Embrace the volatility, trust Bitcoin

Yves Hofstetter
4 min readJan 21, 2021

“Bitcoin is a Ponzi scheme” and “Bitcoin has no value” are my favorite Keynesian counter-arguments to why Bitcoin is a valuable investment alternative. For many years, Bitcoiners had to endure the Wallstreet’s bashing and institutional investors that saw Bitcoin as a no-go. It felt like a cult, organized against the magical internet bean that everyone underestimated. However, the cult is now part of the Ponzi scheme, and there are only a few lefts to preach the flaws of Bitcoin. What has changed? Why is suddenly everyone jumping onto the train?

After seeing 2018, Bitcoins’ increase in price became more important than the negative press around cryptocurrencies and Bitcoin. This was a game-changer in many regards. It taught many how Bitcoin really works.

The volatility of Bitcoin is of paramount importance to understand when you try to trade it. It is nearly impossible to foresee the price movement of Bitcoin because the price is directly susceptible to the human need for it (demand). Since Bitcoin has a limited supply, selling and buying do have a direct influence on the price, this is not likely to change much in the long term, sure the volatility will decrease with a higher market capitalization, but the fact that everyone’s buy or sell order will affect the price will not change. But what does that mean for you? How can you learn to deal with it?

Volatility is actually a great thing. There are so many more positive aspects of volatility than negative ones. Volatility enables you to buy the lows and sell the high (trading). Since the cryptocurrency market offers high rates of volatility, it also provides high gains. The cryptocurrency market can not be compared to the conventional markets. The crypto market offers much more return and loss. Do not expect it to be easy to master, but investing time and money will surely help you understand how it works.

Another strategy is to HODL, keep your money, and hold it as long as you feel the need to save it. Many Bitcoiners (including me) hold their coins until they are dead, probably. Hodling is actually a great way to avoid volatility and even out your losses. For example, a good friend of mine bought his Bitcoin in 2018, right on the peak at around 18k. Bitcoin fell right after and was devasted (he didn’t need the money, he was sad that he lost it), he kept on holding it and buying more throughout the months and years. His Bitcoin in 2018 doubled in value in 2020. Keep on hodling your coin, and your return on investment will be at least 100% in the long term. Do not be distracted by short-term news. Keep on holding it, and you will be okay eventually.

Average your entries out. You can also buy Bitcoin by, let us say, in 1-month intervals, not looking at the price at all. Every month you buy Bitcoin at the same time for the same amount. This would help you even out losing investments. If you purchased the high as my friend did in 2018, you could have bought it at a lower value. The price increase Bitcoin did on that entry could compensate for the losses you endured earlier. This is the best way to fight volatility but makes the calculations much harder, be sure that you are on top here and record your entries to come back and check your gains.

Bitcoin and other cryptocurrencies offer significant volatility and great gains. Getting your fair share of the cake is not hard. HODL, trade or average out, do one of these, and you are likely to see gains in the long term. Look at this as a long-term investment, and your mentality will shift, and volatility will become your friend.

Investors and the public are realizing this in big style today. It is no secret that Bitcoin is here to stay. Buying into it now means that you understood how Bitcoin works. Since Bitcoin has limited supply and everyone is trying to escape the Keynesian economies’ inflation, demand for Bitcoin is picking up and will pick up further. Trust in the economics of Bitcoin, and you will see how much sense it truly makes.

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Originally published at http://yvestalksbitcoin.com on January 21, 2021.



Yves Hofstetter

Young aspiring blogger and entrepreneur, trader, psychology student, and hardcore punk fanatic. https://yvestalksbitcoin.com/