I played a lot of poker when I was young.
Of all the sayings people have said about poker, one always sticks with me: it’s a game of boredom punctuated by moments of terror and ecstasy.
Sounds a lot like crypto.
Most people only notice the terror and ecstasy, not the long stretches of boredom that come between them. Those times the market goes sideways for weeks or months at a time. This summer, for example.
Now that bitcoin’s price is flirting with new all-time highs, it’s a safe bet that we’re no longer in the “boredom” phase.
What comes next—ecstasy or terror?
Everything changes when the price goes up
In January, bitcoin’s price hit $30,000. You could barely fight the urge to buy.
In May, bitcoin’s price hit $30,000. You could barely force yourself to buy.
In April, bitcoin’s price hit $65,000. The market was running out of gas but you probably thought it would go up forever.
Earlier this month, bitcoin’s price hit $65,000. The tank is as full as it’s ever been but you’re still worried about the next drop.
Same prices, different feelings. What changed?
In January and April, the price had gone up long enough for you to think it would keep going up.
Outside of the March 2020 financial panic, bitcoin’s price rose for almost all of last year. By the time you came into the market, it felt pretty safe.
Since bottoming out at $28,500 on June 22, 2021, bitcoin’s price has gone up for more than four months.
Do you feel safe yet? If not, when will you feel safe again? How much higher does the price need to go? Perhaps another all-time high will make you feel better? If not, what will?
If you’re already happy, can you bottle up all those positive feelings and save them for the next time bitcoin’s price drops 50% or more? When the traders tell you “don’t catch a falling knife,” China bans everything again, social media algorithms plaster your feeds with bearish content, and the price seems like it keeps going down forever?
The parabola nobody’s talking about
Since December 2018, when this bull market started, bitcoin has followed a parabolic arc upward. You can see it on this price chart:
A series of higher lows for almost three years, each one higher at an accelerating pace, with a ton of volatility from one low to the next.
When you connect the lows and project that path forward, you don’t get a lot of room for many more “higher lows” along that path. While the coming weeks could bring a wide range of outcomes, one of two things will have to happen over the coming months:
- Price accelerates to a blow-off top. This will bring ecstasy, then terror. Bitcoin’s price will go up, possibly for months. We’ll get altseason. The market will overheat, lots of people will sell, buyers will run out of money, and crypto will collapse into a bear market as it has done four times before.
- Price drops or goes sideways to break the parabola. This will bring terror, then ecstasy. Bitcoin’s price will go down or sideways, possibly for months. Altcoins will bleed. The market will cool off, lots of people will buy, sellers will run out of crypto, and the market will consolidate for its next leg up as it has done seven times before.
The only question is which comes first—the terror or the ecstasy.
Now might be a good time to prepare for both outcomes. Whether up or down, when this market moves, it moves fast and violently. Don’t wait until you’re in the throes of chaos or excitement when your mind is consumed with fear or greed. Plan now so you won’t have to later.
Lots of ways to win
This market gives you lots of opportunities to win.
Dollar-cost averaging is good. Trading is good, too, if you know what you’re doing. Some do well aping into whatever they saw on Reddit this morning.
What am I doing?
I’m following my plan for bitcoin’s bull market.
It’s not a trading plan, you don’t take profits, and you only sell at the peak of the market, which may never come. Along the way, you only look for prime buying opportunities and save your money for those times.
Backtested, it beats dollar-cost averaging in every scenario, with the same amount of work and lower total investment. Three lines on a chart tell you when to buy, two signals tell you when to sell.
Until the market forces you to sell or until you have another chance to buy, you get to enjoy your life and spend time doing things you love. Let the market take care of everything else.
That way, you can’t lose. When the market goes up, the value of your investment goes up, too. When the market goes down, you have fresh cash to take advantage of your good fortune.
When you can sit on your ass and watch your investments go up 300% or more from doing nothing, you don’t need to stress about the coming parabolic boom. This market always comes back to you.
And then you only get the ecstasy of those massive moves up, without the terror of the crashes that inevitably follow.
Whatever you decide, do it soon. This market won’t wait for you to make up your mind.
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio.
Originally published in Cryptowriter.