When you first buy Bitcoin, you are entering an exciting new world whose potential seems limitless. Often, you have entered this world for the money. You've read or heard stories of people who have made a lot of money buying Bitcoin. You may have been intrigued to see that famous hedge fund managers were buying Bitcoin on a massive scale.
In short, you were eager not to miss out on what seems to be an interesting opportunity in a world where monetary inflation seems to have no limits.
However, you have not yet taken the time to define a strategy. You've simply chosen to buy Bitcoin. That's an essential first step, but you can't stop there if you want to take full advantage of Bitcoin.
Defining a strategy with Bitcoin involves understanding the redefinition of the time horizon that Bitcoin induces
You need to go further as I constantly explain by really trying to understand the why of Bitcoin. Beyond that, it seems essential to define a strategy that fits your profile and interests. The hardest part will be to stick to it no matter what. Nevertheless, it's easier not to panic when the market turns red if you have a strategy to hold on to.
This is where the redefinition of the time horizon comes in.
In the stock market, there are three distinct time horizons:
The short term is anything less than 2 years.
The medium-term corresponds to a duration between 2 and 10 years.
The long term corresponds to everything that exceeds 10 years.
In the Bitcoin world, things are slightly different as you will see. The short term corresponds to a Bitcoin market cycle in my view. As a reminder, a market cycle is a period between two halving events for Bitcoin.
The short term with Bitcoin is therefore 4 years.
The medium-term will be 10 years, allowing you to stay in the market for at least two Halving events. Finally, the long term, which is the right horizon in my eyes, is forever. Yes, you read that right. I wrote forever.
I wrote that already in early April 2020 shortly after Bitcoin's Black Thursday, when its price dropped below $4K in March 2020: “Bitcoin HODLer one day, Bitcoin HODLer forever”.
Becoming a HODLer forever means you are believing in the hyperbitcoinization of the world in the future
Everything that has happened since that time has reinforced this vision. When I write HODLer forever, it means that I am believing in the hyperbitcoinization of the world in the future. I think it will be possible for me to use my Bitcoin as a means of payment in everyday life, and that Bitcoin will also have reached the stage of a unit of account.
We are not there yet, I readily admit. However, this is my strategy with Bitcoin. It is also Michael J. Saylor's strategy, as he frequently says. It may not be yours, since everyone has to define what the best strategy is for their future according to their profile and interests.
This article aims to make you aware of the importance of defining your strategy if you have not already done so. This strategy must take into account the definition of the short, medium, and long term with Bitcoin which is a total paradigm shift. Thus, investing in Bitcoin for less than 4 years is taking serious risks, because you never know what phase of the market you will be in within a 4-year cycle.
Of course, you can have an idea, but without any guarantee. This is like choosing to be a trader when your biggest natural advantage with Bitcoin is the time you are willing to HODL no matter what.
Once you've defined your strategy precisely, feel free to tell me in the comments which strategy you fit into, and why. It's always interesting to find out how others view their investment in Bitcoin.