In the cryptocurrency market there is one rule that you must always follow; Never underestimate Bitcoin.
Our greatest weakness when it comes to finance is our emotions. There is no other market where that is more evident than with Bitcoin. The daily FUD and uncertainty for the future are already too much for most to handle. But something happens during the coldest part of crypto winter. People begin to forget how Bitcoin behaves. The combination of the price constantly going down day after day, and also the depression that they see on crypto Twitter and YouTube lead them to believe that Bitcoin will never be able to recover. That perhaps the death blow has finally been dealt to this market.
With Bitcoin, this is a story as old as time. FOMO and pure euphoria during the bull market. And then complete depression and hopelessness during the bear market. After the FTX fraud took place, the entire market thought that Bitcoin would soon be going down to $12k, and that would only be the beginning. People were waiting on the sideline to buy Bitcoin at under $10k.
This is when the danger comes into play.
People get caught up in their emotions and the recent trend, completely forgetting what Bitcoin was, and how it has performed in the past. They forgot that Bitcoin is a contrarian and loves to do exactly the opposite of what everyone thinks will happen. The lack of price action during the bear market also contributes to people forgetting the most vital trait of Bitcoin. When the price of Bitcoin moves, it moves with incredible velocity. Betting against it can be dangerous.
However, each cycle that is exactly what people do.
As I mentioned above, after the FTX fraud many “experts” were declaring that Bitcoin would definitely go back to $10k. People saw this as an opportunity to make money and decided to short Bitcoin. Some saw it as such a sure thing that they used leverage. As we now know, Bitcoin did the exact opposite. Instead soaring up to $32k in two weeks. People who underestimated Bitcoin were liquidated and used as fuel to accelerate even further.
It’s a lesson that many of us that have been in the market for a while have learned the hard way. When you think you are smarter than the market and bet against Bitcoin it will remind you who actually is in control of the power, and it isn’t us.
In contrast, the same situation plays out when people overestimate Bitcoin as well. In 2021, Bitcoin has soared over $60k, and people were certain that $100k was next. And that would be only the beginning of a historic bull run. That is when a large percentage of Bitcoiners on Twitter changed their profile picture to “laser eyes.”
Once again, when people got carried away and tried to outsmart the market by longing the market, or even taking out a crypto-backed loan to buy as much as they could while prices were still cheap. These people were soon brought back to reality by Bitcoin.
There is a popular saying in the Bitcoin market, “Stay humble and stack sats.”
This is the ultimate key to survival with Bitcoin. Take it one day at a time. Never estimate it, but also never get carried away and over-estimate it. Those who can stay humble and survive in this market will be the real winners.
How about you? Have you ever underestimated Bitcoin and lost?
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