If you’re like me, and you’re probably not, then you’re watching the price of bitcoin fluctuate … wildly. Lots of people have gotten into the crypto game in recent years, and when they see the huge price swings that bitcoin regularly goes through, they FREAK OUT. And so they make impulsive decisions at, like, a $400 drop in a cupla days, pulling out all their cash.
Well, I’m here to say, big deal. Happens all the time. Don’t freak out.
This isn’t the stock market, people. So don’t project your S&P angst on the crypto-asset market. They’re apples and oranges, cats and dogs, humans and chimpanzees, Oscars and AVNs … NOT EQUIVALENTS.
Huge price swings are normal in the crypto market, a result of fixed(ish)-supply assets and shifting demand. I won’t get into the details, but many cryptocurrencies — and especially bitcoin —have built-in mechanisms that absolutely limit supply … like, there will only ever be 21 million bitcoin ever mined into the supply. No less. No more. That’s it. There will only ever be 21 million — period. Get it? (It’s the opposite of the Fed, by the way, which prints money whenever the heck it wants and, in turn, gradually impoverishes you with inflation.)
Again, it’s technical, but just remember that bitcoin’s supply is so fixed that almost any change in demand for it will result in what comes across as exaggerated price swings. CATCH YOUR BREATH. MEDITATE. GET A FACIAL.
This is normal.
So, what does this mean? Well, don’t throw all your money in bitcoin. Not anywhere close to your life savings, please. But maybe a small percentage of your portfolio, like three percent or something (or more, if you’re willing to incur more risk/uncertainty). Talk to a crypto-savvy investment advisor. I’m not one, by the way … just a dude who reads like a Rain Man who’s incapable of memorizing a phone book.
Long term, bitcoin has been one of the best, if not the best, performing asset in history. That’s not exaggeration. It’ll dip, swing, swoon and freak you the fu#* out, but you should respond to this like one of those Buckingham Palace guards with the tubular hats who can’t move even when he gets kicked in the naughty bits by ornery boys or flashed by creepy men.
Just get a drink. Kick back. And see the fluctuation for what it is — bitcoin, an asset that is owned by no one, controlled by no one one, truly free money, is working. How amazing.
As for boning up on your bitcoin knowledge, well …
… don’t read this crypto advice. It’s stupid, and it’s from me, from a long time ago, when I understood little of how bitcoin works. For shame. I’m a monster.
No, instead, read these for more background info on how bitcoin works, why it was created, etc: