At the time of this writing, Bitcoin has taken the #5 trending spot on Twitter and is edging $33,000 in price. Everyone and their crazy uncle are talking about it, and how they have made money off of it. Why do I bring up what is trending? This shouldn’t be the foundation for discussing an asset, and the adoption thereof… Well, everyone is. The rideshare drivers are talking about how great of an investment it is, the bartenders and even friends at the holiday parties. It is the hype; it is the talk and is something that people are buying into because they want to join the party and get some of the action.
This all feels too familiar. I want the rise to $50,000, $100,000, or better yet $1M to be straight and swift with no major pullbacks, but this isn’t likely. As a HODLER (Hold on Dear Life), Investor and strong advocate for the decentralization Bitcoin is bringing to finance, when large amounts of retail investors, hedge funds, and other institutions are purchasing for the wrong reasons this is when our ears should perk.
People are beyond calling the people who own Bitcoin crazy libertarians who know there is something better than a currency consistently being debased and manipulated. If you go to Google finance, for the longest time Bitcoin was listed forefront as the currency (now moved to its tab).
I remember all the euphoria in the fall of 2017 with Bitcoin’s meteoric rise to ~$20,000. At this time, it was purely hype-driven. Specifically, you can see Google searches at this time, and it was for everyday people trying to get in on the action.
As it can be seen the hype and hysteria are starting to take off again. Although, in my opinion now it is different. With all this crazy stimulus and money printing, we are seeing so much worthless confetti (USD) entering into the market. With this happening, our purchasing power is decreasing while concurrently our savings are going away. Bitcoin solves this, because, in its nature, it is a deflationary asset, meaning every year less and less are being mined. Everyone who is reading this article should have at least a few Satoshi’s (1 Satoshi = 100 millionths of a bitcoin). What do you have to lose, your precious infinite confetti? 🙂 Jokes aside, we want something that finite and the USD is just the opposite.
Why do I say this?
There are many reasons, but as humans, we should be exploring things that better humanity and adopt them into our lives. By purchasing, you are essentially supporting a cause that leads to the preservation and storage of wealth. This should be something we all aim for, as it is in our best interests to move to one globally decentralized currency, where not a few rich and powerful can get ahead, rather anybody can participate without worrying about unsound money, bad politics, and being controlled.
A lot of this is complicated to understand, what should I know if I want to dabble in it or just get started?
Bitcoin is a lot of fun, and cryptocurrencies can be addicting to watch. Seeing yourself making 30-50% daily returns is almost unheard of in the stock market. Just as we see these massive rises, we also will face 30-50% pullbacks, and they can be devastating. When people get in for the wrong reason, they sell because they are not making a return and end up taking a massive loss (Just as we see all the time in the stock market). These spectacular gains and nasty crashes can be full of euphoria and sadness, but in the end, know this. You should not day trade unless you are experienced, and it is only a loss if you sell. Invest what you can afford to lose. Do not trade on leverage or take out a second mortgage on your home to buy Bitcoin. Most importantly, buy-in consistently over a period to minimize significant price variances.
What is next? Where are we going from here?
MustStopMurad posted a fantastic graphic that we should all look at for some of the necessary steps for a large scale currency adoption. I know many people state, “Oh well it is already too expensive, I didn’t get in at $10,000, so I am not going to be able to get in at all.” This limited thinking couldn’t be further from the truth and in fact, we are still in the early stages of Bitcoin’s adoption.
To reiterate what I have said in former videos, and blogs/social media posts in the past we are in uncharted waters. In the past couple of months, we have had tremendous tailwinds helping drive up the price of Bitcoin and its altcoin counterparts, and it is uncertain how long these tailwinds will last. To name a few, from big companies (PayPal, MicroStrategy, Square, Grayscale, and more) putting this on their balance sheets, Biden’s new Treasury pick, the massive money printing from the Federal Reserve, the pandemic driving people to move towards digital currencies, and the erosion of trust in monetary policy long term this asset will perform spectacularly. There will be setbacks, and likely within the next couple of weeks/months, but as we look at the long term it will keep breaking all-time records eventually to $500K per coin. Am I too bold with this statement? Calculated risk and fortune favors the bold.
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.