This post is inspired by a friend of mine who’s very big into cryptocurrencies. Most opinions will be his, those that are not will be labeled as such.
Three days ago, the price of Bitcoin plummeted from about 4000 to 3000. For those who are unfamiliar with Bitcoin, for the sake of the discussion, just think of it as a form of currency with its own monetary value.
From a price of $4300, Bitcoin dropped to about $3K. It’s currently sitting at $4K.
Why did the price drop so much? China made an announcement effectively banning digital currency trading. Then the fear sets in. People are now afraid of the legitimacy of Bitcoin being compromised – a mindset that leads to many sell orders. Here is a paraphrased quote from my (experienced) friend. You may agree/disagree with the sentiment.
Nobody can predict whether shit’s going to go up or down. What I do is have a very diverse (Crypto) portfolio that I constantly invest small amounts into. So I bought a bit when it was 4.3K, I bought a bit when it was 4.0K, I bought alot when it was 3.0K (because let’s be honest, it’ll go back up). If you don’t need to pull out, don’t do it. I made alot of money last week because people got scared and wanted to pull out.
That made me think about the recession almost a decade ago. A company I used to work for saw it’s stock go down to about 30$ during this recession, but now the stock is over 150. Those that kept investing and stood their ground stood to gain the most.
Many of our family friends who bought houses when they were on the low saw very large gains at this point in time as well. When the masses are scared, it seems as if they start to sell, as they believe investments will go to zero. Perhaps there is much money to be made on the capitalization of fear.
I have no doubt BTC will bounce back stronger than before – if you own any, DON’T SELL. If we ever go into another recession, watch what people do with their ETFs.