A 787,000% return. Let that sink in. That's what one early Ethereum investor, a so-called "whale," raked in after sitting on their investment since the 2014 ICO. These days, it seems every policymaker has caught the buzz for this overnight (well, decade-long) success story. But hold up before you start mortgaging your house to buy the next doge or shiba, though — let’s pump the brakes. Was it genius? Or just plain, dumb luck? I’d say it’s a cocktail of the two, with a high bazinga content of the latter.

Was It Really All That Smart?

Let's be real. In retrospect, this was, in 2014, Ethereum a whitepaper, a promise, a gamble. Maybe Vitalik Buterin is a genius, but so are hundreds of thousands of other people. Plenty of promising projects crash and burn. The ICO landscape at that time was the Wild West and remains so. Were the odds really so stacked against the possibility that this one specific project would blow up as badly as it has?

Think about it this way: imagine you're at a casino. You throw $310 on a roulette table. It lands on your number. Do you suddenly become a gambling genius? No. You got lucky. This whale’s ETH investment is, however, in many ways, the same thing. In doing so they took a calculated risk, sure, but they benefited from an extraordinary stroke of market timing fortune.

Missed Opportunity Cost Matters Too

Here's where things get interesting. So while we’re all excited about the 787,000% gain, how many people are considering the opportunity cost? That $310 could have been invested elsewhere. Assuming this whale had invested in Bitcoin at the time, they would have seen substantial gains. In other words, what if instead they put all that money into a diversified portfolio of traditional assets? It wouldn’t quite have been 787,000%, but at least it would have been a safer, more predictable return.

  • Ethereum ICO: $310 -> $2.44 million (787,000% gain)
  • Hypothetical Bitcoin Investment (2014): Potentially significant gains, but likely less than ETH
  • Diversified Traditional Assets: Lower but more stable return

If we only look to the Ethereum win, we ignore other profitable low-hanging fruit. This investor would have had other options available to them that would have been safer. All we get to see is the highlight reel. We focus on the investments that did pay off and forget all of the practice investment hours and investment decisions that went south.

A Word of Caution to Everyone

This story is tempting, I know. It feeds on that part of our brains that desires quick fame and effortless wealth. Everyone wants to think they can make the next crypto million buck. And the media eats these stories up because it’s click bait. It’s perilous to take this surprisingly successful singular outcome and spin it out into a surefire formula for future wealth building.

The crypto landscape has changed radically since 2014. It’s a lot bigger, a lot more mature, a lot more regulated (kind of), and a million times more complex. The odds of discovering another coin in their portfolio with that sort of explosive potential are astronomically low. Prepare to withstand the expected rollercoaster of volatility. You should always be ready to tackle any FUD and subsequent market crashes that come your way. Incurring that requires nerves of steel, or just a 10-year disinterest in the municipal bond market.

Loosely, the whale’s inactivity protected them from selling at a panic. Perhaps that was brilliant, a bizarre sort of accidental, decades-long plan hatched in apathy. For most of us, constantly checking the charts and reacting to every price swing is a recipe for disaster.

So toast the whale’s victory, if you like. But don't let it blind you to the reality of crypto investing: it's risky, it's volatile, and it's far from a guaranteed path to riches. But that story is one more about luck and timing than some strategic grand masterclass. But hope and insistence — as all the seasoned investors out there will tell you — is a pretty lousy investment strategy. It’s never too soon to begin considering how we can improve regulation in this rapidly evolving space. We need to weed out the nonsense. We need to protect everyday investors from the inevitable scams and market manipulations that always accompany these gold rush narratives. And that’s because whilst some whales are able to make massive profits, a much larger number of little fish go on to get eaten.