Bitcoin is skyrocketing. Here’s why it’s not the time to buy.
Bitcoin just hit a new all-time high, and a lot of people are making money. Right now and for the foreseeable future, you’re going to have a ton of people urging you to buy Bitcoin and other cryptocurrencies that you don’t understand. Before you potentially lose a lot of money, I’m going to explain why you probably shouldn’t buy Bitcoin or crypto.
And don’t worry, I’ll also give you my honest opinion about crypto as well. Because it’s probably not what you think.
Bitcoin’s new heights
Yes, it’s true the Bitcoin is reaching new all-time highs, and at the time of writing this, it’s currently at $66,136 per coin.
Over the last 6 months, it’s up over 150%, and that’s nothing to sneeze at.
This comes after two years of the market being absolutely terrible. The previous all-time high was in November of 2021 when it reached about $64,000. Since then, it’s collapsed and reached a low of $16,837. If you bought at the bottom, your investment would be up 300%.
If you’re reading this, you clearly didn’t buy when it was at the bottom.
Whenever crypto explodes, you hear from friends, family members, and strangers online that you need to buy, and it goes completely against what we know is rational thinking (I’ll dive into this more a bit later).
Understanding crypto
Not only will people tell you to buy Bitcoin, but they’re also going to tell you to buy other cryptocurrencies. If you don’t know the difference between these two things, you definitely shouldn’t buy any.
Before I ever bought crypto, the only thing I knew about crypto was that people would say, “Don’t buy any unless you’re OK with losing it all.” To this day, I think that’s the best crypto advice you will ever get. If you have some throwaway money and want to experiment, go for it. But if you’re doing it to get rich, don’t.
I know you’ve probably heard some stories of people like the Dogecoin millionaire or people who bought crypto in 2017 and are now millionaires. Just know that there are more people who have lost everything than people who made it rich.
I personally had about $5,000 I could invest and was totally fine losing it all, but before I did, I decided to educate myself.
I read five of the best books on cryptocurrencies and the blockchain, and I also watched a hundred + hours of YouTube videos and consumed a ton of podcasts to better understand crypto before investing. I also got involved in multiple crypto communities and had a lot of conversations with a lot of crypto traders.
I fancy myself a pretty smart guy, and I’ve also been a tech nerd my entire life. After all of that self-education, I still barely understand WTF crypto is and how it works. My understanding is better than most, but it’s still not great.
I ended up investing, but just know that if you invest, you’re most likely investing in something you don’t understand. One of the other primary rules of investing is “Only invest in what you know”.
The psychology of investing
You’re getting all sorts of investing wisdom nuggets in this piece, and I’m about to drop another one on you. And you don’t even need to be a genius investor to understand this one. It’s like the golden rule of investing:
BUY LOW. SELL HIGH.
This is why buying crypto right now may be the silliest thing you can do. Take a step back and ask yourself how this could ever possibly make sense.
Relate it to any other purchase you make. Would you ever buy a car at it’s highest price when you know you could get it on sale? How about a TV? Or clothes? Or literally anything else.
The problem is that we all get highly irrational when it comes to investing. When crypto or stocks reach they’re all-time high, we get flooded with FOMO and think about how if we don’t invest now, we’re going to miss out on all of the future gains.
And when crypto or stocks reach their lows, we’re like “Thank God I dodged that bullet!”
I’m not going to dive into a ton of investment strategies here, but ideally, you’re going to keep an eye on things you think are a good investment and buy when they’re at their lowest. An even better strategy is something called “dollar cost averaging”, which means investing over time so you’re buying during lows as well as highs and taking your fallible brain out of the equation.
The other reason we’re irrational when it comes to investing is that we can’t tell the future, and we don’t know how high these things will go. Will Bitcoin reach $100,000? Possibly, but it could also tank again tomorrow.
The last crypto bull run went from the fall of 2020 to the fall of 2021 when it went up about 500% (with a massive drop in between there).
Crypto scams and the lack of regulation
The other major issues with crypto are that there are so many scams and a lack of regulation. While people will tell you the lack of regulation is what makes crypto a good thing, that’s highly debatable.
I’m no genius, but I had a good feeling crypto was going to bounce back because people have short memories.
After the last crypto collapse, the amount of scams that came to light were mind-blowing. People were doing the shadiest crypto scams and there has been very little accountability. The biggest problem with crypto is that the crypto economy has followed in the footsteps of the big banks, which it was never supposed to do.
Crypto trading platforms over-leveraged themselves, and once the market collapsed, there was nowhere to hide.
I was personally affected by this, and it was an extremely stressful experience. I had thousands of dollars of crypto tied up with a platform called Voyager, and they went bankrupt. When this happened, they locked all trading, and I couldn’t move my crypto.
While they went through the bankruptcy, it was a nightmare experience. There’d be news that another crypto platform was going to buy them out, and we’d maybe get our money back. Then, the buyer would also get caught doing shady stuff and go out of business, and this happened 2 or 3 times.
Finally the bankruptcy went through, and we all got a fraction of the crypto back that we invested. It was better than nothing, but losing money just because the business was corrupt isn’t fun.
Then, there’s Sam Bankman Fried, the crypto-billionaire con artist, all the NFT scams, YouTubers doing pump and dumps. And don’t forget Elon Musk acting like he cared about anyone investing in Dogecoin.
Some people have been held responsible for all of the shady things they did, but most of the people who lost their money are never getting it back.
My honest thoughts on crypto
I don’t trust big banks. I’m also not a major fan of capitalism as a whole. After learning more about crypto, I actually had hope that it could be an alternative to big banks. Unfortunately, at the end of the day, I finally understood that greed is part of human nature. As much as crypto is “decentralized”, there will always be people in charge of the systems we use.
There’s a bit more crypto nuance to that, but for the most part, you’re probably going to use a mainstream trading platform to trade crypto, and these are run by people.
There are a lot of crypto projects that I think can do some good, but the market is just too flooded with scams and people trying to get rich. I had faith in a few cryptos, but after the market crash and dealing with the Voyager bankruptcy, I stopped caring.
And with that said, I’m going to give you one last investment wisdom nugget: You only lose money if you sell.
If you’re an investor like me and not a trader, you’re in no rush. You don’t care how long your money sits there.
I know a ton of people who sold their crypto after the collapse and lost a lot of money. Not me. After looking at the historical trends of crypto and through my understanding of human nature, I figured it’d eventually bounce back.
I also knew this could take 3-4 years or more. I’m actually surprised it bounced back already.
But, I also realized that my anxiety can’t handle the crypto markets. It’s just too much, and I value my mental health.
Not only did I make all of my money back with crypto, but I’ve actually made a profit and am going to sell all of it. I’m going to take that money, pay down some credit cards, and invest the rest into my Roth IRA and some index funds.
And now that we’re coming to the end, if you still plan on buying crypto, just remember, only invest what you’re 100% ok with losing. I’m a big believer in learning from experience but don’t become one of those people on Reddit who tells your sob story about how you invested your life savings and lost it all.
There are people much smarter and richer than us pulling the strings. It’s only a matter of time until people with millions or even billions of dollars start selling off their crypto and we see another crash. And if you believe crypto isn’t going anywhere, I highly recommend you wait until the next crash to start buying.
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