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Got FOMO? Here’s Why You SHOULDN’T Buy Bitcoin Right Now
When you find your way onto a site like CryptoVantage, it’s usually because you’re considering buying a cryptocurrency like Bitcoin. There are many articles that will give you 100 reasons to buy Bitcoin. But in this article, we play the devils’ advocate.
The reasons explored herein are good litmus tests to determine if you’re buying bitcoin for the right reasons, with the right plan, and at the right time. If these aspects don’t line up, a perfectly reasonable conclusion for you to make is that it’s not the right time for you to buy bitcoin.
Don’t Buy Bitcoin: Check your FOMO
In one sense, the right time to buy bitcoin is anytime, depending on how long you intend on holding your investment. If you plan on selling your BTC 10 years from now, then you probably don’t need to think too hard about whether or not $32k or $35k is the best price. But if you’re buying bitcoin because you see the price going up and you have a fear of missing out (FOMO), then you are not in control of your investment. Your emotions are.
Having your emotions control your investments is a sign that you are not ready to buy bitcoin. Emotions will make you buy high from FOMO, and sell low from panic caused by fear, uncertainty, and doubt (FUD). To state the obvious, this is a losing investment strategy, and one that will cost you dearly if you don’t figure it out ahead of time. That’s why it’s great to learn about FOMO and FUD ahead of time, so you can recognize them. Knowing when they pop up is important, because it’ll prompt you to take a second look at your investment plan.
Don’t Buy Bitcoin if you Don’t have a Plan
This brings us to the second reason not to buy bitcoin right now. If you don’t have a plan, then there is a good chance that your emotions will get the better of you and cause you to make expensive decisions with your money. Investment plans are great ways of bypassing your emotions, as long as you maintain the conviction to stick to your plan.
A good investment plan consists of at least two things
- A buy target in terms of when and how much
- A sell target in terms of when and how much
My personal investment plan looks like this.
- Buy $10 worth of BTC every single day for the rest of my life
- Never sell bitcoin
Admittedly, this is a bit of a radical investment plan for people just entering the crypto markets. The reason why my plan looks like this is because I have a ton of conviction in Bitcoin and it makes sense for me to continually get rid of fiat currency in exchange for Bitcoin, an extremely flexible and useful asset.
I do however have a different investment plan to profit in the shorter term and it involves selling a small percentage of a bigger investment. For example:
- Buy 1 BTC at $25k
- Sell 0.5 BTC at $100k
It really just depends on what your personal financial goals are, and what level of conviction you have for the asset you’re buying. Let’s now dig into the topic of hype and conviction as to better understand whether or not current market sentiments are well founded.
Beware of Hype and Conviction
During bull markets, companies publish a ton of information specifically designed to rally up hype. The more hype that can be built, the more the price pumps. Regardless of whether or not Bitcoin is a sound investment in the long term, it too is subject to being artificially inflated in value due to undue hype.
Buying at the top of a hype cycle is generally speaking a bad time to buy bitcoin. The Bitcoin hype cycle typically coincides to some degree with Bitcoin’s quadrennial halvening cycle. Every four years the price of bitcoin explodes, partially due to the way that it has been designed, and partially due to the kind of hype that is drummed up by everyone involved. Another such halving is scheduled for next year.
Now, if you have conviction over your investment like I do, then I’m buying BTC no matter where we are in the hype cycle. This is because I am intending on holding bitcoin for my entire life. In that sense, it really doesn’t matter when I buy bitcoin, because I intend to hold it long enough to see that investment be profitable for me.
An interesting fact about bitcoin investments is that 100% of bitcoin investments have been profitable as long as they’ve been held for more than four years. This fact is just one ingredient that allows me to have strong conviction over the investment. I use my conviction to buy when BTC’s price is low and everyone else is panicking, and sell higher when we’re at the top of the hype cycle.
Should I Buy Bitcoin in November/December 2023?
Speaking of hype cycles, the market is in a micro hype cycle as of October/November 2023. There is news of a Bitcoin spot ETF being launched by Blackrock, an asset manager with $9 Trillion AUM. In the past few months, when there has been news and updates on the ETF application, the price of BTC has pumped. There is a good amount of hype being built up around the ETF. The question is whether or not the ETF hype is well founded.
A Little Education Goes a Long Way
The common theme throughout this article is that education is your best defence. Knowing that a plan will help you as well as what good minimal components are for that plan. Then, knowing that BTC has a four year cycle of boom and bust can help you plan when to buy it and how much to buy.
Finally, keep in mind that we’re in the middle of both – a micro hype cycle, and at the beginning of a macro hype cycle. With all this in mind, the final decision to buy bitcoin or not is yours and yours alone!
