Fellow humans,
Investing is easy. Understanding investments is not easy. The simplicity of investment success is buying low and selling high.
I know a guy who invested $8,000 into bitcoin about three years ago, when bitcoin was around $19,000 per coin. The market quickly crashed, and then finally reached $19,000 again in the past week. He was at a loss for almost three years.
If you’ve been watching bitcoin since 2017, you probably remember the December 2017 bubble. From December 1, 2017 to December 17, 2017, the price per bitcoin rose from $10,000 to $20,000 — you can see that by clicking here. Within five days after reaching $20,000, the market crashed about 35% — the bubble popped, and it didn’t stop there.
Bitcoin’s market value was around $3,200 per coin about one year after he bought in. That means his $8,000 investment shrank to about $1,300 at the lowest point. He’s blessed with patience and disposable income, so he never sold, but that’s not the point.
The point is that never should have happened. He invested when he had no idea what he was doing. He saw the market going up, and he believed it would continue doing so.
New investors are attracted to investments when the market is doing well. This is natural. If bitcoin never rose in market value, I doubt I would be interested.
When an asset starts exploding in market value, people pay attention. People want a piece of the action. People want to make money.
I’m not saying we’re currently at the pinnacle of another bitcoin bubble. I don’t know what will happen. We still haven’t reached an all-time high of $20,000 per coin, so we might see more gains before a potential crash.
Markets are ultimately unpredictable. If somebody tells you their market prediction, don’t believe them. Even if that person is me — be skeptical.
Every market goes through crash and recovery cycles — real estate, precious metals, retirement funds, stocks, bitcoin, fiat currencies, etc. This is not the problem. The problem is inexperienced investors entering the market at the peak, and expecting profits.
Somebody like my friend will do something similar in the future. They might catch a wave, and quickly make money. In this case, they will look like a genius.
However, they could buy another bubble like my friend did. When it pops, they will look foolish, and lose money. Isn’t it better to wait until the bubble pops, and then invest?
This is not financial advice. I encourage you to do your own research. However, if you want to buy bitcoin, I’ll gladly provide additional information.
Until next time,
Salvatore Norge