Fellow humans,
The following chart might be the most important chart in the bitcoin market right now. Everybody seems to be dreading screen time with financial charts and their own personal portfolios. If you’ve bought bitcoin or “crypto” in the past year, then there’s a good chance your investment is underwater right now. Nobody likes to trade one asset for another, and then find themselves on the losing end of the trade.
Temporarily of course. As can be seen in the chart below, the red represents long-term bitcoin holders (155+ days), and the more red you see, the more bitcoin they’re selling into the market. As an investor, the last thing we should want is for the most convicted investors of the same asset to sell. For example, if I’m selling all of my bitcoin, then you should know something is wrong with bitcoin.
The silver lining in today’s market is the relatively low level of hodler selling. Long-term holders are selling relatively smaller amounts of bitcoin right now, which helps support the bottom. Buying the bottom of an asset like bitcoin is the number one way to make fast profits. In my personal opinion, we’ve already bottomed for the current cycle. I could be wrong though, and just because we might have bottomed, does not mean we would be going straight to the moon. The price will likely chop around below the all-time high of $67.5k for a while.
Logically, long-term holders (some not all) want to sell their bitcoin when they have an opportunity to maximize their dollar profits. In other words, hodlers would prefer selling the top. Who wouldn’t? We’re nowhere near the top at the moment, so hodlers are clearly comfortable buying.
The current accumulation environment is like fuel for bitcoin’s price, and time has historically been like the igniter. Past performance does not dictate future returns. Just because the chart is showing a pattern, does not mean history will repeat. However, we might expect some resemblance of the history. After all, human behavior does not often change.
If the chart above is an indicator, then we’ve likely already bottomed or very nearly bottomed, and the only two ways to go now are sideways or up. If theory holds, then time preference becomes the only question. How long am I willing and able to hold an asset before selling? As much as I enjoy holding bitcoin, sometimes selling is my best option. I don’t keep much dollars in the bank, so bitcoin is not only my long-term savings, but also my short-term.
For those who are willing to invest and wait for roughly one year, now might be a solid entry into the bitcoin market. Remember capital gains taxes though. Also remember holding bitcoin for as long as possible is always a good strategy. However, the best strategy is to move your personal financial life onto the bitcoin standard.
My posts are never financial advice. My posts might tempt people to blindly invest, which I understand, but I don’t agree with the strategy. Don’t be an idiot. My strategy is to learn about assets before buying, and the more I learn about bitcoin, the more I want to buy.
Until next time,
Salvatore Norge
P.S. — Seriously, not financial advice.
“Keep falsehood and lies far from me; give me neither poverty nor riches, but give me only my daily bread. Otherwise, I may have too much and disown you and say, ‘Who is the Lord?’ Or I may become poor and steal, and so dishonor the name of my God.” — PROVERBS 30:8-9
I’m not very wise. Never financial advice. Do your research.