|
September 29, 2014, 01:33:48 AM |
|
A comparison to 2011
For context, it took us 20 months following the 2011 $32 high for that price to be surpassed. Giving investors back then the benefit of the doubt, let's assume that most didn't go all in at $32, say they averaged at around $16. If that was the case, it actually still took 18 months just for them to get back above THAT level after it dropped below it. So, let's provide an even more optimistic estimate. Say they dollar cost averaged down in equal amounts from $32 to $2 (June 2011 to November 2011). Their break even exchange rate might have been around $10. Even then, they'd still have had to wait around 13 months after the $32 peak just to break even.
Putting that into today's context, with our ATH on Bitstamp of 1163, the relative bottom this time around would've been around $73, and we've only gotten down to the $340 range! This brings me to another key difference regarding this time around.
Like I said, we haven't even gotten close to such a relative low of $73, and that is a double edged sword. While people haven't lost as much money on the way down up to this point as they would have if it had dropped to $73, they also haven't had the opportunity to buy in as low, to accelerate their process of breaking even, assuming that they do still think the long term trend is up.
This time around, say you dollar cost averaged, by buying in with the same amount of dollars, at equal intervals, all the way down from $1163 to $338. Your break even point might now be around $655. In a relative sense, that break even point is much closer to $1163 than, say, $10 was to $32 back in 2011. Back then, it would've been like having your break even exchange rate at around $18. Keep in mind that that a price of $18 wasn't crossed again for 19 months out from the high of $32.
So, we're currently only 10 months out from the ATH. Say the same sort of situation comes to pass. Could you really hold out eight more months just to break even? I'm personally all about holding (and my personal break even exchange rate is lower than that $655 figure) but I could foresee a bunch of people having to tap out if it really takes that long this time around.
|