The Hardest Time In Bitcoin's History
The time we are currently going through will likely be the most difficult time that you ever experience with Bitcoin, Ethereum, and crypto in general. People have already lost so much and there is a real fear that the market may continue to worsen and we will lose more. We have been told to buckle up and prepare for the worst. With all of that said, hope is not lost. The challenges and tribulations have been a test of a lifetime for many of you. But one that will reward you more than you could have ever imagined. And so we must do what is often the hardest thing in Bitcoin, Survive and continue to accumulate until better days come.
The World is In Chaos
For many of us, we are living in unprecedented times. A pandemic spread across the globe causing countries to shut down. This would cause governments to print money, which would eventually cause inflation to go through the roof. The US FED has been extremely hawkish at raising interest rates which have caused financial markets to tumble worldwide. Countries are on the brink of collapsing due to their debt. This has caused countries like the U.K. to pivot back to printing money and prompted the UN to plead with the US FED to stop increasing interest rates to spare world economies. If that weren't enough, a war between Russia and Ukraine broke out. With all indications recently that the war is beginning to escalate.
It seems that the entire world has stopped and all eyes are waiting and watching for the next shoe to drop. Could the US keep raising rates at a pace that causes other governments to collapse? Will the war escalate even further? Whatever happens, there is a general consensus that it will be something negative. That this event will not only send the world into a giant recession, which it arguably already is. But, that it will cause a Great Depression.
Now, let's bring this back to Bitcoin.
A few years ago, this is a situation that many of us would have imagined that Bitcoin would thrive in. It was built to work well to protect yourself from the government's inflation. As a neutral asset that no government could control. But yet, the recent performance has been very correlated with regular financial markets such as stocks. The reason for this is that Bitcoin is still young, and is considered a risk-on asset. It is also one of the most liquid assets out there. Being able to be bought or sold 24/7. This often results in Bitcoin selling off when markets are closed and there is news that causes panic. One could argue that this is something that makes Bitcoin extremely useful. Unfortunately in this situation, it helps contribute to its price falling.
While you can twist the statistics in any way you are trying to tell a story. The truth of the matter is that since the covid price drop in March 2020. Bitcoin is still up 6x. If we are starting from that date as a measure of its success as a hedge against inflation. It has been overwhelmingly successful. It is important to remember that, especially as the price has seemingly been on a constant downtrend the last year.
It is this downtrend, and fear of it becoming even worse that has caused so many people to sell. No matter how hard it is to stay positive when we are seeing red-price candles each day. The truth is that the absolute worst thing that you could do now is to sell. Bitcoin is nearly 70% below its all-time high price of $69k and has been in a bear market for nearly a year. Those last few years are the most important to remember.
Throughout Bitcoin's history. Most bear markets have lasted around 350+ days. We are now quickly approaching 330 days since the top of the market. While this cycle may be different from past cycles due to the current world situation. But it is also possible that we have reached price bottoms, or are very close to reaching them. Prices may move sideways for a while, but they will begin to recover. You don't want to let the FUD get to you and result in you buying at the top, and selling at the bottom.
So Many People in Crypto Lost Their Money / Had It Frozen
If that wasn't enough, the crypto market had its own summer of disaster and pain. Most notably with the collapse of UST/ Luna, which would begin the cascade of hedge funds and companies becoming insolvent. Such as 3AC, Celsius, Voyager, Vauld and the list continues. It's likely that a high percentage of you who are reading this article either had a portion of your portfolio go to nearly zero with UST or Luna. If you were lucky enough to avoid that, you might have gotten your crypto frozen on services that would become insolvent. With no guarantees that you will ever see your crypto again. If you were incredibly unlucky, perhaps you were impacted by both of the situations.
While the world macro situation has made people panic and sell off to have the cash to protect themselves. This was unpreventable. It was out of our hands. On the other hand, the summer of pain that crypto felt was mostly by self-inflicted wounds. There is a lot of money to be made in this market and that brings out the greed in many of us. This greed is what made everything fall apart this time around. Everyone had their sights set on the price heights that they thought were definitely coming our way. Do you remember those talks about Bitcoin going to $100k being ultra-conservative? Everyone was talking about $200k and beyond. The same went for Ethereum. A $10k Ethereum was also considered a low prediction. Many people in the market were proclaiming that ETH would hit $20k and beyond. This caused many people to put on leverage and go long. It would be free money. But then that never happened, and some big players were liquidated. The market wasn't ready for the aftermath.
This situation did teach us a very valuable lesson, however. Too many of us had forgotten how important it is to take custody of our own cryptocurrency. We had forgotten the risks of giving up your keys and sending your coins to a 3rd party to earn interest. But we were all reminded swiftly.
The Hardest Thing
That brings me to point of this whole article. Back during normal times, having a black swan event was a rare occurrence. One that would happen only a few times a decade at most. The financial market hasn't had to deal with any of these events since the financial crisis of 2008. Which naturally led to the creation of Bitcoin. It also means that the crypto market has gone through very few of these events as well. They can be counted on one hand. But during the last year, the crypto market has dealt with multiple of these black Swan events. Circumstances that might have been death blows during times when Bitcoin was younger and not as strong. Yet, we have dealt with these events and the price of BTC is still hanging on at $19k. That is something to be very bullish about in my opinion.
Yes, world events could indeed worsen, and eventually, the price of Bitcoin will go lower. It also might not. One thing is certain. The prices that we are seeing right now are incredible buying opportunities. On an equal scale or arguably even better than the buying chance during March 2020. These are the difficult times that will define your portfolio. The hardest thing to do in crypto is to look past and ignore all of the FUD that you see around you and continue buying as much as you can. Looking past financial governments on the brink of collapse around you. Looking past crypto companies disappearing. And looking past the excitement in the market coming to a halt. If you are able to keep your conviction and continue to buy, you will likely set yourself up for the future very well.
How about you? Have you been able to look past all of these situations and continue to buy?
As always, thank you for reading!
