How much longer can Bitcoin go up? Here are eight kinds of experience about its price
I started to buy and mine Bitcoin and other digital currencies in 2013. I witnessed almost two full rounds of bull and bear and got 100,000 yuan from 500 yuan. It seems to be an unreplicable process of getting rich, but actually, the process is far from that simple, and I am far from getting rich as people imagine.
Today, I’d like to tell you eight things I’ve learned from my seven years of experience about “holding Bitcoin.”
1. In the long run, the amount of BTC held by each person is bound to decrease
For 10 years, bitcoin has been rising. Every time it goes from bull to bear, it falls by 80% to 90%. Then every time it goes from bear to bull, the maximum spread reaches a hundred times, which means that every bull and bear cycle, the peak of Bitcoin moves up by ten times.
Why does the number of BTC held by each person would decline forever?
Because the price of bitcoin continues to rise, and by a huge margin, whenever you run out of fiat currency and try to sell it to do something, you find that no matter what you do in the real world, the fiat currency you earn won’t buy back the same amount of bitcoin. So there are a few people who do become rich on bitcoin, but they also have less and less of it.
Many years ago, I knew a few people who held 5,000 BTC, even a few held more than 10,000, and by the end of the last cycle, they had almost sold it out.
Why do I say I’m not “rich” either? Because even though I was a committed hodler, I also sold a certain number of bitcoins because I needed money to start a business, and then I realized that I could never get those BTC back, regardless of the valuation of the business.
So don’t think about how rich the early entrants are, because holding BTC is almost impossible in the long run — when the price goes up to 2 times, you can choose not to sell, but how about 10 times? 50 times? or even 500 times? There is always a price tag in anyone’s mind, which also brings us to the second point.
2. The average cost of Bitcoin ownership will always be close to the current price.
Everyone has something he wants to do, and at that price where he can make it, he will sell. Some are looking to buy a luxury car, some are looking to buy a mansion, some are looking to create a career, some are looking for financial freedom, in short, everyone will sell BTC one day.
So theoretically, the higher bitcoin rises, the fewer the coins with higher revenue multiples, and the smaller the impact on the total cost of ownership, as the volume of bitcoin transactions has been steadily increasing over the past 10 years, the largest coin costs must be those closest to the current price.
You don’t have to be jealous of those who entered the market many years ago, as if “it’s unfair to distribute wealth simply by entering sooner or later”. There is no need, as I have already said, to hold BTC in the long run, and there are no early adopters who still have tens of thousands of coins, except Satoshi Nakamoto himself.
3. Bitcoin is the fastest-rising asset for the common man.
In the past 7 years, I have never seen an asset that has increased in value faster than bitcoin. Everyone says how many times the house property has gone up in the first-tier cities in China, and often envies those who were “on the board” earlier. I also have some real estate, but compared to the ratio of bitcoin appreciation in my hands, it’s nothing. Some people say if they were able to travel back in time, they would definitely buy a house in year XX, stocks in year XX, and bitcoin in year XX. No, if you still have the memory of the time when you flashback, you should not consider anything else if you have the option of bitcoin.
You may say that some MLM programs, indeed, may really add value in an instant, but first of all, the window is short, and the rapid collapse would follow after this short period. As for the assets that can not be held for a long time, 99% of people will be destined to not trade at that exact point; secondly, when its value went high, due to the small volume of market transactions, what you can earn is only the book wealth, and when you sell part of it, the price will fall immediately, and the rest of the part will not be able to sell out.
But Bitcoin is not, as it has been rising for as long as 10 years, giving ordinary people enough time to enter, and no matter what time they enter, as long as they don’t ell, they are all making money to this day. Besides, its volume is large enough. There are often people on the Internet who have never bought Bitcoin, saying they can’t sell it after they buy it, and such people can be seen as fools — Grayscale is not afraid of holding hundreds of thousands of Bitcoins and they continue to buy it every day. It’s really inappropriate for someone who can’t afford to buy half a BTC to say there that it can’t be sold.
Bitcoin may not go up forever, and it may even die tomorrow, but that doesn’t stop it from being the best investment of the last 10 years and having the friendliest investment threshold for the average person. You have to buy at least a whole house, but you don’t even have to buy a whole bitcoin.
4. Everyone should hold some Bitcoin.
I can’t remember how many times over the years I’ve urged people to hold a little bit of bitcoin. If you’ve never bought any, you should definitely buy some and try it out; if you’ve bought some before and plan to liquidate it, it doesn’t hurt to keep a reserve position, right? You can hold a few thousand yuan and what can you lose? But if it goes up, it has no ceiling.
