Entrepreneur, investor, and founder & CEO @VirtuseExchange
Crashes are to the markets what waves are to the ocean.
Bitcoin crashes hurt.
But they don’t have to.
While an exciting and debatable media topic, they don’t need to be a source of constant anxiety.
Here are three reasons why.
Guess how many times Bitcoin crashed in its history?
1? 4? 8?
Some of them were quite horrific. For example, in 2013, Bitcoin lost 87 percent of its value in three days.
Don’t get me wrong; volatility is frightening, and it usually scares away many people. But the smart money is unaffected by it.
Smart money knows that you need volatility to get price appreciation.
And smart money also knows that innovation almost always leads to volatility. And Bitcoin, as one of the best fintech innovations of the century, thrives on it.
The behavior of Bitcoin during its 12-year history emphasizes one point:
Crashes never last.
Sometimes the market recovers with lightning speed. Other times, the reversal of a crash takes years.
Take the crash of 2017, for example. It took more than three years for Bitcoin to return to its peak levels.
Bitcoin always recovers.
But, make no mistake. Crashes are part of the game, and they’re unpredictable. The only reliable way to avoid being affected by them is to stay out of the Bitcoin altogether.
Yet, there’s a better way to deal with crashes.
Invest long-term and ignore the short-term price movements.
As legendary investor Warren Buffett said, “If you aren’t thinking about owning an investment for 10 years, don’t even think about owning it for 10 minutes.”
Crashes in Bitcoin price are nothing exceptional. And the smart money drools for their occurrence.
So, let the media and politicians argue for or against them. Your job is to keep your hands steady and accumulate more Bitcoin after each dip.
It’s evident from recent years that buying on dips has been an easy way to boost your profits.
Large dips lead to high returns and vise versa.
This is what’s important to understand.
Crashes are to the markets what the waves are to the ocean.
And just like the ocean, the market is a dangerous and even deadly place for those that are unprepared.
But for someone who knows how to ride the waves, the bigger the wave, the better.
The point of this comparison is to show Bitcoin crashes are natural phenomena.
You need to be prepared to ride them.
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