Why I bought Bitcoin and how I immediately lost money on it

I’m a bit rubbish. I bought Bitcoin last week and managed to get my purchase in just before it falls.

Look at this table. I bought at the golden circle. I couldn’t have done worse. Bitcoin is down from $67,390 when I bought at $64,181 currently, a loss of 5%. Ugh.

This year there have been 349 days and people who bought Bitcoin on 343 of those days are richer than when they started. If you bought Bitcoin in January, you probably bought yourself a Mercedes for Christmas. Not me. As mentioned, I’m a bit rubbish.

But it’s not over yet. I’m going to hold on to my bitcoins for a while longer and see if they come back up. For what? Because another time it worked for me.

Cryptocurrency

The history of my cryptocurrency purchases is full of false starts and embarrassing failures, interspersed with a single purchase that made me a lot of money (maybe not a lot for you, but for me). It was 2020. I invested $15,000 in Bitcoin in May and withdrew $45,000 in early January 2021.

It was extremely exciting to sell and pocket the money. But of course I immediately felt sorry for the seller.

Because after I sold it went up again. So much more. I tripled my money, but I could have multiplied it by six if I had just been a little more patient.

The following table shows what I did. I bought in 2019, rode a wave, and sold again five months later, making a minor gain (I only had a fraction of a coin). Then I bought back for more than I sold for (this turns out to be a trend).

What happened next ? I sold too soon. After selling, Bitcoin rose significantly. I got sick. Of course, in late 2022 there was a brief period where I felt relief because Bitcoin was below the price I sold it for in 2021. I didn’t buy at that time . However, now I’m buying again. After he went up.

Cryptocurrency

The table above is a slight simplification. Several purchases were spread over a few days, as were the sales. I averaged them. I also bought and sold Ethereum at the same time as I bought and sold Bitcoin. And in 2019, I diversified into other altcoins, making losses.

The story continues

I paid $653 in trading fees. I said I was an asshole.

RELATED

This is the big mistake that individual traders make when they “play” the stock market: trading too much. This is actually the big advantage that professionals have. On average, professionals cannot beat the index, but individuals can easily lose to the index by making mistakes in buying and selling and incurring too many costs.

Patience is the key to investing and I don’t have it. I don’t “hold” it. However, you have to participate to win it, so I’m joining again.

Is it too late to ask what Bitcoin really is?

Good question. The fact is that computer code is very easy to copy, so it should not be possible to make a transaction using computer code as payment. But Bitcoin is a system that allows you to make a transaction using computer code as payment. It ensures that each bit of code is used once and when it is spent, it is spent.

If you think about, uh, my online banking account is kind of like that, right? You’re right. The only difference is that Bitcoin updates itself without the need for a trusted banker responsible for keeping track of who owns what money. Bitcoin has no employees, the system runs on code base (plus incentives that get people to contribute to crypto by paying them in bitcoin. This aspect is called “mining”). In my opinion, not having employees is not a fatal advantage, but for certain types of people, not having to trust a banker is very important.

If you also think, does anyone really use Bitcoin to buy things? Few people do it. It was designed and intended as a currency. But it has become an asset. It’s more gold than cash. It has value but is not often used for spending purposes.

And if you think, but at least gold is useful? I have to agree again. I’m not really here to defend Bitcoin. I’m interested in it opportunistically, not as a true believer.

In my opinion, the long-term usefulness of Bitcoin is probably zero. Does this mean its value will be zero? Probably… but not necessarily! Its value seems to depend on its worth. When the price increases, people want to pay to buy it, in the hope that the price will increase further.

In the very long term, there is the possibility that Bitcoin will be a mere useless trinket, just a memento of a time when the Internet was a simpler place, and nonetheless worth a fortune. I’m not betting on it, I’m guessing it will go up a bit now and crash later. But it’s possible!

Certainly, in the medium term, before its practical value is proven to be zero, it is possible that great bursts of enthusiasm for Bitcoin will cause its price to rise. We’ve seen a few of these in the past. I bet we could be at the start of another one. Although, as I revealed, my record is mixed.

Is Bitcoin gambling rigged?

Highligths. If you play crypto and think the market isn’t rigged, you’re crazy. All kinds of practices that are not legal in the stock markets are allowed. The concentration of crypto is extreme. A handful of accounts own most of the Bitcoins. Large miners and others have a huge interest in manipulating the market. But above all, they have an interest in raising it.

Are there any logical reasons to enter the Bitcoin market?

It’s a risky bet. But the logical reason why I said I bought Bitcoin is to take into account a few factors that increase demand and one factor that reduces supply.

1. The first demand factor is the prospect of an exchange-traded fund being created in bitcoin in 2024. If you could buy it on the stock market like all other stocks, it would create new demand for Bitcoin and also give it legitimacy.

2. The second demand factor is the aging of the population. Young people are more open to cryptocurrencies than older people, and as they age, they control more wealth. If nerds who were 100% into Bitcoin in 2012 are 10% into Bitcoin in 2032, but normal people who were 0% invested in Bitcoin in 2012 are 0.1% invested in Bitcoin in 2032, that’s a lot of money to try. to get into Bitcoin.

3. The first supply factor is halving. New Bitcoins come from mining (which is the reward people receive for contributing to the cryptography that makes Bitcoin work). Every four years, the system halves the mining reward. This has already happened in 2012, 2016 and 2020. Currently, 936 Bitcoins are distributed to miners every day (some of which are sold to recoup their exorbitant electricity costs). After April 2024, the number of bitcoins dispersed each day will drop to 468. The supply of new bitcoins is decreasing and we are getting closer to the day when all bitcoins will already be mined. There will be 21 million in total, and around 19 million are already mined.

The price seems high, at AU$63,000, but it’s impossible to say what a fair price is. In reality, a large portion of Bitcoins are never traded and may be lost to their owners. Liquid supply is not high.

Bitcoin is rare. Many people don’t own Bitcoin and only a few do. In times of high demand, prices can skyrocket. We’ve seen it many times before. Suckers like me are out there, experiencing FOMO, and looking for an opportunity to buy, even if they buy high. Anything can happen from here.

Follow Yahoo Finance on Facebook, LinkedIn, Instagram And Twitterand subscribe to our free daily bulletin.

Yahoo Australia

Fuente