What happens if a person starts to invest in bitcoin at or near the top of the cycle?
Those who start investing in Bitcoin at top or near the top of the cycle in terms of short-term investment will face losses. However, if someone invests for the long term, there is a possibility of profit again in the next bull run in the future. I think it would be more effective to invest for the long term by following DCA instead of investing a lot of money at once.
No one is going to know that they are investing at the top, yet they should always attempt to be prepared both financially and psychologically that they might be starting to invest at the top.
Accordingly, they can keep buying as the bitcoin price is going down, so their average cost per BTC will go down, and they are not guaranteed that the BTC price will recover - even though they could end up spending a lot of time in which their holdings are in the negative.
what happens if a person starts to invest in bitcoin after the top and as the price is going down?
If someone invests in bitcoin after the top and as the price is going down, what happens is that many people get scared when they see the price fall. And investors who bought on FOMO sell out of fear of loss.
Yeah, but we don't have selling in our vocabulary.. .so just because others are selling, we keep buying when the BTC price goes down, even if our holdings might keep going further and further in the negative.. but yeah, if we started to buy at $124k, and the price goes down to $75k, then we might be in the negative for a long time, and maybe we bring our cost per BTC down to $105, even though we might be buying more at in the lower $100ks, the $90ks, the $80ks and perhaps even in the $70ks, if we have any money left at that time.. .Sometimes we might be running out of money so we are OLNLHY abe to buy what extra money we get after each pay period, whether that is $100 per week or some other quantity.
In a bear market, the price of bitcoin falls and as a result, many people sell bitcoin out of frustration.
So what? Why do we care about what other people are doing? Have we lost conviction in our bitcoin investment? Aren't we in bitcoin for the long term, such as 4-10 years or longer.. most likely 10 years or longer? So why should we give any shits about price, except for to keep buying? why should we give too many shits about what others are doing, except to realize that they likely don't have conviction about bitcoin as an investment?
remember the price fall in 2022 when BTC prices went all the way down from $69k to $15,479, and guys who were buying BTC on the way down during that time might have had started buying BTC in the $60ks and kept buying throughout that time and perhaps run out of money to keep buying in the lower $20ks and even in the sub $20k prices, except to the extent that they could buy BTC with whatever extra money they received when they were paid... so maybe they lowered their average price per BTC from $60k and down to $32k, so their holdings still was in the negative, but they were back in profits when the price went above $32k. They did not have to wait for the BTC price to get back into the $60ks in order to resume having their holdings in profits... to the extent that it mattered, since maybe they were planning to hold and keep accumulating until at least into the 2030s.
But if someone continues to be patient and continue DCA during this time, there is a possibility of profit in the next cycle.
Yes.. Holdings being in profits does not necessarily mean that they are selling. but just feeling better about being in profits rather than being in the negative.. There could be guys who started accumulating in early to mid-2021, and who have been accumulating since that time, and maybe their average cost per BTC is still in the $40ks and/or $50ks, yet maybe they are still accumulating, and sure they feel good that their holdings are around 2x to 3x in profits, but they are not really planning to start to sell any for several more years, perhaps not until the 2030s, and they still might have to keep accumulating at least 2-3 more years from now, depending on how much that they were able to accumulate in the past 4-5 years.. and so what they do next is more dictated by how much BTC they are able to accumulate rather than what their average cost per BTC happens to be.
Maybe even by 2030, the BTC price is around more than $1 million, but their average cost per BTC might have had gone from $44k (at it's lowest ever point) to then around $120k per coins, yet their earliest coins bring down their average cost per BTC.. and maybe they also made some mistakes along the way with their BTC, but if they kept on buying, they still learned from their mistakes and fixed their various systems, including how they kept and safeguarded the overwhelming majority of their coins.
Another thing is that when the price falls, there is no loss. If anyone sell bitcoin without being patient after the price falls, then there is a loss
There is a loss in the value of our holdings, but we do not lock in our losses by selling, but instead we should be keeping on buying and have systems in place to keep buying until we have enough or more than enough, and that can take a couple of cycles to start to get to that point where we are starting to feel that we have enough or more than enough
What happens if a person starts to invest in bitcoin at the bottom of the cycle and/or as the price is going up?
If the price is at the bottom. I think this is the best opportunity to invest. But at this time, many people try to sell out of fear and based on negative information.
I don't understand why you are so focused on the dumb kinds of things in regards to what other people are doing?
I have been in bitcoin since late 2013, and I was buying through 2014, 2015, 2016 and sure a bit after that too.. but there were so many guys talking about how smart they were to be selling when I was buying... Maybe some of those guys figured out to buy back, but some of them psychologically could not bring themselves to buy back more bitcoin at prices that were way higher than their selling point, so they ended up selling way too much too soon, but not realizing their stupidness until several years after it was too late to fix their mistake, and sure they might have seemed like geniuses for a decently long period of time, even several years... but later they did not look like geniuses..
