We all know Bitcoin to be highly volatile, with 10X gains and 80% drops a fairly normal year for Bitcoin. But for those new to this burgeoning asset, it can be nauseating. When investing, everybody likes to buy low and sell high, but with such volatility, when is low and when is high? I bought Bitcoin at the peak of 2013, and looking back, that was probably, nay, definitely what helped me gain the HODL mindset.
To be honest, I can’t remember how or when I first came to hear about bitcoin. In 2013, it was tough to actually purchase bitcoin. Coinbase was founded in 2012, but was only serving US based customers. I remember jumping through several hoops to get it via FYBSG, a now defunct Singapore-based exchange.
I also remember buying it during the blow off top in November 2013, where one bitcoin was exchanging hands at the time for USD$1,000 and more. At the time, it was truly a gamble. I had a job, I had spare cash, so I bought some.
Of course, everybody knows what happened next. Oof.
The Bitcoin Winter of 2014
Bitcoin promptly crashed by 80%. Lots of people panic sold and never bought back in again.
I was different. I knew Bitcoin had tremendous potential, and that a decentralised platform was always going to win out against centralised platforms. In addition to the rampant money printing and ever inflationary properties of fiat currency, I strongly believed in the future of Bitcoin, and that it will rise from the ashes to become a multi-trillion dollar asset and the hardest, soundest money the world has ever known.
Haha, no. The above paragraph was just not true at all.
What happened was I promptly repressed the memory of ever having bought this stupid coin. The price had dropped to a point where it was immaterial, and wouldn’t matter even if I’d sold it. So, I dug a hole deep in the recesses of my memories, in a passage way so dark and creepy, and left it buried there.
There, it would remain, safe and buried over the next 3 years.
What If…
Now, what if I had bought bitcoin earlier in 2013? Nobody knows for sure. But there’s probably a pretty high chance that I would have banked in the 2X, 3X, hell, maybe even a 5X return and said “thank you, bye bye”, and ended up looking like a fool in 2021.
Which brings me back to the title of this post. Buying at a peak, experiencing that 80% drop in value, and then seeing again, that miraculous rise back up to my purchase price and beyond, has given me that added strength and conviction in holding on to this asset.
Buy and hold for at least 1 cycle (4 – 5 years)
I wrote a piece earlier this year called Hodl – easier said than done, and I stand by it. Especially in the face of such volatility. But as the years go by, we build a bigger base of believers, and Bitcoin becomes stronger for it. For those new to Bitcoin, or thinking about buying, please buy and hold for at least one cycle.
The price of Bitcoin as I’m writing this is currently US$51,500, and I believe it will go much much higher over the next few years.
Is it still a good time to buy Bitcoin? Yes, I believe so.
But the price is so expensive! I can’t afford one! Well, Bitcoin is divisible by 100,000,000 units, so you can actually buy fractions of 1 Bitcoin, according to your risk appetite and what you can afford. You can buy $100 or $1,000 worth of Bitcoin, or even apportion a monthly sum to average in.
Bitcoin is mainstreaming before our eyes
Also, remember that Bitcoin is no longer the little fringe currency used on the dark web for buying drugs and ordering assasinations. (Cash is still the main medium of exchange for that!)
We’re seeing fast maturation, adoption and growth of a brand new asset right before our eyes.
- VISA, DBS, Twitter, PayPal, Robinhood, MicroStrategy, Bank of America and many other major companies are all either actively looking to integrate crypto, or come up with a strategy to work with it over the next year.
- Institutions are holding Bitcoin and other crypto as part of their reserve assets, with many others considering adding them to their portfolio.
- El Salvador has adopted Bitcoin as legal tender.
Plus, you know Bitcoin is doing something right when China bans it.
Bitcoin Security
Lastly, if you’re looking to dip your toes into Bitcoin, be sure to learn about online and offline wallets. Once your holdings get to a decent amount, you can consider getting an offline wallet such as a ledger.