Please click the link below to listen to the 74th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere.
External Podcast Link
Two Minute Crypto – How to Hodl Bitcoin
Welcome to Two Minute Crypto – this episode outlines a brief Bitcoin hodling guide. It should all be so simple. BTC is an asymmetric investment opportunity – if you accept that thesis – hodling it should be an entirely natural process and yet the reality of investing in Bitcoin is far more challenging.
The following guide assumes you have a basic understanding of your investment, a broad acceptance of the ‘BTC as sound money’ thesis and an exit strategy. Taking each of these as a given – retaining your grip on Bitcoin remains a tricky proposition.
BTC is Not Immune to Market Chaos
In a broad market recession Bitcoin too will lose value. Gold and silver are no different – when everyone is rushing to the exits everything gets sold off as margin calls and debts of all kinds suddenly need to be met, serviced or rebalanced. BTC has never weathered a meaningful financial crisis and any expectation that it will be immune to market mayhem is pure folly. If you consider selling your position because of short-term price collapses you have little chance of being around to reap the rewards BTC may someday offer.
Everyone’s a Scammer
BTC is littered with fallen idols from Roger Ver to Trace Meyer and so many more in between. Everyone has an agenda and no-one’s opinion is above suspicion. Trace Meyer was a tireless proponent of BTC and doubtless played a significant part in bringing many tens of thousands of people into the ecosystem. Nonetheless, a scammer he became. He won’t be the last. Of course, follow those who have built and supported BTC but always, always remember – verify rather than trust.
Bad Bad Events Await
BTC’s journey to global money significance is going to be littered with many profoundly discomforting events from state bans to mining capitulation and everything in between. It is going to be anything but a smooth ride. Without internalizing this reality you stand little chance of hodling through whatever future ‘long-dark-nights’ of Bitcoin await. Far from being ‘in the clear’ BTC’s struggle to supplant fiat has only just begun and every dirty trick in the book will be played to prevent it from succeeding.
Whatever Timeline You Have – It’s Too Short
Sure, it could all happen far sooner than we expect. A struggling nation might go all-in on BTC with others rushing to follow. However, this rose-tinted adoption fantasy doesn’t help you as an investor. You are far better served by playing the long game – let’s say – three full BTC halving cycles -2032. Once you zoom out and extend your investment horizon – it becomes far easier to judge progress and assess challenge. Most people will state that BTC is a long term investment and in the same breath check the 4hr chart. Such investment dissonance undermines your ability to see the big picture and makes a knee jerk capitulation much more likely.
You Might be Wrong and That’s OK
Finally, despite all its advantages and secret sauce – BTC can still fail – you might be wrong and it might go to zero. Any long-term investment in BTC should be founded on an acceptance of this possibility. That’s just fine and, in essence, no different to any other venture. Refusing to accept this simple truth will simply render your position a brittle one – a hopium dream that at any time may shatter. Accepting reality and the risk of BTC failing frees you to focus on the only thing that truly matters – fundamentals of your investment.
If and when Bitcoin dies – you won’t be in any doubt as to that reality. However, in the meantime – the potential upside of BTC remains unknown – it is the ‘great possible’.
As always, thanks for listening.