, but stewardship requires separating meaningful advances from empty narratives. Just ask a bullish crypto enthusiast how their 2021 NFT collection is doing.

Stewardship and the 100-year family mindset in a changing landscape

AWM Capital brings decades of front office experience to every new asset class. Our philosophy is grounded in building the multi-generational family legacy—an operating system focused on integration, alignment, and truly sustainable wealth. Our clients trust us to look past short-term sprints and into the deep work of value creation—guiding families toward generational championships.

We prioritize substance, value creation, and discipline, ensuring that ambitious plays align with a blueprint for lasting success. Crypto’s buzz draws a crowd, but only those guided by patience, wisdom, and an all-encompassing team escape market noise and better discern the true value of an emerging technology.