Note that the following is educational material only. It is factual but it is not financial advice.
Money in the bank is melting in terms of its buying power. 2020 has been no joke and things are only going to get worse from here. Negative interest rates in the banks incoming. How can you protect the buying power of your liquid wealth over time? Bitcoin.
Be sceptical. Do your own research. But buy some. Some. Less than 10% of your liquid savings. Once you have skin in the game, you’ll be panicked into doing your own due diligence. Don’t be wrong about not getting into bitcoin. It could be the biggest mistake you ever make.
The first things you need to know before investing in bitcoin or the wider cryptocurrency market. I recommend using crypto.com and celsius.network to buy and custody your bitcoin for you, until you are expert enough to custody it yourself using a hardware wallet. Both are apps on the Apple/Play Store, have low fees and offer the opportunity to earn yield on your crypto too. Never respond to bitcoin investment related emails.
What have I learned in 4 years? A hell of a lot. Luckily for you I can summarise it in one single sentence. “Buy Bitcoin, hold onto it, never sell it, no matter what.”. Had I done JUST that, I’d have more bitcoin today that I currently have. A lot more actually. Learn from my mistakes. It’s simple. Buy it. HODL it. Don’t over trade. Don’t chase price pumps. Don’t buy what you haven’t researched. Coinbureau is a good source of info on many alternative cryptocurrencies. You can use Coinbase and CoinGecko to analyse their price performance over time and LunarCrush to gauge project activity and social media sentiment. Be aware that altcoins price movement is based almost entirely on ideology and sentiment. Bitcoin is the only proven cryptocurrency and blockchain.
Some numbers for you….
Bitcoin has on average gone up 170% per year for 10 years.
Bitcoin Stock to Flow ratio over 10 years on a logarithmic price scale:
Bitcoin Rainbow Chart (same as above but useful for timing entry and exit into bitcoin)
Bitcoin Stock to Flow Cross Asset Spiral
Cryptocurrency is extremely volatile in short time frames. You should be extremely careful outside of holding BTC, ETH and CEL in 75%, 15%, 10% of your portfolio respectively.
By holding bitcoin, you are changing from a 100% allocation in a stable inflationary asset controlled by banks and governments to a part allocation in a volatile, deflationary asset controlled by nobody but the open market as a means of protecting your money from inflation. Michael Saylor and Elon Musk famously did this in 2020 and 2021 to protect their business balance sheets from losing buying power faster than their businesses could generate revenues, each buying 400 million dollars and one and a half billion dollars in bitcoin respectively.
There will only ever be 21 million bitcoins, 18.6 of which are already in circulation, so less than 2 million left to be minted by the network. There are over 40 million millionaires on the planet whose money is melting due to unprecedented quantitative easing and the centuries-old-solution to inflation (Gold) has not performed it’s role, probably due to provable price manipulation. The supply and demand forecast for bitcoin is insane.
Despite it’s volatility, Bitcoins higher and higher “lows” have proven it to have asymmetric upside potential and a fine store of value if held for a long time frame of at least 4 or 5 years. That said, buying a market top because you heard about it in the mainstream media will likely see nothing but 3 years of downside price movement thereafter.
Trust no one!
You can follow me @cyberfellabtc on twitter for regular technical analysis of bitcoin charts.