Bitcoin: A Time to Panic?
Oh how the mood in the crypto markets can change. After having been in the bitcoin market several years now, it still surprises me just how quickly this shift always seems to happen. And it seems to be becoming worse as time goes on. After all, the world is going through difficult times. In the past bitcoiners only had to deal with number go up, or number go down. Wondering if we were in the bull market or not. Those were the days when bitcoin was uncorrelated to other financial markets and the stock market. If stocks were going down, or there were inflation fears, you could almost always count on bitcoin doing the opposite and moving up in price. That was before mainstream financial market adoption came into bitcoin. We all wanted the big players to get into bitcoin. After all, it was what we needed in-order for us to reach the moon, but with that happening, we have become quite correlated with other financial markets. Now when stocks go down in price or there are inflation fears, you can almost count on bitcoin going down in price as well.
That won't always be the case. But, it does need to grow quite a bit, before financial players understand what bitcoin exactly is, and before it can live fully on its own merits. The day will come, it just isn't here yet. Meanwhile, before that happens, it is still a great opportunity for regular people to get invested in bitcoin before it goes fully mainstream.
There is a lot of fear in the market. We have the FED meeting tomorrow where Jerome Powell will most likely raise interest rates in the US, which has the market spooked. We have ongoing issues with the war taking place between Russia-Ukraine, and the ramifications that are happening because of that. There is still the massive financial fallout that is being felt from Covid, and the havoc that it caused to supply chains being heavily disrupted, but also causing the collapse or inflation of many fiat currencies around the world. As mentioned before, one would think that bitcoin would be the perfect solution for many of those problems above. It actually is. There is a famous phrase where bitcoin maximalists will often say, "bitcoin fixes this." And in this situation it would help many of those problems. But as stated, the adoption just isn't there yet.
Taking those market fears into consideration, and then also taking note that the crypto market's confidence in bitcoin has been shaken as well. Not shaken in the sense of its technology or if it is a great asset, because those both remain unchanged. But, we have to remember that just a year ago, people were declaring that bitcoin would reach $200k at the very least, and most likely much higher. But to date, its price high during the bull market was $69k. A number that I'm ecstatic about, especially considering the price that I first got into bitcoin. But for many, it has shaken their confidence in that perhaps the bull market has come to an end. Perhaps the bear market has begun, and in combination with the macro market fears, this could be the mammoth bear market of all bear markets.
As cliche as it will sound, if that has you worried, your bitcoin investing timeframe is way off. While we all want to feel that instant gratification of making huge gains in a short amount of time. The truth is that each and every one of us from the start knew that this was a game that was meant to be played over the long-term. A game lasting at least 10-20 years. If that is your mindset, then this short-term market fear will have no effect on you. Actually, if you're like me, it probably has you excited. As much as I want the price to go up, I would be just as excited to have a chance to accumulate bitcoin cheaply again. A chance to reach those impossible accumulation goals of mine.
Now, perhaps you do have the correct investing time-frame in mind, but are still concerned about the potential price action. If that is the case, there is a good chance that you have invested too much of your money into this market. There is a famous investing phrase with bitcoin, "only invest what you can afford to lose." Once you have fully accepted this mindset, that is what will finally make you free. When you have a long-term timeframe, and aren't over-invested into the market, it is amazing how much less anxiety and stress the daily price action will give you.
Don't get me wrong, I understand what many of you are probably thinking. Michael Saylor likes to often compare to buying bitcoin as the same thing as buying real-estate in Manhattan New York more than 100 hundred years ago. Basically meaning that it is a chance of a lifetime that cannot be missed. We all feel the FOMO, that this is our chance to finally get ahead in life, to finally change our lives around financially. Personally, that is exactly what happened for me. Because I invested so heavily in bitcoin, it completely changed everything. But I literally went all-in during that timeframe. I won't lie, it was a stressful experience. An experience that isn't for everyone. So, if the market is really getting to you, and you're too heavily invested. There is no shame in cashing a little out, and taking some off the table.
For those of us who are able to withstand the stress of the market, and continue to accumulate at a rapid pace. In 5, 10, or 15 years from now, we will look back at this time. We will know it was the moment that we changed our lives. In the short-term, bitcoin's price very well could drop, it could go up. We could be in a bull or bear market. But if you have the right mindset, none of that matters.
How about you? What are you current thoughts about the bitcoin market?
As always, thank you for reading!
Bear markets are the best time to buy! Stack your bags now!