Every once in a while a friend, family member, or acquaintance asks me if they should buy bitcoin.
And the answer, 99% of the time is: “oh sure if you don’t mind it going down after you bought it.”
Because, in my six years of owning bitcoin, nobody buys into any kind of crypto for the first time and makes money.
All the newbies buy in AFTER a price spike. Including myself.
I bought bitcoin in 2013 AFTER it broke the $100 barrier. Six months before I bought it, it was trading at $13.
And if there is one thing I have learned trading crypto in the last decade, there is ALWAYS a pullback after a price spike.
From 2014 to first quarter 2015, bitcoin declined 75%. And I lost interest in crypto for more than two years after that.
In the world of crypto, smart money loves to chase scared money right out of the stadium.
Newbies who invested in crypto in the hope of making a quick buck always get screwed. ALWAYS.
I know this leads to a conundrum. How can I ever recommend buying bitcoin to anybody asking when it’s pretty much a guarantee that it’s a lousy time to buy it?
I first invested in crypto six years ago. I have been “seriously” invested in crypto for close to three years. I love crypto. I think it’s the greatest thing ever.
But I do ever tell people “boy, today, is a good time to buy some bitcoin?”
Sure, sometimes I do. But usually, that’s the same month that bitcoin is tanking. Or doing nothing.
And nobody cares. Like right now:
Google Trends Chart – phrase “buy bitcoin”
Do I think bitcoin is going to go up? Of course I do. I think every year it’s going to go up. Of course some years I am wrong.
Do I think bitcoin will go up in 2020? It already has (up 18%).
In 2019, bitcoin doubled in value, from roughly $3500 to little more than $7000.
But just when it started to become popular in the spring of 2019, it soared to close to $14,000 before dropping month after month to close 50% down from the yearly high.
When new money comes in the game, that’s when it time to empty some wallets and break some hearts.
So what to say when somebody asks you if it’s a good time to buy bitcoin?
I say buy some but treat it as a learning experience. Buy a little, don’t buy so much you are checking the price every day.
If they want to buy to make a quick buck, tell them buying bitcoin is a great way to lose money in the short run.
But I do tell them I have been invested in bitcoin for years and if they are willing to stay in it for the long run, then they won’t regret it.
One more thing: Altcoins. I never tell anybody to buy altcoins. Ever. I do hold some altcoins. I think some altcoins hold great promise at some uncertain point in the future.
But nobody new to crypto ever buys altcoins because they believe in the tech. They are just out to make a quick buck.
They are gamblers. Gamblers always get burned. And gamblers with empty wallets tend to look for scapegoats. Don’t let it be you.