‘There’s one digital commodity that is a scarcity. If you have a long time horizon, if you want to wait a decade, if you want to live, if you’re willing to be beat this way in that you know, tossed on the stormy seas of fate by the monetary winds that blow. They will blow in your face, they will blow in your back, you know, and if you’re going to, you know, stand on the deck or lash yourself to the deck and you’re prepared for a very rough journey, you should be able to make it to the promised land with a hundred percent certainty. It’s an opportunity, not a hundred percent certainty, but it’s an opportunity. In my opinion, the odds are better of a good outcome than the odds that my ancestors took when they left Lucerne, Switzerland in 1730.’ – Michael Saylor.
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As bitcoin continued to trade lower and lower over the past week, a lot of negative media attention turned to the biggest players in the crypto space. Michael Saylor’s Microstrategy is the public company with the largest bitcoin holdings. It was expected that a large part of the negative press attention would go to him and his company, and it did.
Firstly came the concerns about a margin call on his loan and a possible liquidation that would take the whole of the crypto market under. However, Sailor dispelled those rumors and remained as cool as a cucumber even when bitcoin slipped below $18,000 on Saturday. Whatever the market brings, Sailor has also assured everyone that he is in this for the long term.
In fact, Saylor has declared that bitcoin either goes to zero or a million dollars. Since there is no way we hit zero dollars, we can look forward to seven figures as bitcoin adoption grows exponentially. Before that happens, Saylor says investors should expect that the journey ahead will be rough because of bitcoin’s high volatility. He explains that there are two ways in which investors can approach the bear market. One approach brings anxiety and stress, while the other speeds up the accumulation of the world’s most scarce and desirable asset:
‘So I was saying that the macroeconomic winds are blowing and, uh, if you’re an investor, you just have to decide how you’re going to deal with it. I think one choice is to be caught up in the maelstrom and attempt to trade your way out of it by slavish devotion to the news of the day and attempting to predict what the central bank will do and then trying to figure out whether or not. This is a good entry point or not a good entry point. That’s a recipe for anxiety, especially trying to pick the bottom and pick the top, and I know that’s hard.
A rational strategy is dollar cost averaging into scarce desirable assets that, you know, someone that’s more affluent and more informed than you will want to buy from you in a decade. If I was trying to come up with a plan to manage through the chaos, I don’t know that I could time the market. I think that I would just kind of dollar cost average my cash flows into a portfolio of property that was scarce that was desirable that would hold its value, with the caveat that I would need to be able to afford to maintain it. If I could buy a high-quality property that I could afford to maintain for a decade, then as cash flows arrived, I would just allocate accordingly.
If you like bitcoin, then bitcoin just dollar cost averaging into bitcoin is a similar thing to that and rational. I think a useful chart is the four-year moving average chart. I think if you look at the, uh, the four-year simple moving average of bitcoin, it kind of reflects something synonymous with the book value of the network because for 458 days, that number reflects the trading volume or the trading price of bitcoin. It’s traded billions of dollars a day 1458 times, and so by the time you calculate that number, it typically lags the overall price, but it’s gone up consistently for the history of the asset, you know, for obvious reasons.
If you’re a dollar cost average or a conservative bitcoin investor, I think that you would look at that and think, ‘Yeah, I mean, well for obvious reasons, it hasn’t looked this cheap since March 20th, 2020.’ Like that was the last time it touched this and then you got to go back to like February of 2019 and then you got to go all the way back to 2015.
So I believe that in the short term, bitcoin appears to be a volatile risk asset. If your time frame is near term, if it’s a high frequency time frame, then you kind of have to trade bitcoin like a high volatility risk asset, you know, or an amped up risk asset. If you’re a low-frequency long-term trader, if you’re buying it with the expectation that a decade from now it’ll be worth more. It starts to look like a store of value non-risk asset because there’s no management team, there’s no product cycle. There’s no employee base. It’s got no competitors, it’s not a company, it’s got no nexus, it’s not in the country, it’s not land, it’s you can’t produce more of it. It’s a different thing.
So depending upon whether or not you’re short on your time frame or long on your time frame, you see it differently. I think that in the near term, it’s pretty clear it’s a risk asset and if the Federal Reserve’s going to control all the risk assets, so when they squeeze the money supply, all those assets, the tech equities, the equities and bitcoin are being hammered down. To your point, it appears reasonable.
At some point, they’ll lighten up. We’re going into the midterms. The things that are constraining risk assets right now are the war, you know, foreign relations, the war in Ukraine, and Russian foreign and monetary policy. Those could very well change. If they don’t change, then all the risk assets will have a hard time for the next year to two years.’
Let’s take a quick look at some of the recent market updates. Things are once again looking up for bitcoin and the rest of the cryptocurrency market, and the minus 80% scare seems to be behind us, at least for the moment. At over $20.000, while bitcoin has gained 5.91% in the past 24 hours, the overall cryptocurrency market is also back above 900 billion dollars, currently at 903 billion dollars. According to reports, while it’s holding one or more bitcoin, it just reached a new all-time high of 865.254.
Many more investors have become whole, and it’s thanks to the recent crash. Here is a tweet from bitcoin influencer Bitcoin Archive:
The crash has been pretty nasty, but many people are taking advantage to stack more Satoshi’s. Are you totally buying the dip or avoiding it like the plague? What you think about Michael Saylor’s interview?
[This article is a transcription of a video made by Savvy Finance]
Original video: https://youtu.be/F9vWH0Wf51g ]