Bitcoin price dips should be seen as discounts
The Bitcoin price is steadily gaining momentum after having experienced a somewhat shaky start to the year – it was down 35% from its all-time highs just a few months before.
But like many in the sector and investors around the world who are serious about creating and building wealth, I have been embracing the volatility in the cryptocurrency market and confidently buying the dip.
Indeed, it’s been a wild time, with a couple of flash crashes thrown in for good measure, for Bitcoin and other cryptocurrencies which have been swinging between price gains and losses. The crashes were primarily triggered by a wider risk-off sentiment that also impacted many areas of global stock markets.
Yet, it’s my view that this short-term market volatility should be endured for longer-term gains.
I’ve been actively using the lower prices of Bitcoin and other major cryptocurrencies to top-up my portfolio. Why? Because like many major corporations, financial institutions, governments, prestigious universities, and household-name investing legends, I’m confident that digital currencies are the inevitable future of money.
In our increasingly tech-driven, globalised world, it makes sense to hold digital, borderless, decentralised currencies.
In addition, adoption and demand are increasing all the time, whilst at the same time, supply is decreasing.
Plus, it also comes down to demographics. Millennials – who are beneficiaries of the largest-ever generational transfer of wealth, predicted to be more than $60 trillion from baby boomers to millennials over the next three decades – have grown up on technology.
They are digital natives. Cryptocurrencies are, by their very nature, tech-driven.In addition, they are decentralised, so not controlled by any financial institution – which are largely viewed as outdated and untrusted by millennials.
Seemingly, I’m not the only one who has taken this ‘buy the dip’ approach. The third-largest holder of Bitcoin added more than $150 million of the cryptocurrency to their holdings following January’s flash crash.
Figures from BitInfoCharts show the investor purchased more than 3,000 Bitcoins during that period.
Such ‘whales’, which are individuals or entities that hold enough cryptocurrency to have the potential to move currency valuations, shrug off concerns about dips, use them as buying opportunities, and focus on long-term trends. This approach alone has the power to push crypto values up.
More recently, Michael Saylor, the CEO of US-based business intelligence firm MicroStrategy has bought a fresh batch of 660 Bitcoins as the crypto market registered losses.
In an official update, the 56-year-old businessman said that each Bitcoin he purchased during the dip cost him $37,865 and he paid a total of $25 million for his new tokens. His company account now holds a total of 125,051 Bitcoins, which Saylor claims to have acquired for $3.78 billion. MicroStrategy has been stacking Bitcoins since 2019.
Despite the recent market turbulence, the trajectory of Bitcoin and other major cryptos is upwards. I would not be surprised to see Bitcoin reach $100,000 in the first half of 2022.
However, Bitcoin panic-sellers have been practically giving away their cryptocurrencies to wealthy buyers who will use the digital assets as a shield against inflation, which is eroding spending power.
Bitcoin and other digital currencies are widely regarded as a shield against inflation mainly because of its limited supply, which is not influenced by its price.
In short, savvy investors view the Bitcoin price dips as discounts.
Nigel Green is the CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations, made up of over 97 legal entities, writing business in more than 100 countries worldwide and with $10 billion under advice.