The Profitability of Bitcoin: A Closer Look
An infographic that has been circulating online claims that Bitcoin has been profitable for 94% of its trading history. However, this claim is not entirely accurate. The infographic compares the historical price of Bitcoin to its current price, showing that the price has been lower than the current one for 94% of the time it has been traded on the markets. This does not mean that Bitcoin has remained profitable for 94% of its existence. It simply means that the current price is higher than the price it had in 94% of the past days.
It’s important to note that profitability depends on when you bought and sold Bitcoin. Only those who bought at a price lower than $43,000 and have never sold are currently in profit. Those who have sold may have done so at a loss and may not be in profit anymore.
Holding vs. Trading: Which is More Profitable?
For holders, those who buy Bitcoin and keep it in their portfolio without selling it, there is a higher chance of profitability. This is because the majority of days in Bitcoin’s history have had a lower purchase price than the current one. However, many purchases were made during bubbles, which can affect profitability.
On the other hand, trading Bitcoin can be riskier and less profitable. The price of Bitcoin has only been able to recover the purchase price of 6% of the days, while it has been able to do so with the remaining 94%. Short-term traders may not have enough time to recover losses if they bought during a high-price period.
The Majority of Bitcoin Holders Are Profitable
According to data from HODL Waves, a chart that tracks the movement of Bitcoins on the blockchain, the majority of existing Bitcoins are held by long-term holders. Only a small percentage of Bitcoins are moved daily or weekly, indicating that they are more commonly used as a store of value rather than for trading purposes. This is why more than 80% of existing Bitcoins are currently profitable, as the current price is higher than the price on 94% of the days since it has been listed on exchanges.
Hot Take: Holding Bitcoin for Long-Term Profitability
While Bitcoin has had its ups and downs, holding it for the long term has proven to be profitable for the majority of its history. By buying Bitcoin at a lower price and holding onto it without selling, many investors have accumulated unrealized profits. However, it’s important to consider the timing of purchases and avoid buying during major bull runs. Trading Bitcoin can be riskier and less likely to yield consistent profits. Ultimately, whether you choose to hold or trade Bitcoin, it’s crucial to understand the market dynamics and make informed decisions based on your risk tolerance and investment goals.
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