Bitcoin (Cryptography: BTC) They are often grouped together with risk assets such as growth stocks in the minds of cautious investors. Under that logic, if there is a bear market of stocks and emotions become risk-on-risk-off, Bitcoin is more likely to fall than hold steady, just like any other asset purchased for its potential for rising, rather than sturdy.
So, if you have problems with the stock market, does that mean you shouldn’t buy Bitcoin? And it’s far from there. In fact, you might want to buy more, so let’s find out why.
First, let’s take a look at how Bitcoin worked in the latest Bear market in 2022.
As you can see, Bitcoin lost much of its value throughout 2022 and slowly began to grind it back in the following year. But it took about three years to break for those who bought it during the bull market at one of the peaks of 2021. This suggests that buying coins is likely more risky when prices rise than when prices are struggling.
So, knowing this, why doesn’t everyone do it?
In short, it’s scary to invest in unstable cryptocurrencies in an environment where asset prices are generally downward. Many people, including legendary investors like Warren Buffett, are stuck to the inaccurate notion that Bitcoin’s value is “not based on anything concrete” or that there is no mechanism for its lack of speculative buying frenzy created by loose monetary policy. So, when prices have fallen sharply recently, it is very easy for skeptics to see a short-term move and conclude that rather than temporarily falling, the value of the coin is heading towards zero.
But let’s put that view into a test. At the lowest prices in 2015, 2019 and 2023, Bitcoin has dropped by about 80% from its previous record high. It continued to infringe on new all-time highs within years. Even after the price drops significantly, it doesn’t happen unless there are a few buyers willing to invest in it.
Focusing on the short term is not a rewarding activity with Bitcoin. A long-term focus will enrich investors.
It is important to recognize that Bitcoin is not destined to increase in value over a certain period of time. So, if you buy a lot during the bare market, as previous data shows, you may have maintained your underwater investment for a very long time, probably even for a few years. If you need money between that undefined period of now and in the future, you must lose and sell.
The story continues