Why not allocate a little to an investment that has limited downside losses, unlimited upside multiples, and a 10-year history of proving it? Configure as much as you like, as little as you fear, but more or less, it should be the best target on one end of the Taleb barbell strategy, right?
Why ignore it over and over again? Is it simply because you learned about it early but didn’t hold it, so you can’t forgive yourself by holding it at the current price, and then have to desperately hope it goes down? It’s irrational, if that worked, you’d already been the richest man in the world.
5. Bitcoin’s “Developmental Price Range” Determines the Ceiling of the Cycle
Developmental price range is a word I invented.
There is a developmental period in the game, and so is the price of bitcoin. The developmental period is a time when the price grows undisturbed, and if no one bothers with it, it means that the price will continue to rise for some time, and once the mainstream, irrelevant media all discover bitcoin and start reporting on it, there will be a multi-fold upswing in a short period of time, because there will be a huge influx of incremental cash into the market, but often the top is only a few months away.
So how long can bitcoin go up?
That should continue for a long time. When the mainstream media come out to report it, the price of bitcoin will reach its cycle peak, because even the freshmen are coming in, so no matter how much the media spreads, it will be hard for more people to enter the market with more money, and the pressure for profit is greater than the demand for support, so the bull turns to bear.
This is true for every cycle, and the apex of the price of bitcoin in every cycle is determined by “the price at which the mainstream media intervenes in a big way”. And when the price reaches 3 or 4 times that price, it will collapse, which would be done in a very short period of time.
6. Bear markets last a little longer than your imagine
So why does a bear market last a little longer than you can bear? Why do the dealers always focus on your light assets, and the price goes down as soon as you buy and goes up as soon as you sell? No one is actually watching you, it’s just that you are in tune with most people’s humanity.
It is you, like everyone else, that has accumulated so much kinetic energy of selling, and you have longed for the dawn for so many years, that you are desperately trying to catch the light before the dawn, and you are afraid that if you can’t catch the light before it has gone. Finally, you will miss the whole dawn.
So each time, the bear market is just “a little bit” longer than you can hold it.
7. One day, Bitcoin will no longer fluctuate 10x or 100x
Some hodlers will say that holding bitcoin is always the right thing to do. Indeed, historically, there is no problem with that, but that doesn’t mean it will always be true in the future.
Bitcoin’s current market capitalization has already exceeded $300 billion. Although this is not high for a borderless investment, if the bull market peak of this cycle really rises 10 times from the current level, then it would surpass the total market value of gold reserves of all countries in the world.
At that time, Bitcoin will no longer fluctuate 10x or 100x.
Bitcoin will either die, which is extremely unlikely now, or its volume will reach the level of one of the assets that mainstream institutions can allocate, and it will become an ordinary investment product. At that time, the average person who wants to grab a positive black swan then has to find a new target.
8. Sell your BTC in the following 3 situations
While the history of the last 10 years shows that selling bitcoin at any point in time is a mistake, it makes no sense to hold an asset until one dies, even if that asset goes up forever, not to mention that it doesn’t go up forever.
Sell your BTC in the following 3 situations:
1. When Either the size or popularity of Bitcoin reached the scale of traditional financial products.
Bitcoin’s growth rate has reached this level because it is small(compared to traditional financial markets), and the incremental capital needed to pull it up is small. So if bitcoin reaches the size of a traditional financial product, you can consider selling it, or if its penetration is close to that of stocks, you can do it too, because there will be no more “demographic dividend”.
2. When selling BTC can take your quality of life to a whole new level.
After all, the ultimate destination is life. If one day you have the chance to improve your life but you do not do it, and when the bear market comes, as I said, you probably won’t be able to carry the next wave of the bull market. At that time, your whole mentality will collapse, and the feeling of “I could have” will make you do everything out of balance.
3. When Selling Bitcoins Gives You Financial Freedom
Financial freedom is another hurdle. If selling bitcoins allows you to cover all your family’s expenses for a year by the bank interest, and even have some extra money to invest, then sell it.
You can use the extra investment funds and the money you earn from your job to slowly choose your future path, learning and doing something meaningful. When you are in this state, the effect on your mindset is priceless.
The above 8 points are my reflection and experience summary of bitcoin in the past 7 years. Some of them are my observations and some are my personal experience. hope it will do you a favor.
Article from Cai Leilei
Translated by Yang(Mengyan Finance)