The beginning of May 2022 finally looks like what we experienced a year earlier in May 2021. At this time China's ban on mining of bitcoin and Elon Musk's criticism of the environmental impact of mining of Bitcoin have put the Bitcoin market in a state of doubt. A sharp drop in the price of Bitcoin followed, with the price remaining just above $30,000 until the end of July 2021.
At the time of writing, the price of Bitcoin is $31.7K, or about 55% below the price of Bitcoin at its ATH in November 2021. This represents a significant drop, and it is easy to see why extreme fear prevails in the market:
This fear is reinforced by the macroeconomic context. High inflation continues, as does the war in Ukraine, the effects of which will continue to weaken economies. Add to that the endgame whistled by the Fed in recent weeks. Key rates move back up, even if we can sense that central banks hope that this inflation will eventually resolve itself .
In these moments of fear you have two options though:
- Let your emotions rule you . In such a case, fear will take hold of you and only God knows what decisions you will make in the end. The only thing I know for sure is that you will later regret the decisions you made based solely on your emotions.
- Take a step back to continue making decisions based on your sense of logic . Whatever decisions you make, I can guarantee you that you will never regret later if you made decisions on your own based on your logical thinking.
So in the current Bitcoin market situation, controlling your emotions is key. Knowing how to take a step back is not easy for many of the investors who joined this market in 2021. Why? Simply because they joined this market at the top of the wave. They joined the market when everything seemed easy.
In October or November 2021, when the price of Bitcoin jumped to a new ATH, I told all my readers over and over again that the long-term view with Bitcoin is the key, because the price of Bitcoin never rises in a straight line. Getting a message when the Bitcoin price looked like it was going to jump to $100,000 was easy.
Many people have even accused me of being too bearish… If you read my articles, this should make you laugh because I have been extremely bullish on Bitcoin for many years. I remain a realist though, I know the impossible can happen in this market.
The impossible is the start of a war on the borders of Europe, which again shakes all the security that some people seem to have had since the COVID-19 crisis two years ago, which seems to have already been forgotten. Thus, investors who constantly talk about conviction and a long-term view should be able to apply their prescriptions now.
When everything is red and the market falls by more than 50% , you need to remember this type of message, which was easier to remember with bitcoin over $50,000.
As I often say, you shouldn't expect anything special in the short term, but be prepared for anything. Because anything can happen. As such, I like this lesson delivered by American billionaire investor Seth Klarman in 2010 after the 2008 financial crisis:
“You should always be prepared for the unexpected, including sudden, sharp downward swings in markets and the economy. Whatever worst case scenario you think, the reality can be much worse.
The price of Bitcoin is currently just over $30,000 and everyone is wondering if the Big One has started:
“Bitcoin Price Drops to $30,000: Is the Big One Coming? Is it time to panic?”
I wonder and prepare for the Big One. How do I prepare for the Big One? As I continue to accumulate BTC at this price level, which I find extremely attractive. I have been buying Bitcoin at every possible price level for the past few years. From $3K to $60K. De facto, $31,000 Bitcoin is a great opportunity in my eyes.
Because Bitcoin's fundamentals haven't changed despite this price drop, which is just noise. The real signal is the Bitcoin revolution. And I still see a bright future for Bitcoin. But to take advantage of it, you should be able to properly redefine your time horizon by taking a long-term view . In tough times, it's really important that you do. Your strength of character is being tested right now and it is up to you to react in the right way, knowing that Bitcoin may still fall below $30,000. You need to mentally prepare for it now.
In times of uncertainty like these, the media likes to scare the public. But it's at these times that you need to step back and make your own choices without letting media narratives push you to act differently from your beliefs.
Last week, when the market turned red, CNBC ran its "markets in turmoil" special. Charlie Biello, who always posts excellent analysis, took the opportunity to tweet the following chart:
This chart clearly shows that the timing of CNBC's "markets in turmoil" special appears to be the only indicator with a perfect track record.
Final thoughts
Buying a strong asset that can be held long-term like Bitcoin seems like the best option to me. Even more so today, when uncertainty remains and strains the emotions of all investors. The market volatility is not ready to stop. At the beginning of 2022, I announced that this year would be dominant in the markets:
"Here's the only certainty you can have right now about the stock market in 2022."
So you have to accept it to benefit from it. If you can do this, you will be able to hold strong assets beyond a single market cycle and thus take advantage of the next waves that are sure to come. This is how you will be rewarded in the future when the price of Bitcoin reaches $100K.
That day will come even if Charlie Munger and Warren Buffett continue to predict a Bitcoin price that will move toward zero in the future.
Stay strong, stay Bitcoin HODLers.