Why Many Bitcoin Investors Buy on the Way Up: Three Key Reasons
As Bitcoin’s price continues to reach new highs, many investors are choosing to buy on the way up. This strategy may seem counterintuitive to some, but there are several reasons why it can be a smart move. In this article, we will explore three key reasons why many Bitcoin investors choose to buy on the way up.
1. Each New ATH Dwarfs The Last
Bitcoin has a history of generating new all-time highs (ATH) after each halving event. With each halving, the supply of new Bitcoins being issued is cut in half. This scarcity has historically driven the price of Bitcoin to new record highs. Here are some examples:
- Dec 2012 ATH (after 2012 halving): $1.1K
- Dec 2017 ATH (after 2016 halving): $20K
- Nov 2021 ATH (after 2020 halving): $69K
Investors who have a long-term perspective and are willing to hold onto their Bitcoin for four years or more may see their purchase at the current record-high price as a bargain in the future if this trend continues.
2. Exit Strategy
Another reason why investors choose to buy on the way up is that they see Bitcoin as their exit strategy. MicroStrategy CEO Michael Saylor, a prominent Bitcoin advocate, believes that Bitcoin is an asset class that can compete with traditional stores of value like gold and real estate.
“What we see right now is Bitcoin has just emerged as a trillion dollar asset class, and it’s alongside names like Apple, and Google, and Microsoft, but the difference between Bitcoin and the magnificent seven is that Bitcoin is an asset class. It’s not a company,” Saylor explained.
“So Bitcoin is competing against gold, which is 10X what [Bitcoin] is right now. It’s competing against the S&P index. It’s competing against real estate, a hundred trillion dollar-plus asset class, as a store of value.”
Investors who believe in the long-term potential of Bitcoin see buying on the way up as a way to accumulate wealth and preserve their purchasing power.
3. Capturing Profits and Accumulating More
Buying on the way up can also be a strategic move for investors who plan to exit their positions at peak price levels. By selling their holdings during a long-term correction trend, they can capture profits from the current cycle. They can then use these profits to accumulate more Bitcoin when prices are lower.
This strategy requires careful timing and sensitivity to market trends. Investors must be diligent in monitoring price movements to avoid losses.
In summary, there are three key reasons why many Bitcoin investors choose to buy on the way up:
- Each new ATH dwarfs the last: Historical data shows that each new all-time high for Bitcoin has been significantly higher than the previous one.
- Exit strategy: Bitcoin is seen as an asset class that competes with traditional stores of value like gold and real estate. Buying on the way up allows investors to preserve their purchasing power.
- Capturing profits and accumulating more: By strategically exiting at peak price levels, investors can capture profits from the current cycle and accumulate more Bitcoin when prices are lower.
Hot Take: Buying on the Way Up Can Be a Smart Strategy
While buying on the way up may not be suitable for all investors, it can be a smart strategy for those who believe in the long-term potential of Bitcoin. By understanding the historical trends and having a clear exit strategy, investors can navigate the market and potentially benefit from future price increases.
As with any investment, it’s important to do thorough research and consider your risk tolerance before making any decisions. However, for those willing to take the risk, buying on the way up can be a calculated move that pays off in the long run.
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