Sure some guys learned before it was too late, so maybe they ended up with smaller BTC stashes from their mistake, but they did not end up completely without coins or very low coin status.. even thought they would have had done better to have had stayed focused on buying BTC or at least mostly holding what they had.
Many guys realize that they would have had been better off to just shave off small portions rather than feeling like they needed to sell large chunks of their stash, especially when they could have had either done without their purchase and/or to have had drawn resources from other places, besides depleting their BTC holdings.
Then if someone analyzes the previous information and decides to invest in Bitcoin, then there is a possibility of profit in the future. But at this time, many people wait without investing because they wait for price more lower. As a result, they may miss the opportunity .
Should the above described situations be treated differently, since a person might not know exactly where he is in the cycle. To get started does a bitcoin newbie need to learn bitcoin cycle theory?
Sir i think It is not possible for anyone to know which stage Bitcoin is in the cycle.
Isn't that part of the rationale to mostly stay focused on ourselves and to keep buying, and sure we might end up with some BTC purchases that were done at high prices, yet we are assured to keep building our bitcoin holdings if we focus on buying and we are not fucking around with selling expecting to buy back cheaper and the employment of various selling techniques that do not increase our bitcoin stash when we should be trying to grow our stash.
Several guys have ONLY been in bitcoin 1 year or 2 years and they likely have not had enough time to really build up their bitcoin stash, even if they have been employing fairly aggressive buying techniques. Guys do not tend to have a lot of money that they are able to front load into bitcoin, and even if they are, they likely would be better waiting a whole cycle before transitioning into sustainable withdrawal.
However, a new investor needs to have some basic understanding of the cycle. As a result, he will be able to know what the stage of the halving, bull and bear market is.
Sure.. As a person is continuing to buy bitcoin, he can still learn about these things, yet is he going to act on his learnings, and if he is acting on his learnings how is he going to allow his learnings to affect how he accumulates bitcoin?
However, it is better not to analyze these too much before or at the beginning of the investment, as there is a possibility of making wrong decisions.
If someone has no bitcoin or very low bitcoin, then the only way to prepare for up is to buy bitcoin... so how convinced could we be that the BTC price is not going to go up?
I think the best thing is to maintain discipline regularly and follow the dca and conduct long-term investment activities. As a result, anyone will be able to buy Bitcoin at a time-based and average price. If one have a long-term attitude, the risk is much reduced.
I doubt that there is a goal to buy bitcoin at an average price, yet there is a goal to accumulate bitcoin, and there is no idea about what the BTC price is going to do.
DCA and ongoing buying allows a person to tailor how much he is going to buy to his own situation and to his budget, and once he has some BTC at least he has some preparations for up.. but it still could take several years of buying before his bitcoin holdings are in profits, and even that is not guaranteed, so guys have to adjust their bitcoin position size and how much they put in based on their own personal circumstances rather than expectations about bitcoin's price performance being guaranteed to provide them with certain results.
But yeah, guys can do what they like ultimately, and each of us is responsible for our own actions and the performance of our holdings and the holdings was something that we could control over time, even though we cannot go back in time once we make our choices and we spend 4-10 years or longer accumulating bitcoin, we cannot go back and fix what we had done, and if we pursue a whimpy bitcoin accumulation practice and then 4-10 years or longer down the road we might not be as advantaged by starting our more aggressive strategy at such later date rather than if we would have had started a more aggressive strategy earlier in our BTC accumulation process.
Are you trying to say that with basic knowledge a peerson cannot invest in Bitcoin? Well I do not agree with you coz basic knowledge is actually enough to kickstart your Bitcoin Accumulation journey.....When I say basic knowledge i am referring to this simple but important things, whichh are:
- Where to buy Bitcoin ( and probably where to sell though not really important)
- Where to safely store your Bitcoin by practicing things like self custody
- That Bitcoin is volatile( The price goes up and down and as such only your discretionary income should be used for investment, not money needed for your surviival.
- Bitcoin is divisible( you don't need to buy 1 whole Bitcoin, you can simply begin by stacking up a few Satoshis).
I would like to add something more to your information, if the investor wants to invest in Bitcoin, then he must remember the DCA method. Because even if the investor is poor and needy, he can still invest in Bitcoin according to his ability, he will only continue to make regular purchases according to the DCA method according to his ability. If he follows the DCA method weekly, then if he can invest $ 50 to $ 70 per week, then he will definitely be able to collect a large amount of Bitcoin at the end of the year.
In this way, if he continues to invest in Bitcoin according to the DCA method for the next few years, then he will definitely be successful according to his plan. Because an investor can definitely complete his investment successfully according to the DCA method, he should continue to invest in Bitcoin until one Bitcoin is deposited with him.
Suppose an investor plans an investment and accepts Bitcoin for investment and also invests consistently in a long-term plan according to your advice according to the DCA method, but still there is a possibility that his investment will be inconsistent. We know that people can have financial needs at any time, so an investor should plan his investment a little differently. To put it differently, we first manage our family with the amount of money we earn monthly and meet all the needs, after meeting all the needs, we invest the remaining amount in Bitcoin. Initially, the investor may think that investing the amount of money left over after meeting the needs of the family is definitely right for him, but when he needs the extra money for the family, he will not be able to continue investing or he may have to sell his investments to provide additional money.
