“Is this a good time to buy Bitcoin?”
This is a question I get asked more than almost any other.
First and most importantly, people are asking the wrong question. No one really knows what is going to happen with Bitcoin, which means no one really knows the answer. Welcome to the world of risk.
So what’s the right question? Let’s dive into The RISK Rituals framework to figure that out.
REST
Stop and breathe. Be intentional. Make sure that you know what you’re risking and what you expect to gain. And make sure that you really want to do this!
Resting is your opportunity to unplug and disconnect from the media and check in with your head, your heart, and your gut.
- Head: Do you know what Bitcoin is? Do you know why it is valuable? Do you think it is likely to increase in value?
- Heart: Do you support its mission, and do you share values with other investors in the Bitcoin community?
- Gut: What does your gut have to say about Bitcoin? Don’t think about this one much. Just ask your gut, “Yes or no?” And note the response.
I’m sure you’ve heard that Bitcoin is a risky investment. This is what that means.
Let’s say you invested $10,000 in Bitcoin five years ago, when one Bitcoin was $440. In February 2021, that $10,000 would have turned into $1,136,364.
Take a look:
Along the way, though, you’d have to endure some serious drops. From Dec. 2017 to Dec. 2018, your value would have cratered, from $443,182 down to $73,864. That’s an 83% drop!
INVEST
Ok. You’ve decided you’re ready to invest in Bitcoin. Jump. But not without your parachute, which is your exit plan.
After interviewing many of the most successful investors for his Market Wizards series, Jack Schwager said they ALL share one thing: a rigorous commitment to risk management. He also said that 90% of risk management is knowing when you are going to sell before you buy.
Figure out when you are getting out by answering questions like these:
- What can you afford or be comfortable losing?
- Is this a short-term or long-term investment?
- How much do you want to make?
It feels like you can buy Bitcoin just about anywhere recently, but I’d recommend Coinbase, Cash App, and PayPal as good places to start.
STICK
Stick to it. Stay the course. Execute. You are the rare individual who actually has a plan and knows what you’re doing. Get the job done!
After I stepped through The RISK Rituals myself, I concluded that I believed in Bitcoin because it is an innovative technology that will form the basis of a more privacy-focused internet. I decided I could hold for as much as 10 years, sell half after 1,000% gains, and hold the rest indefinitely.
That’s my strategy. There are as many strategies as there are investors. What’s yours? Be reasonable. Stick to it. That’s how you make money in the markets.
KEEP
Keep your gains. You earned them! Even a loss can be a gain once you accept the fact that those who do step up to the plate have to be willing to strike out.
If you have made it this far, you are winning. Of course, “winning” doesn’t mean you make a profit every time. But use this strategy consistently and you will put yourself in a great position to grow your wealth.
Whether profits or experience, keep your winners!
Hopefully you are starting to see what’s wrong with the question, “Is this a good time to buy Bitcoin?” The RISK Rituals framework leads us to a better set of questions:
Rest: Do I value Bitcoin and do I see a future with Bitcoin, that I want to be a part of?
Invest: How will I buy, and when will I sell?
Stick: How will I find fortitude through the tough times?
Keep: What have I gained? What have I learned?
Finding answers requires that we ask the right questions. Now that we’ve got a better set of questions, we can start on the journey to some real answers.