Woot! Bitcoin Went Up! I Am Such a Good Investor!
This happens every bull cycle. People throw money into the market, and it goes up, and they think that they are so smart. Look at them beat the market. Look at them get rich!
And then, the bubble pops, the tables turn, the "unexpected" crash happens and they think they are idiots. Its all over. But, instead of getting out, they ride it down, until it bounces, and they think that they are so lucky they didn't get all out, to watch the cat reach apogee, and fall again, further, farther, faster.
This crypto bull market is going to make a lot of people, insanely rich, on paper.
That, and Trump might be inaugurated on the 20th of this month,4 days from now.
These are not as unrelated as it may seem
Getting out of the market
I will assume that all here are very pro-crypto.
So, you are in the market, at least as much as you can be.
Getting out of the market, up until this decade, has been, selling your stuff for cash. (usually US Dollars, or The US Bonds) It was a no-brainer, it was what everyone did. There wasn't any other option. (except for maybe gold)
Now, getting out of the market has a big question, into what?
Get into the dollar that is losing 10% a year?
Get into the stock market that is ready to crash at any moment?
Get into bonds that seems ready to implode?
Get into real estate, that is obviously going down, and hard?
If you believe in crypto, there is only one place to get out into, more crypto.
But, even if you get into bitcoin, you seemingly will lose all your gains. But not quite. Your bags are still bigger, and your bags are worth more.
Keeping your gains
Here i was just talking about people losing all their gains, and i just listed all the ways you would lose more money. Not being very helpful here, am i?
The sad thing is, you only need to figure out when bitcoin will crash, and then swap into stable coins for a few weeks and buy back in. Bitcoin, in the past, has crashed fairly quickly.
Timing is the difficult question. But, the other question is, "Is this time different?"
If you sell your bitcoin this time, you may never be able to get (let alone afford) any bitcoin again.
I believe the real line in the sand will be one million per bitcoin. If we break one million this cycle, then do not sell bitcoin, it isn't going back down again. More and more nations and large corporations will be trying to get as much as they can.
This seems to be tied to whether Trump really gets into office, and whether he sets up a bitcoin reserve.
Bitcoin is fast becoming the greatest asset world wide. And so, it is the thing you would be selling out into. Even if you knew it was going to have a 50% pull back.
If bitcoin becomes the "new money" (a feeling by the general populous that its money to have and hold) then selling out of bitcoin is not a wise idea. And, there probably won't be in 50% pullbacks in the future.
If bitcoin becomes the thing everything is priced in, then all you care about is how much bitcoin (or convertible token) you have.
How much bitcoin (crypto) do you really need?
There will come a point where having any bitcoin means you are RICH!
There are predictions, that in the future, a family will celebrate when their child goes out into the world and makes their first, FULL satoshi. (yes, the things you get out of faucets right now)
So, if you are trying to set yourself up for retirement. There is a point where you will have all you need to do that. And your bags may start growing faster than you can ever spend them. At least until prices start settling to a stable point.
Right now, you need 10 bitcoin to buy a million dollar house.
If you wait a bit, you will probably only need 1 bitcoin. As bitcoin goes towards a million dollars per, and houses prices start crashing, you may need only ⅒ of a bitcoin or less. Basically, your largest purchase (as a normal, middle class person) will become well within your reach.
So, at some point, you will no longer need to be concerned about avoiding the crash after the bull run. Does it really matter if you have 5 million or 10 million?
A better way to look at crypto gains
When your cryptos are WAY up, use them to get the things in life that you really want. Especially those that align with your future plans.
My favorite is buying a homestead. If you use part of your crypto bag to buy a homestead, you will effectively start to minimize your outflows as you become more self sufficient.
Buying a house, or paying off your house makes your life a lot less fragile. It makes things like insurance companies pulling dirty tricks on you much easier to deal with. It means never having to deal with the bank that holds your mortgage again.
The same with buying a car. (except a lambo) You can get yourself a good, reliable car, and never worry about payments again.
Of course these things become cheaper and cheaper in crypto terms as time goes on. But, do you really need to make sure you have 10 million in the future, instead of 5?
So, start looking at the things you want, and make plans to buy them later this year when crypto will (probably) be way, way up. I imagine there will be many Craigslist posting with "trade for crypto" in them.