Buy at these prices? Sell now? Are you waiting for the correction? What should I do? The greed and FOMO environment is sure to attract new investors and put pressure on older ones. We don’t want to buy high, but at the same time we don’t want to miss out if the correction never comes. Is It A Good Idea To Buy Now? Or is it already too late?
Bitcoin is a speculative asset. Things must be called by name. I could use a more noble euphemism, but that would be a nonsensical delusion. We can romanticize it in a thousand ways. However, deep down we know the truth perfectly. We buy bitcoin to make money. Yes, the dirty money. What’s the problem with that? We have money and we want to invest it to multiply it. Y? We shouldn’t be ashamed of this. The pursuit is perfectly valid. Of course, many believe that we should hide this with a nicer story. “We buy bitcoin to change the world.” “You are the heroes of a financial revolution.” “We go for the banks and the governments.” “We’re building a better world”. How beautiful we are! Bravo, we!
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Now they are addicted to price fluctuations. And greed drives us crazy. The phrase “bitcoin price” is the most popular one in this field. Every Bitcoiner favorite sport makes price predictions. Every time we hear that Bitcoin could one day hit a million dollars, our eyes sparkle with excitement. Revolution or money? Ideology or money?
How much is a bitcoin worth? How much will it be worth in a year? That is the key question. What is the risk? What is the opportunity? How Much Money Should We Put in Bitcoin? What should my strategy be? These are the questions you hear on the street. People want to know.
So how do we value a speculative asset? How do we value an asset with no intrinsic value? In the case of a business or a farm, we would consider the production of the asset. Income related to assets would probably be the most relevant variable in determining the total value of the business in question.
But, How do we value a work of art? An antique? A collector’s item? There is no income here as it is an unproductive asset. It is compulsory for us to have recourse to supply and demand. If the item in question has many buyers, the price will certainly be high. Otherwise it’s not worth much. Notice that I’m not talking about scarcity. The item could be unique, but without inquiry there is no value. That’s in relation to the price.
But, How do we determine a good investment? Just because an item has a high price tag doesn’t mean it is a good investment. A Picasso could sell for $ 100 million, but that doesn’t mean it’s a good investment. It is very important that the future demand is higher than the current demand for it to be a good investment. In other words, the growth (demand) projections must be favorable.
Real estate developers, for example, closely monitor the population growth of cities to estimate the future value of their properties. If the population is young, lots of new people are moving to town, and there isn’t enough free land, it is assumed that house prices will eventually rise. The price hike cannot happen overnight, but it is only a matter of time. Sooner or later people get married and want to buy a house. That is the “future claim”.
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What will the demand for Bitcoin be in the next 5 years? Bigger or smaller than now? We could gauge this using two factors: demographics and liquidity. Millennials are very fond of Bitcoin as a value storage instrument (speculative good), but they still don’t have much money to invest due to their youth. That will of course change gradually over the years. On the other hand, everything seems to indicate that the monetary and fiscal policy of the industrialized countries will tend to be more flexible in the coming years. That is, there will be a lot of monetary liquidity due to macroeconomic factors.
In addition, it should be noted that the infrastructure of the Bitcoin community is growing. In other words, more and more interesting services and products are being developed, which is gradually increasing the general attractiveness of Bitcoin. This is definitely a very positive thing. For example, it is now possible to receive credit and use Bitcoin as security. It is getting easier and easier to exchange Bitcoin for other assets. In short, the Bitcoin world is richer today than ever before.
It is also important to mention improving Bitcoin’s image and reputation as a valid and legitimate investment. Right nowBitcoin is not everyone’s favorite good, but it is a good that is very popular with the public. He’s already out of the shadows. And now it is as common as any other financial instrument. We can tell ourselves that 4 years ago. Which means there is a trend. And it is very likely that this trend will continue in the years to come.
To buy or not to buy? Honestly, I think the answer is to buy. At these prices? Yes why not? By purchase, of course, I don’t mean that we will mortgage the house and put all of our money in Bitcoin. I mean, it’s best to buy a little at regular intervals and keep it “forever” (for a long time). Buy some now. And if there’s a big fix, great then buy some more.
I know people who have been telling me for over 4 years that they want to buy Bitcoin but never buy anything. It always seems expensive to them because when they first heard about Bitcoin, the price was there. I always tell them the same thing. It’s not the end of the world. One could buy $ 10 worth of bitcoin to break the ice. What does it matter if the price falls? If the price goes down, buy $ 10 more. If you are buying to “never sell” (or to sell in 10 years), transients are not so important.
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Let’s say we are not new to this area and have been buying Bitcoin at different prices for years. My case. We are now at an important high point. Of course the investment was a success, but we don’t want to sell because we are buying with the intention of “holding forever” (for a long time). That doesn’t mean we can’t give ourselves a small gift right now. Sell a little, stingy. Buy this TV. Change cell phone. Change the tires to the car. A sweet from time to time does not make life bitter for anything. I’m not talking about throwing the house out the window. I mean a little forbearance.
In summary, we generally think absolutely. Buy all or sell all. But that’s like meeting a pretty girl and after a minute of talking, asking her to marry him. Calm down, people. We go in parts. It’s best to start with a coffee. I mean we can sell a little. We can buy a little. And navigate the price fluctuations with elegance. If it goes higher, we give ourselves a little luxury or just save a little in Fiat. Or if it goes down, we’ll buy more. It is a win-win strategy and without much concern. Hakuna matata! Do not worry. Be happy. Stop suffering.