After starting the investment, the investor should adopt a strategy to avoid having to sell the investment, such as investing a part of the money he has left over from spending on his family in Bitcoin and keeping the other part in a separate fund. This will not only make his investment safe, but when he needs additional money, he can use the separate fund to meet that need.
I think this can definitely be a good plan for every investor.
You are correct. If a guy puts himself into a situation in which he has to sell, then that means that he had employed poor cashflow management practices and perhaps even invested too much into bitcoin. It is quite likely that such guy needs to figure out better cashflow management practices so that he is not putting himself (and his family) into situations in which he has to sell all or some of his bitcoin based on his failure to adequately prepare his finances properly. Sure, sometimes mistakes are made, but we should be trying to engage in practices where we lessen the likelihood of the mistakes and/or we lessen the impact of mistakes when they end up being made.
You can do what you like Victorybit1, but it does not seem to be a good idea to be fucking around trying to sell and buy back cheaper, especially if you still have a goal to keep accumulating bitcoin.
One of the best ways to assure that you keep building your bitcoin stash is by keeping on buying, so selling is not a good way to increase your stash.
Sure, the more bitcoin you accumulate and the longer you are in, then you might start to think that you can time the waves, yet we have a whole hell of a lot of examples in bitcoin's history where guys end up selling too much too soon and they also end up not accumulating as much bitcoin because they are too busy waiting to buy on dips rather than ongoingly buying.
You are right sir, and all that you said here are very true, selling with the hope of rebuying it back is not the best way to go about your Bitcoin accumulation because you might likely sell off too soon, and that price you sell thinking to buy back may be the lowest price that person may ever encounter again.
Those investors that sold their Bitcoin at $72k thinking to buy back when the price of bitcoin goes deeper, how would they feel that moment that Bitcoin keep on rising to $124k?
They will feel really bad for themselves because they themselves deprived themselves from an opportunity they would have benefited from, so victorybit1 stop trying to sabotage your own effort by selling thinking to buy back because bitcoin can do the big jump in price it usually does, and you may likely miss out, a word is enough for the wise as the saying goes.
We likely had guys who were somewhat new to bitcoin in the past few years, and they might have had been accuulating bitcoin along the way, yet maybe they don't have a large budget, so they might have thought that they could have done better, and any sales between $25k and $100k are not looking too smart, and it is a bit presumptuous to think that you can buy back cheaper. think about guys who were buying in the lower $20ks or even below $20k in 2022 and in 2023, yet selling in the same year well below $30k or even thinking that they were geniuses selling in the $30ks or $40ks, so they might have had doubled their investment or even did better than double, but now it is impossible to get BTC for less than $100k.. and sure it is possible that we might have another chance to get sub $100k bitcoin, but I would not count on it, and so in that regard, it is way better to stay focused on accumulation and be glad for coins that we were able to stack up in earlier times and be careful to spend them too early unless we reached a status that we have enough coins or more than enough coins.. which it is not easy to get to such overaccumulation status...
It tends to take more than a couple of years to reach overaccumulation status, even if we might be able to attempt to accumulate aggressively in the beginning.. and even if we get to overaccumulation status, we have to be careful to not sell BTC beyond our overaccumulation status so that we remain in such an overaccumulation status.. since why should we spend years and years building up our bitcoin holdings in order to sell them for inferior products and/or investment and then have to buy back our bitcoin because we sold too many too soon?
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People come into this space without even knowing who they want to be, trader or investor. They jump in, start mixing both, and at the end of the day they get confused, frustrated, and end up blaming Bitcoin or the market. The truth is, an investor mindset is built around patience and conviction, while a
trader mindset is built around speed and risk management. If you try to be both without understanding the differences, you will just be setting yourself up for mistakes..
Risk management has various tools that depends on what is being done. Accordingly in investing your risk management relates to your position size and your cashflow management practices.. So you are managing your risk by choosing an investment size that is not going to put you or your principle in jeopardy.
Selling in investing would not likely be a risk management tactic unless we made a mistake or we failed/refused to keep adequate back up funds.
The stronger our cashflow management, then the more aggressive that we can be when we are investing.
And about the king size accumulation part, I agree. underestimating how powerful consistent buying and holding can be is not wise. It’s not flashy, but over years it speaks louder than so call traders. A trader claims to make quick moves, but an investor who keeps stacking and holding through the noise eventually sees that big reflective profit you mentioned. it’s about being intentional and choosing your lane, not drifting between both out of confusion..
You are right that frequently traders talk about their trade as if they were investing, so they might not really realize the difference, and sure they are trying to build up their trading capital so they can consider the whole thing to be an investment, but surely the terms can frequently overlap and be confusing and even misleading in terms of figuring out the differences in approaches.
