Bitcoin is firmly in uncharted territory: For the first time ever, 11 years since it first launched, the world’s most popular blockchain-based digital asset breached the $20,000 mark, and then some.
With over a week left to spare to the end of 2020, Bitcoin is trading around $23,500 (22/12/2020) and has not shown any signs of releasing its grip on over 20% gains since the start of last week.
The cyclical prophecy has once more come true: about 6 months after a Bitcoin halving event, a massive crypto rally ensues, carrying Bitcoin and the rest of the crypto market into incredible peaks, shrugging off logic and rationale to repeatedly establish itself as the choicest new commodity and store of value to invest in.
If the writing on the wall continues in similar fashion, we can also expect the usual fear-of-missing-out (FOMO) activity to begin in earnest. That, and the growing institutional interest we wrote about has certainly helped fuel curiosity and skittishness in the retail audience!
And that wouldn’t be a bad thing, at least not from our perspective. As a company fully invested and sold into the idea of blockchain, we truly believe that investing in the technology and in cryptocurrency is only a matter of following the logic of economy and the future of digital transformation — a future where the conventional concept of banks could be extinct.
But it’s always wise to exercise caution in any sort of market, and in any sort of climate, least of all something like blockchain and crypto. So as you prepare to dip further into Bitcoin and crypto, here are some things we think you shouldn’t do in the current Bitcoin bull run!
- Don’t ignore the short- and medium-term risk
Double digit percentage gains within a day in crypto is normal. Don’t forget, back in March, Bitcoin was below $4,000. So if you’re willing to wait for 500% gains, then you must be willing to weather 80% losses in the short term and medium term.
- What goes up must come down
Similar to many markets like stocks and real estate, crypto really is a cyclical market, with even deeper crashes and higher volatility in between. No one can truly say where the peak will lie during this current rally, but if you believe in the cycle, then you believe a pullback has to happen at some point. Know where you want to enter, and know where you want to exit, and try not to change your mind!
- Understand more, understand deeper
Coinbase CEO Brian Armstrong wrote last week urging investors to “seek out resources” to understand investment opportunities better before diving in. There are plenty of financial experts out there who might be able to tell you more about what you’re getting yourself into (and we don’t mean Googling it alone).
Other than Bitcoin, most other new projects now will appear attractive and promising, but treat them all like any other business opportunity — if they can’t satisfy you in terms of depth, business viability and reason, then you probably should stay away.
- Not all eggs in one basket
It’s pretty cool to be reading about guys like Didi Taihuttu and his “Bitcoin Family” who abandoned fiat and banking entirely and bet it all on Bitcoin, but that’s probably a terrible idea for most people. Treat crypto as a means to diversify your savings or investments.
You don’t want to be stuck without options should (or when) Bitcoin does drop by 90% overnight!
- Don’t take out loans to buy crypto!
It can be extremely tempting to buy into the hysteria now, and while a lot of analysts and market experts are doubling down their investments now, it’s really unwise to take out long-term commitments, especially knowing how difficult it can be to pay off your debts down the line.
Take the story of the unfortunate flight attendant from the UAE who took out a bank loan to buy crypto at the height of the last crypto rally. A $100,000 debt at the height of 2017 crypto prices — that later tanked and stayed down throughout 2018 and 2019 — almost landed him in jail, if not for the intervention of his ex-colleagues!
Remember, always do your own research and never invest more than you can afford to lose.
A smarter investment is always into development of your own business. And if something permanent and tangible is what you’re looking for in progressing your blockchain project, hit us up at CryptoMarketeer!
