Bitcoin Reaches $19,000 — Yet We’re Asking All the Wrong Questions
By: Jon Peters
Tags: Bitcoin, Money, Finance, Investment, Economics

Photo by Micheile Henderson on Unsplash

Bitcoin Reaches $19,000 — Yet We’re Asking All the Wrong Questions

A lesson in greed from someone who lost it all

It’s had a meteoric rise (and fall) since its inception in 2009. But whether you read about it in a celebrity tweet, or when you heard the story of the guy who spent 10,000 of them (currently worth $190 million) on two Papa John’s pizzas, most people have at heard of Bitcoin.

Don’t worry, this article isn’t investment advice, and I’m not going to bore you with detail explaining the technology behind Bitcoin. After all, it’s unlikely you would have clicked on this article if you didn’t at least have a basic understanding of how it works. But for anyone who is completely new to the world of Bitcoin, the video below provides a helpful overview of exactly what it is, how it works, and why it’s so special.

Created by The Guardian

For the first eight years of its life, Bitcoin remained relatively unknown. Easily collected using the most basic of computers, early adopters gathered thousands of coins and dreamed of the day their precious coins would be worth a substantial amount of money. Bitcoin spent much of the early 2010s trading between $200 — $600.

Enter ‘The 2017 Boom’

On January 1st, 2017, a single Bitcoin would have set you back $960. By December 16th 2017, you could have sold the same Bitcoin for just shy of $20,000. How’s that for ROI?

Early adopters and long-term Bitcoin believers became millionaires, Bitcoin began receiving attention from the mainstream media, and the question on everybody’s lips was “Just how high can it go?”

It was a wonderful time for cryptocurrency.

At the time, my wife and I were trying to save for a deposit on a house, and I put a few thousand dollars into Bitcoin and other cryptocurrencies in June 2017.

For six months I watched with glee as my portfolio grew and grew until it peaked at around $50,000. My wife begged me to sell, but I refused. I was adamant this was only the beginning, that selling would be a catastrophic mistake, and that the price would continue to rise.

It didn’t.

By the middle of February 2018, the price of Bitcoin had more than halved, and by the end of 2018, the price had returned to around $3,000.

I sold my Bitcoin at around the same price I had I originally paid for it.

Fast Forward to 2020

Three years on, Bitcoin is rapidly approaching its all-time high and is once again beginning to attract mainstream attention. This surge in price has undoubtedly been helped by the news that PayPal and Square have been buying Bitcoin — with the plan to allow users to purchase Bitcoin through their respective services.

The positivity around the most recent rally can be intoxicating, and it won’t be long before the FOMO (fear of missing out) sets in. Each day, more and more people are flocking to the internet to ask the following questions:

“Am I too late to get in?”

“Will it reach $100,000?”

“Should I invest my life savings into Bitcoin?”

But these are the wrong questions to ask because nobody knows the answers.

Some people will tell you that Bitcoin’s price is headed for the moon, that you’re never too late, and that one day it will reach $250,000 per coin. Others will tell you it’s worthless.

The only question you should be asking is, “At what point should I sell?”

Without an exit strategy, you’re destined to make the same mistake I did. You could multiply your investment by ten times or one hundred times, but if you don’t have an exit strategy, it doesn’t matter one bit. The spreadsheet you made that shows how much your portfolio is worth doesn’t mean anything. You can’t sell it. It’s nothing but numbers on a page.

Until you sell your investments, you haven’t made anything.

A Final Word

Bitcoin has made a lot of people a lot of money over the years, and I believe it will continue to do so. Averaging around a 240% annual return, $100 worth of Bitcoin bought in 2010 would be worth around $35 million today.

But I don’t know what the price will be tomorrow, next week, or ten years from now, and anyone who does claim to know is a liar.

I’m not telling you to invest in Bitcoin.

But I will tell you that if you do decide to buy some, don’t be suckered into the hype. Don’t allow yourself to become blinded by the rocketship emojis, extravagant price targets, the claims that Bitcoin will one day have the same market cap as gold, or that it will replace the dollar.

Have an exit strategy, and stick to it. And remember — until you sell, you haven’t made anything.