Just maybe if you are a Tibetan monk and a sadhu from India, you don’t care about the price of Bitcoin. We can fake nonchalance, but it’s pure theater. We all have a heart deep inside that beats during a hike. Or not? Aside from the rhetoric of a better world, we’re buying Bitcoin in the hope that one day we’ll see cheese on toast. Maybe not in the near future, but definitely in the distant future. The problem is that much of what is said about Bitcoin is wrong. Many in the crypto space always promise things that are not kept. In 2018, it was said everywhere that Bitcoin would soon reach $ 50,000 or more, but we’re already in mid-2020 and are having trouble breaking the 10,000. What should I do?
Many have searched for answers in the past, and that is largely a mistake. Growth in the first decade is highly unlikely in the second decade. We cannot assume that Bitcoin from the coming years will behave exactly like Bitcoin from previous years. In my opinion, this expectation is disadvantageous and unrealistic. In fact, it makes no sense. An asset is good if it outperforms its alternative. In our case, the alternative would be the S P 500. That is, Which asset will grow the most in the next 2, 5, 10 years? Bitcoin or the SP 500?
Read on: Bank of America names Bitcoin the best good of the decade
The average annual return for the SP 500 is 9.8%. That is, underneath it is considered a poor return, tantamount to being considered a mediocre return, and moreover it is considered a good or excellent return. If you get a 20% return, you’re a genius and in the same club as Warren Buffett and Peter Lynch. A sensible reference for Bitcoin is the SP 500, not 2010 Bitcoin.
Tesla, Amazon, Apple, and Facebook were excellent investments because they outperformed the SP 500. And the rich get richer because the middle class grows with the gross domestic product, while the rich grow with the SP 500. To be a successful long-distance investor, we have to devote a little bit of greed and stop thinking so much about 10X or 1000X. A sensible and realistic plan is to outperform the SP 500 every year.
On the other hand, we have to rethink our numbers. In crypto space, we talk about ups and downs all the time, but we talk very little about averages. In addition, some defraud to protect Bitcoin from attacks. A minimum and then a maximum is always chosen to demonstrate that Bitcoin is a high-yielding asset. For example, It has been said several times that Bitcoin performed excellently in increments of over 100% during this crisis. This is of course pure cheap propaganda. Choosing the March low and setting today’s price is a stupid win. Because minima and maxima are exceptions. Average values are more important.
In the short term, the market is a popular competition. People vote with their purchases and sales and the price dances to the rhythm they play. In Bitcoin, big hikes and big lows are rather short events. That means that the price does not deviate from the average for long. That is, if we only use the minima and maxima, what we actually do, we will never understand what happens, what usually happens. Our focus should be on the average values (200, 50, 30, 10 days).
Read on: Analyst says Bitcoin’s correlation with SP 500 means the price should be $ 18,000
If the price is below the average, it is discounted. If it’s above average, it’s expensive. It is best to always buy at constant intervals so that our personal average matches the Bitcoin average. Maybe buy a little more if we are below average and if we happen to have to sell a little more it is preferable to do so if we are above average.
Now of course we are very far from our historic maximum of 20,000. But that doesn’t matter much because the price was there for a few hours. Most importantly, the annual averages are always increasing. If we beat the SP 500 with the averages, we’re good.
The future is important here, not the past. The question: Are we growing up? Many want Bitcoin to conquer the world. Here is a big mistake. The goal should not be world domination. It should grow a little bit more every year. Grow in people and money. If the market is a popular competition in the short term, the market is a vegetable fair in the long run. That means the value is measured by weight. In other words, the basics are important.
First reason for optimism: demography. Bitcoin is a phenomenon of young people, and young people are getting more and more every day. And not only that. Young people have more money to invest every day. We are growing up. The future is in the youth. Bitcoin is a magnet for young people.
Second reason for optimism: globalization. The urban middle class is growing worldwide and Bitcoin is easily accessible. The technology-sensitive population is growing day by day. The Bitcoin community is growing in all countries. Many people will find that buying Bitcoin is easier than buying dollars. Bitcoin is global.
Third reason for optimism: infrastructure. New products, new applications, new companies are taking to the streets and the blockchain industry is getting bigger. H.More offer interesting solutions. We are stronger every day.
Fourth reason for optimism: maturity. The market is slowly leaving its youth. There are still a lot of crazy and irresponsible people, but we already have more people in this room. The exchange is regulated. And the market creates more trust than before. The overall picture of Bitcoin has improved significantly. And big capitals and governments are looking at Bitcoin with better eyes. Large funds, large technology companies, large banks and governments intend to enter this market sooner or later. We’ll grow up.
Read on: Bitcoin’s ROI since 2015 outperforms the five best indices by 70 times
Now important note. Bitcoin is not an iPhone that loses value over time and becomes obsolete with the introduction of better technologies. A Bitcoin is essentially a social contract. A covenant based on faith and trust. He lives like Peter Pan Tinker Bell because people believe in him. It is not a seasonal cloth. It is the Roman Coliseum. Will it be demolished next year to build a modern stadium? Every day the likelihood that it will never go away increases. It is the identity of an expanding tribe. It is the legacy of a society. It is kept alive by the faith and strength of the group. It’s like a language or a religion, it’s not a seasonal item.
How do we know that the Spanish language will have a future? Well, the demographic growth of the Spanish-speaking population and the growing economy of the Hispanic countries. Just like the number of people who have learned the language as a second language. The same can be argued with Bitcoin. Bitcoin is an emerging market. It grows in number, money and age. The price reflects it. Yes, it’s volatility. Yes, we are far from our all-time high. But could the average price outperform the SP 500 in the coming years? Naturally. There is reason for optimism here.