Take a deep breath and let’s walk through this together.
I guess the reason why you are reading this article is either because:
a) you own Bitcoin, and you are wondering whenever you should sell or
b) you want to buy Bitcoin because you don’t want the ship to sail without you.
I understand you in any case.
Here is the thing.
Whatever reason makes you read this article, both are absolutely reasonable.
“Whenever you see a successful business, someone once made a courageous decision.”
― Peter F. Drucker
We are currently in a special situation.
It is good that you have not acted yet. Here are a few thoughts.
I own 0.5 Bitcoin.
One month ago, on the 21st of October Bitcoin’s price stood at $12,800.
Since then, the price of one coin skyrocketed by a breathtaking 45% to $18,600.
On paper, I have earned $2,900 for bravely not selling my stake, even though I was tempted to.
I’m a passionate traveler, in fact, me and my partner have just returned from a 365 days trip around the world.
Call me obsessed, but I translate dollar in travel days.
Here is the math: $70 equals 24 hours of freedom at the beach or in the wild with no chores and responsibilities in low-cost countries such as Thailand.
My theoretical gain of $2,900 in the last 30 days hence translates into 41 beautiful days on the road.
Trust me, it’s tempting to sell my stock, transfer the profit into my account, and wait until the borders reopen.
But I don’t.
Here is why:
I designed it last year in Vietnam when I bought 0.5 Bitcoin when Bitcoin’s price stood at $7,301. The plan is to make a profit of $50,000.
“By failing to prepare, you are preparing to fail.” — Benjamin Franklin
I have made mistakes in the past, that were all related to my emotions being in control of my decision making.
As a result, I behaved impulsively and regret my behavior later on.
“If you can’t control your emotions, you can’t control your money” — Warren Buffett
Ever since my objective mind is in charge of financial decisions. In the case of Bitcoin, I sat down and made a plan that I explained in great detail in this article:
Here are the key facts:
My plan created in 2019.
I intend to sell 0.41 bitcoins in 40 steps between $20,000 and $250,000.
Step 1 of 40 is going to be executed pretty soon once the prices hit the magical hurdle of $20,000.
The last part will be sold at $250,000.
If I add up all the 40 steps, this leads to an exact profit of $50,000.
The remaining 0.09 Bitcoin will stay with me forever. I consider it my insurance.
Here are the reasons:
One of them is historical price development. Let’s take a look at the past performance of Bitcoin just after the block halving. Here is a quick briefing on the halving:
Since May 2020, every 10 minutes only 6.25 Bitcoins are currently “paid” out to the miners for validating transactions. This is 50 % less than a year ago.
Miners are everywhere in the world, not just in one country!
Technically, they also earn transaction fees paid out in Bitcoin, but this is only a very small fraction of their income.
The so-called “miners” are getting paid in return for validating the blocks that keep a record of Bitcoin’s transactions.
In the past, this event has caused Bitcoin to rise by 7,500 % from $12 to $1,100 after 2012’s halving.
Four years later in 2016’s halving, the Bitcoin rose by 3,000 % from $626 to $19,710.
Let’s for argument sake assume the pattern follows the historical trend.
The return between the two halving events decreased by 60% from 7,500% to 3,000%.
If the return decreases again at the same magnitude, the expected return is 1,800%.
Add 1,800% to from the ex-halving price of approximately $8,000.
This would lead to an expected price of $144,000.
I won’t suggest forecasting the future by studying past performance.
But it’s a pretty solid witness of the core property of Bitcoin’s protocol working just as intended. What do I mean by that?
Central banks all around the world print a lot of money. But the official inflation indicators don’t seem to respond.
For most people, this doesn’t make sense. They fear hyperinflation soon.
Here is one of the thousands of examples that currently drive retail investors nuts:
Who Bought the Monstrous $4.2 Trillion Added to the Incredibly Spiking US National Debt in 12 Months? Everyone but China
Who Bought the Monstrous $4.2 Trillion Added to the Incredibly Spiking US National Debt in 12…
The Incredibly Spiking US National Debt has soared by $3.75 trillion since March 1, powered by stimulus and bailouts…
This is when they hear the first time of Bitcoin.
A currency with a finite supply of 21 million coins? What, only 21 million? If equally distributed, every human on earth would own 0.003.
That’s not enough for everyone and pretty rare.
Also, don’t forget that there are only 18 million coins in circulation so far. Another 3–5 million are expected to be permanently lost.
Now you are ready for a few more headlines:
PayPal says all 346 million users in the US can now buy, hold and sell cryptocurrencies
PayPal says all users in US can now buy, hold and sell cryptocurrencies
PayPal announced today it’s dropping the waitlist to buy, hold and sell cryptocurrency in the U.S. With the move, all…
BlackRock CIO Says Bitcoin Could Replace Gold: ‘It’s Here to Stay’
BlackRock CIO Says Bitcoin Could Replace Gold: ‘It’s Here to Stay’ – Decrypt
Bitcoin and cryptocurrencies are here to stay, according to Rick Rieder. Image: Shutterstock In brief Rick Rieder…
Citibank Analyst Says Bitcoin Could Pass $300K by December 2021
Citibank Analyst Says Bitcoin Could Pass $300K by December 2021 – CoinDesk
A senior analyst at U.S.-based financial giant Citibank has penned a report drawing on similarities between the 1970s…
Bitcoin Now Has a Greater Market Cap Than Mastercard
Bitcoin Now Has a Greater Market Cap Than Mastercard – Decrypt
Market capitalization. Image: Shutterstock In brief Bitcoin overtook Mastercard by its total market capitalization. The…
How Does It Look Like To You?
Does it look like:
a.) The price keeps on climbing, just like it has magically turned into a money-making machine one can invest in without taking any risk. The so-called “FOMO”, Fear of Missing Opportunity wave kicks in, fueled by the sudden attention of the mass media.
b.) We are currently watching the transition from one money technology to the next. Until today, the central bank was the central authority that guaranteed confidence in the stability of the money system.
In the future, there will be digital currencies that draw trust from the inviolability of the protocol and the decentralized administration.
c.) a mixture of both
Here is my message to you.
Don’t trust others. Trust yourself. Make your own research. Make your own plan. Let your brilliant mind make your investment decisions.
If you struggle with the core principles behind Bitcoin’s technology, here are the two websites I use daily for my decision making and further education in the underlying blockchain technology.
This is a free online-academy that teaches you everything you need to know.
Interested in learning about blockchain, cryptocurrency, security, technology, or following along with tutorials…
And this brilliant website gives you unbiased information about the numbers behind Bitcoin.
Blockchain.com Explorer | BTC | ETH | BCH
The most popular and trusted block explorer and crypto transaction search engine.
For those of you who did their research: I wish you success!
To all the others: Good luck!
Disclaimer: This article is not investment advice, but for analysis and informational purposes only. It should not be considered Financial Advice. Consult a financial professional before making any significant financial decisions.
I don’t earn any money if you click on the links, I share them with you only because I believe they provide value to you.
I hope to see you again in the future.