The beginning of May 2022 finally looks like what we had experienced a year earlier in May 2021. At that time, China's ban on Bitcoin mining and Elon Musk's criticism of the ecological impact of Bitcoin mining had left the Bitcoin market in a state of doubt. A sharp drop in the price of Bitcoin followed, with the price remaining just above $30K until the end of July 2021.
At the time of writing, the price of Bitcoin is at $31.7K, or about 55% below the price of Bitcoin at its November 2021 ATH. This represents a considerable drop, and it is easy to see why extreme fear is prevalent in the market:
This fear is fanned by the macroeconomic context. High inflation persists, as also the war in Ukraine whose consequences will continue to weaken economies. To this, we must add the end of the game whistled by the Fed in recent weeks. The key rates are going back up, even if we can feel that the central banks are hoping that this inflation will eventually be resolved by itself.
In these moments of fear, you have two options after all:
Let your emotions rule you. In that case, fear will take over you, and God only knows what decisions you will end up making. The only thing I know for sure is that you will later regret the decisions you made based solely on your emotions.
Take a step back to continue to make decisions based on your sense of logical reasoning. Whatever decisions you make, I can guarantee that you will never have regrets later if you made decisions on your own based on your logical thinking.
So in the current situation in the Bitcoin market, controlling your emotions is key. Knowing how to take a step back is not easy for many of the investors who joined this market in 2021. Why? Simply because they joined this market at the top of the wave. They joined the market when everything seemed easy.
In October or November 2021, when the price of Bitcoin was soaring to a new ATH, I told all my readers over and over again that having a long-term view with Bitcoin was the key because the price of Bitcoin never goes up in a straight line. Getting a message when the price of Bitcoin looked like it was going to soar to $100K was easy.
Many people even accused me of being too Bearish... If you read my articles, this must make you laugh, because I have been extremely Bullish on Bitcoin for many years. However, I remain realistic, I know that the impossible can happen in this market.
The impossible is the beginning of a war on the borders of Europe, which again shakes all the certainties that some people seemed to have after a COVID-19 crisis two years ago that almost seemed to be forgotten already. Thus, investors who constantly talk about conviction and the long-term view must be able to apply their precepts now.
It's when everything is red and the market is dropping more than 50% that you need to remember this type of message that was easier to keep in mind with Bitcoin above $50K.
As I often say, you should not expect anything special in the short term, but be prepared for anything. Because anything can happen. As such, I like this lesson stated by American billionaire investor Seth Klarman in 2010 after the 2008 financial crisis:
“You must always be prepared for the unexpected, including sudden, sharp downward swings in markets and the economy. Whatever adverse scenario you can contemplate, reality can be far worse.”
The price of Bitcoin is currently just over $30K, and everyone is wondering if the Big One has begun:
I am wondering, and preparing for the Big One. How am I preparing for the Big One? By continuing to accumulate BTC at this price level which I find extremely attractive. I have bought Bitcoin at every possible price level in the last few years. From $3K to $60K. De facto, a Bitcoin at $31K is a great opportunity in my eyes.
Because the fundamentals of Bitcoin have not changed despite this drop in price which is just noise. The real signal is the Bitcoin revolution. And I still see a bright future for Bitcoin. But to take advantage of it, you have to be able to properly redefine your time horizon by taking a long-term view. It's in the tough times that it's really important to do that. Your strength of character is being tested right now, and it's up to you to react in the right way knowing that Bitcoin could still go below $30K. You need to prepare yourself mentally for this now.
In times of uncertainty like these, the media loves to scare the public. But it's precisely at these times that you need to step back and make your own choices without letting the media's narratives push you to act differently from your beliefs.
Last week, when the market saw red, CNBC ran its “markets in turmoil” special. Charlie Biello, who always publishes excellent analysis, took the opportunity to tweet the following table:
This chart clearly shows that the time when CNBC runs its “markets in turmoil” special seems to be the only indicator with a perfect track record.
Buying a strong asset that can be held for the long term like Bitcoin seems to me to be the best option. Even more so today when uncertainty remains and strains the emotions of all investors. The volatility in the market is not ready to stop. At the beginning of the year 2022, I announced that it would be a dominant one in the markets this year:
So you have to accept it to take advantage of it. If you can do this, you will be able to hold strong assets beyond a single market cycle, and thus benefit from the next waves that are sure to come. This is how you will be rewarded in the future when the price of Bitcoin reaches $100K.
For that day will come, even if Charlie Munger and Warren Buffett continue to predict a Bitcoin price that will trend toward zero in the future.
Stay strong, Stay Bitcoin HODLers.