A Reflection: 1-year Mark Investing in Bitcoin
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December 8th, 2021

On Dec 6, 2020, I made my first Bitcoin purchase at the price of $19,257 for $3k. At that time $3k was a huge chunk of my savings, not to mention I betrayed all 3 investing rules from Textbook at once: “Don’t FOMO”, “DO DCA”, and “Don’t buy when the price already went up a lot”. Yet I reassured myself in the diary: “Under the circumstance that I know for sure the intrinsic value is way higher than the current price, I’m not afraid of dropping.” It is so rare to find an asset that is so volatile and yet so reassuring because you know the price will at least double in the long run, so I had to strike hard.

One week later, Bitcoin’s price dropped to $17K, I went on to social media and saw a technical analysis influencer concluded we are going downwards to $10K. I would be lying if the idea of selling didn’t come to my mind. Fortunately, my starting balance was so small that even a severe dip in Bitcoin’s price wouldn’t make a huge difference. The next day Bitcoin went above $20K mark and never came back.

Since then my principle of investing in Bitcoin is simple: whenever the price drops more than 15%, I buy. The Fear and Greed Index is a good buying indicator when it’s “Extreme Fear”. My net worth quadrupled in one year. What’s more rewarding than the financial gain is what’s inside the rabbit hole.

Starting with Bitcoin, I inevitably looked into Ethereum. With some road bumps in the beginning, I quickly realized Ethereum is not a competitor of Bitcoin. Quite the opposite, it will only thrive if Bitcoin thrives and it’s a win-win situation for the whole industry. I bought my first ETH on Dec 23 at $578. Now I’m officially on my way down to the rabbit hole. I played with AAVE and Quickswap, learned how to use cold wallet and Metamask, did some yield farming on Curve and DFYN, still kept some of my coin on Celsius and BlockFi. There are a couple of lessons I learned along this journey:

  1. Every purchase matters. Do your own research and only make no-regret buy. What I mean by that is even if the price dips half in value and might eventually go to zero, you are not going to sell or blame yourself for that purchase. In addition, a FOMO purchase at the wrong price is going to bring your whole cost basis up and lead to impulse sell in the future, so be responsible for each buy. How do you know you are responsible? Clearly articulate your reason for your family members why the asset has an underlying value and why this is the right place to buy. Then you would know whether you truly know what you are doing or just got euphoria because some influencers said so. I educated my mom to a point she blamed me later why I didn’t buy an ETH for her when it’s < $1k, lol.
  2. It is easier to earn money outside of the crypto world than within. Field farming and staking all sound wonderful with lucrative rates, but the risk is hard to ignore plus the high gas fee on Ethereum, and if you are like me with a humble amount to begin with, don’t even bother, just earn money in your day job and buy coins. Although I have to admit playing with those Dapps helped me understand the ecosystem and why ETH matters. Just make sure you are here for the experience, not the crazy yield otherwise you will get disappointed. I still buy NFT for fun but not as a serious investment.
  3. Investing is the process of getting to know the asset and getting to know yourself. Keeping a diary of every transaction you made, the reason for buying or selling, and how the asset performs afterward will help you reflect and grow. I still remember how terrified I was when BTC dropped to $30K and I lost half of my unrealized gain. Now seeing a 20% dip in one day doesn’t even lift my eyebrow, that’s just the nature of Bitcoin. And because I know I’m still human and humans are emotional animals, setting limited order works well for me, plus the dip often happens so fast that I don’t want to miss it. Over time I developed a system of principles and stick to it.
  4. Get a life. Before investing in Bitcoin, I’m very obsessed with the idea of FIRE(Financial Independence and Retire Early). After all, you only live once and who would want to work forever? But not anymore. I can foresee in the next 10 years, I’m not going to exit the Crypto market, which means two things:
    1. Financial Freedom is not a concern anymore because I will eventually get there.
    2. I will have to endure the extreme volatility for a while. With so many opportunities in this space 24x7, It's easy to get addicted to the chart without realizing time goes by. Those are the moments I feel fortunate to have a job, it not only provides me a stable paycheck to DCA, but also forces me to take a break from crypto.
  5. Be patient. Life is a long game. Because Bitcoin is such a rare gem and the price already went up quite a bit, many people tend to trade in and out frequently. Aside from taking the risk of having less and less coin, what’s more disturbing is the emotional turbulence. Many people get upset at Bitcoin and at themselves when we are in red. Ask yourself do you expect your salary to double in 3 months? Do you have any other assets that can generate more risk/reward ratio than Bitcoin? If not, why are you expecting Bitcoin to do better than what it is doing now? When in doubt, look at the history, buy the dip, transfer your coin to a cold wallet and take a break.

Stay rational, stay curious, I will see you in the next post. Let me know in the comment what’s your experience investing in Bitcoin, and if you have a different point of view.

Featured Image by Moose Photos from Pexels

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