Looking at Bitcoin's current price of $44,500, it's funny how this is pretty much the same price level that we had entering 2022. In some ways, it is as if the recent harsh drop down to 32k never happened, and is already irrelevant. Instead, one could even view it as a positive thing, as it could suggest that we've now hit a higher bottom than the previous one in the summer, and could thus be on our way to greater heights. Yet, despite us being back to where we started this year, the past month has surely caused a great amount of stress to a lot of people all over the world.
To the large number of people who bought their first coins north of $50,000 BTC this fall based on the many promises they may have read online about it going to $100,000 before the end of the year, this will have been their gut-wrenching roller coaster drop. I wonder how many of these buyers with hopes of short-term gains were able to, or interested in, HODLing those coins when the market instead turned downwards at the end of 2021 and the start of 2022?
Whatever percentage of people that may be, it for sure includes many who will have experienced what HODLing really feels like:
The best advice is usually to just periodically buy and hold strong assets with investable savings. And while that may sound simple compared to active trading and all the considerations that come with that, the emotional journey is still very much the same...
As mentioned in a recent post that I made, everything about 2022 looks to me like it is going to be a highly volatile year. Not only in crypto, but also for the main stock indexes. The past two years have been extraordinary in several ways, both with regards to the pandemic-related stimulus as well as the absurd stock market growth. It should be no surprise, therefore, that many are anticipating a market correction. Additionally, there are plenty of warning signs aside from this rapid growth, namely inflation, supply chain issues, and expected hikes in key interest rates. The result is a market where people are anxious and full of fear, uncertainty, and doubt (FUD), and thus more likely to make impulsive and emotional sales should there be hints of a crash coming.
Yet, the record stimulus and low-interest rates have also flooded the market with money and put people in a position where they don't want to hold cash in the bank. Sprinkle a little bit of greed and FOMO, having seen how well the market performed the past two years, and we may have got the perfect balance between emotional buying and selling.
And as we've seen these past few months, the crypto market is not as detached from the stock market as it used to be. Fear of tech stocks in particular falling does carry over to some extent to the crypto market, as big hedge funds look to get rid of their more risk-heavy assets first when bracing for a bear market, opting instead to sit tight in seemingly more secure companies earning dividends.
With all that, 2022 will likely be a year where people's ability to sit still and HODL during the waves will be put to a test. Not just for Bitcoin and crypto holders, but for your everyday index fund buyer as well. Speaking for myself, I like to focus less on the day-to-day price action, and more on my day-to-day effort to increase my revenue streams in order to continuously buy in with more, especially when prices are lower.
So to repeat a sentence that I wrote in an earlier post that I felt summed up my advice really well:
It's much easier to be HODLing if you spend more time BUIDLing new revenue streams and side earnings than you do looking at charts.
So again, sit tight, hustle on, buy in over time, and find enjoyment in the process itself. I’m sure that this year, while it will shake up a lot of people, will also train a new generation of committed HODLers that will add to the foundation seen as the bottoms of each market cycle. After all, that’s the growth in value that really matters.
