The Reality of Bitcoin Investing
I heard this gem “98% of Bitcoin buyers have not become millionaires despite buying the best asset of the last decade and even the best asset ever”. I am not surprised at all as the problem has never been about the investment or the portfolio. The problem lies somewhere else – in our behaviours.
If one had invested $100 in bitcoin in October 2009, the first time an exchange rate was established for it, one would now have $ 300 million. However, the prices did not go up in a linear fashion and there have been extreme corrections such as drops of 20-25% in one day. There was a massive drop of 86% between November 2013 and January 2015. A $1000 dollar investment and you would be sitting on a cool $ 3billion and with a $ 10000 investment at $ 30 billion dollars as the 38th richest person in the world along with Laurene Powell Jobs (wife of Steve Jobs). While there are many braggers, I do not yet see anyone on the billionaires list by simply buying Bitcoin (though never is never) when the early adopters could have. How many actually are sitting?
How many investors can stay invested when the prices go up by 2x, 3x ,10x and 100x (I won’t even mention the multiples of Bitcoin because that is not my point)?
How many investors do you think can tolerate huge drops as given above and stay put?
People have used Bitcoin to buy stuff. People have sold when it has gone up in value. People have sold when it is dropped in value. Let us say your $100 went all the way up to $1 million. What are the odds that you will take $ 500k out and stay invested? What are the odds that you will take your entire money out? Think about the emotional rollercoaster you would have gone through. It is not easy to ride a roller coaster like this alone. Thus, investing is never about the investment; it is always about the investor.
I am not advocating Bitcoin as an investment here (I am making a point on Investor Behaviour). The best investment in History could not make millionaires as people thought they would. Thus, instead of focusing on the next best investment or even Bitcoin, first focus on financial literacy, understand investor behaviour, understand your own behaviour, and then focus on making yourself a wise investor. Finally, the best decision you can make is to get a Real Financial Professional who will not let anyone come between you and your goals; not even YOU.
P.S. I would recommend this Nano “The Art of Investor Construction”.