For how long is HODLing going to work?
I am a HODLer. I Hold On To Dear Life when it comes to my portfolio of cryptocurrencies. This is why I was able to multiply my holdings by 10,000% just last year.
One of the most frequently asked questions I get, is
Why do you still HODL? Isn't a 10,000% gain enough? When are you going to cash out?
followed by
Why do you think its price is going to rise forever? Any rational person would know that Bitcoin's price is going to fall one day. Bitcoin is volatile. Don't be a fool. Get out of it while you can, et al
It's hard to explain why I HODL over a conversation at the dinner table. So, I do it on Steemit instead.
Here's my rationale
It's known that people buy and hold Bitcoin mostly for speculative reasons. No matter how slow or expensive its transactions get, its finite quantity and zero cost of storage still make it an excellent store of value.
Do you know what else is an excellent store of value? Gold
People have been HODLing gold for millennia. The reason for buying and hoarding gold is the same as that of cryptocurrencies.
The market cap of Gold as of April 29, 2018 is $ 7.8 Trillion USD
The market cap of all cryptocurrencies according to CoinMarketCap at the time of writing this post is ~ $ 430 Billion USD
If people HODL cryptocurrencies for the same reasons as they would gold, then it's not unreasonable to expect cryptos' market cap to grow another 1,900%!
But that's a ridiculously conservative and misleading comparison. Here's why.
I compared all cryptocurrencies' market cap with that of just one metal.
A more reasonable comparison, would be to the market cap of all metals which is I don't know.
Since I couldn't find data about the market cap of all metals, we'll have to compare the market cap of bitcoin with that of gold.
Market cap of Bitcoin = $ 158 Billion USD
Market cap of Gold = $ 7,400 Billion USD
Room for growth? 4,683%
This means if you buy $1,000 worth of Bitcoin today, you can expect it to ultimately rise up to $ 4 million , assuming that Bitcoin has the same speculative value as gold if not better. Also assuming gold's market cap is going to stay the same and is not going to get higher.
That would make each Bitcoin worth a whopping $ 437,000 USD
The end game
Obviously, I'm not saying that Bitcoin price is going to rise to $ 400k. I'm just saying that $ 400k will be the price point at which I'd reconsider my HODLing. Until it gets close to that price point, I'm just going to hold no matter which way the price goes.
Some more market caps for comparison.
While casually googling market caps, I was able to access those of some of the world's leading stock exchanges.
All of them are at least worth ** $ 1 Trillion. **
Cryptocurrencies' market cap is still in the billions
This alone clearly shows that cryptos as a whole have a long way to go as an asset class.
This is why I HODL.
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