The bitcoin market seems like it doesn't know what it wants to do. For the last two months it has been stuck in a price range from $42k to $52k. Constantly bouncing upwards and downwards within this price range. There have been predictions by people claiming that it is going to move upwards and break out of this zone any day now. But there have also been predictions that the price could break downwards as well. The truth is that no one really knows what will happen. Bitcoin and crypto are some of the most volatile and unpredictable assets out there. Then, also taking into account that the world is just as unpredictable at the moment as well. Most of us have never experienced anything like this before. The risk of inflation and world fears will certainly have an impact on financial markets.
With that said, I remain as bullish as ever. If you are in this market for the long-term, not using leverage; then there is nothing that you should be worried about. It's actually a win-win scenario for you. If the market does surge upwards, perhaps having a parabolic movement. That will greatly increase your holdings and of course make you very happy. But on the other hand, if the market has a large dip or even takes a breather by going sideways for a while, then that is a golden opportunity to continue accumulating the coins of your choice.
It is this golden opportunity that I want to talk to you about today and how you should be thinking about it.
Having been in the market for several years now, I can confidently say that the most dangerous time for crypto holders deciding whether to leave the market or not isn't when prices drop significantly, or even when they go up significantly. It is when prices are boring. The long periods of time where the prices are moving sideways, doing next nothing or possibly even moving slightly downwards. This is dangerous, because it causes retail buyers to become bored with the crypto market in general and lose all interest. They keep putting more and more money into bitcoin, ethereum or any other coin and with the price moving slightly downwards; they continue seeing the dollar balance of their portfolio constantly dropping. It is very easy to lose hope in this moment, or even lose confidence in the market as a whole. It feels like you are tearing up the money that you are investing, as it is quickly disappearing. This is the time that most retail crypto buyers are most likely to sell out of their positions and leave the market.
Ever hear the famous phrase of "Buying high, and selling low?"
This is often the time that this event will occur. As people's losses continue to grow, they reach a point where they just want to exit the market, take their losses and get back as much money as possible. This ends up being a decision that many people end up regretting. Remember that even though the cryptocurrency market is about as volatile as a market can be. It's not going to have constant volatility. The market moves in periods, and has periods where it needs to cool down, which is necessary for the next wave of volatility. The people who sold low, will come back in swarms once the price of bitcoin reaches new highs. A very similar thing happen in 2018. The previous year bitcoin had reached a new all-time high price of $20k, and then had a blow-off-the-top type of price movement. Which sent it into a multi-year long bear market. People became scared and sold out of their positions as the price of BTC continued to move lower. These same people rushed back into the market once bitcoin surpassed $20k in 2020. But now they were buying bitcoin at a much higher price resulting in them owning far fewer coins.
This is how you need to look at it.
When the price of bitcoin is boring or even moving downwards, the best thing that you can do is to continue buying. A good way to think about it is that your crypto portfolio is like a spring. When you continue to accumulate at these price levels you are adding extra weight and force to that catapult by pulling it down further. Finally, once crypto prices move back up that is when the weight is released from your spring and your portfolios value skyrockets upwards much further than you could have anticipated.
That is exactly what happened with me. The first 2 years that I was in the bitcoin market it felt that the price of bitcoin was doing next to nothing. I continued to buy more and more bitcoin, but the dollar value of my holdings seemed like they were never increasing. And suddenly bitcoin woke up, and so did my portfolio. Essentially this is what everyone is doing when they are buying the dips in the market, but it is very helpful to have a visualization in your head about what you are doing, and what your goal should be during these quiet times in the market.
The cryptocurrency market is often considered to be one of the easiest places to make money and become rich. In many ways that is true, but this market will test you mentally unlike anything you have ever experienced before. During these quiet times in the market, it is vital that you learn and have conviction in whatever coins you decide to invest into. Once you have that conviction, you need to make your plan and stick with it; even when things become more difficult. If you are able to continue investing into crypto and also hold long-term, your life will be changed forever.
How about you? Do these quiet price movements make you excited or lose interest? What are you doing now to improve your crypto position?
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As always, thank you for reading!
