When the Bitcoin price was heading to an ATH everyone wanted to buy. Today the same people are selling in panic, complaining about the crash and predicting the worst doom scenario’s. 95% of the people are making this mistake, they should turn their behavior upside down and a lot of money can be made. Everyone knows you have to buy low and sell high, but most people do exactly the opposite because they follow their emotions.
Most people trade upside down
On my holiday I was talking with someone who is trading BTC for cash and cash for BTC. He said his customers are making the perfect trade for him. When the BTC price is tanking everyone want to sell him (cheap) Bitcoins and when the price is rising more people want to buy. His customers are on the losing side of the trade while they are the ones to decide! This proves that most of the investors trade exactly in the opposite direction as they should do.
It looks like Bitcoin is around the end of a cycle, the best relative price could be now!
It is funny, when it is the best time to buy nobody does because the uncertainty is to big. When the next uptrend is clearly underway everyone will get caught by FOMO again and many will buy for a high price. When you believe in Bitcoin and that the value will increase over time, it will be very rewarding to put your emotions aside and buy when everyone is in panic mode.
The scarcity is a huge feature, increase your holding while it is cheap?
There will only be 21 million Bitcoins and 80% is already on the market. This scarcity is unique, the supply of no other asset on earth is as scarce and predictable as BTC. Gold is also scarce, but when the price goes up miners will invest more and the supply will increase because they dig more out of the ground.
When the BTC price goes up miners will invest more, but the supply will remain steady, only the security level will go up. Gold will be suppressed by a higher price while BTC will get an extra boost because the higher level of security makes the asset even more useful!
The fact that the supply is predictable makes it easy to set long term price targets. You can see with your own eyes in the real world that Bitcoin get adopted in a certain industry. When you are confident that you can foresee how many percent of that industry is going to be captured by Bitcoin, you can make a simple calculation that leads to a likely price target.
Seeing the adoption in countries like Japan and Korea accelerate, hedgefunds starting to invest in BTC, governments and central banks getting interested, populations of countries with high inflation flee to BTC and remittence taking place in BTC on big scale makes me extremely bullish.
When all these people need Bitcoin to satisfy their need the demand will increase greatly and the supply is almost nothing. The entire market capitalization of gold is around 8 trillion and I think with all these use cases (including digital gold) Bitcoin can be 1,5 times more valuable than gold within a few years. By simply doing the math this will lead to a 700.000 dollar Bitcoin!
When you agree with this analyses and agree that Bitcoin will gain enormously over the years to come, this is the moment to buy an as big as possible part of the existing supply while it is cheap. Today you can buy a 100 times bigger part of the total bitcoins than when the target is reached, it will make you incredible wealthy. Off course the requirement is that adoption on these use cases keeps growing and that no catastrophic events happen on the way to the moon.
Trade different than the majority
Now the price is low you should accumulate Bitcoin and when we are in a heavy uptrend and ICO’s receive hundreds of million dollars for only a white paper without a working product you should be selling. It is the exactly opposite of what you naturally ‘feel’ you should do, but if you can resist your emotions it will pay off.
Below I have described the best and the worst way to trade a full cycle. I took the cycle of 2014 / 2015 and inserted the trading decisions that could be made:
This is how 95% of the people tend to trade. The reason is that emotions triggered by the market lead to wrong decisions. This is the way that will ‘feel’ like the best decision, driven by FOMO in rising markets and panic in falling markets
This are perfect trading decisions that could be made by someone that believes in the technology of Bitcoin and understand market cycles. This person will buy a lot when the price is low and take profit at high prices.
I think we are somewhere between september 2014 and september 2015 in the current cycle. If I am right we could go down at most another 50%, but for the long term you will have guaranteed profit if you start to accumulate now.
I know it is easy to look back to 2014 and say how you should have traded this cycle. I also know that it is extremely hard to know in advance when a top or a bottom is near. This is not my point, my point is that you should sell if you ‘feel’ you want to buy and buy when you ‘feel’ you want to sell.
It is extremely hard to time highs and lows, so actually there are 3 advisable ways to do it:
Trade without emotion, only use indicators that tell you wether Bitcoin is expensive or cheap. To do this you have to be educated in technical analyses, fundamental analyses and risk management. Be aware that this is not easy, it really is a profession! 95% of the people will not be able to do this in a profitable way!
Buy and HODL, if you believe that Bitcoin will be adopted further the price simply HAVE TO rise over a longer time frame. When you buy and HODL and Bitcoin keeps behaving as it did in the past you will always be on profit once you been through one full cycle. Even on the BTC you bought at or near an ATH.
I created the Diversification Protocol. When you use this protocol you only need to check the figures every week and do what the rules tell you to do. This way your emotions will not influence your investment decisions and you will automatically buy BTC when it is cheap and store your gained value in gold when BTC is overvalued. Using this protocol you will automatically trade like good investors. Buy more around the low and sell more around the high.
Disclaimer
This is no financial advice, just my view on the market.
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