Bitcoin: Let There Be Pain
It's a story that we have seen time after time since the creation of Bitcoin. Just when people think the worst of the price action has come to an end. That is when even more pain happens. Up or down, the market typically does the exact opposite of what most people are expecting. Only this time the market has been acting like it is on steroids. With the price of BTC moving much lower than most of us would have ever expected during the peak of this cycle. After all, this is the first time in the history of Bitcoin that its price has dipped below the previous bull market cycle's peak price. What this all means is that we are in unprecedented territory. What we thought we knew, we no longer know. There is more pain on the way and it is time to brace yourselves.
I have been known to be a permabull, which is still how I view myself. My conviction in Bitcoin has not been shaken, and I have never believed in it more. But, there is simply no ignoring the facts. The world is heading towards a scary situation that we must prepare for now. There is a war happening over in Europe. Inflation around the world has gone through the roof. Many people can no longer afford to pay for the necessities of daily life. Governments have fallen deeper into debt and the only way out seems to be printing even more money. Which helps them dilute their debt, but hurts everyday citizens. If you ask around, regular people likely have noticed the prices of goods rising. But it is even more likely that they have no idea how dire the situations really is. Ray Dalio, is a billionaire and in charge of one of the world's largest hedge funds. He stated that he believes that the 2020s could be a lost decade for the world. Meaning that he believes it could take the world an entire decade to begin to recover from the mess that has taken place. That stocks and other investments will be down during this time. If stocks are down for a decade, what do you think will happen to Bitcoin and other crypto? Throughout the last several months, the two assets have been nearly identical in correlation. Except for one key factor. Bitcoin has either moved more to the downside, or more to the upside.
At the time of writing, Bitcoin has once again dropped down to a price of $18k. There have been predictions that $12k, $10k, and even below are not out of the question during the next few months. Like I said before, no one knows what will happen.
How can you protect yourself?
Even with the US government printing trillions of dollars during the last two years, the Dollar is stronger than ever. Right now the best way to protect yourself is to remember the key phrase during moments of financial panic, "cash is king." Not just any cash though, the US dollar. For example, the Japanese Yen has fallen by 30% during just the last 6 months compared to the US dollar. It wouldn't have been very smart to be holding onto Yen.
Step one, have savings in the US dollar.
Step two, lower your risk. Many of us have most likely been investing too much money into crypto during the last several months. View current prices as an amazing opportunity to accumulate our favorite coins. That has been my mindset as well. But, now would be a good time to take a step back, and reconsider your investing strategies. While we all want to accumulate as much Bitcoin, Ethereum, and crypto as possible. It would probably be a good idea to divert more money towards cash savings during this recession that we are currently in. In my opinion, it will most likely develop into a Great Depression and perhaps worse. For example, perhaps in the last several months, you have been investing 75% of your available cash in Bitcoin and crypto. While putting away the remaining 25% into savings. Now would probably be a good time to reverse that strategy. With 25% of your available cash going into crypto and 75% into savings. The key thing is that you need to make sure you are in a financially stable situation. Hopefully being able to save up several months' worth of living expenses. So that if the worst situation would play out, you would be able to survive. If you can do that, it will eliminate a huge amount of stress from your life. You will be relieved to know that even if you would lose your job and couldn't find work, or if Bitcoin's price would collapse further, you would be fine.
Now allow me to share my Bitcoin permabull with you as well. With the price of Bitcoin that we are currently seeing, and the expected drop that we will see very soon. I truly believe this will be considered one of the greatest buying opportunities there ever was. I would argue that this drop is an even better value buy than in 2020, or years prior. Even though there is great fear in investing markets, there is much more confidence in Bitcoin and crypto than there has ever been before. The networks and adoption are far greater. Nations have even made Bitcoin legal tender. The Ethereum merge has taken place and confidence has never been greater that they will be able to achieve their lofty goals. DeFi's use case has become even more evident throughout this entire situation as well. The genie cannot be put back into the bottle. Bitcoin is here to stay and its price will likely go much higher than any of us can even imagine. For me, it's not a question of if, but when. If you can get your financial situation in order, there has never been a better time to buy. Just remember that with how exciting Bitcoin can be, and how much joy it can give you. That it can give you even more pain. It won't be a straight line up to $500k per Bitcoin. Instead, there will be many peaks and valleys. Unfortunately, right now we have entered an extremely deep valley.
How about you? Are you feeling the Bitcoin pain, or are you accumulating more?
As always, thank you for reading!
