The price of bitcoin is what attracts most people to learning about it, but it’s important to consider what your personal financial situation is and how you are considering investing time and money into bitcoin. You probably fall into one of these categories:
- Beginner/Just learning or Not interested
- Short term investment to make money
- Long term investment for retirement
- Short and long term investment, can separate the accounts so different goals can be achieved
As you learn more about bitcoin you may progress down that list. Regardless, learning about the investment will help you understand the value of the asset and its volatility (price movements).
On a personal note, I have progressed down that list over the years. Depending on when you first learn about bitcoin and make your first investment, you could be buying as the price drops over many months. Its not unprecedented to buy when prices are falling. In a true market where something is traded 24/7/365, falling prices are a sign of more sellers willing to distribute their bitcoin at the current price or lower. Once they have sold all they need or can sell, the existing demand carries the price higher until more sellers are willing to sell. You can see the swing in prices as more sellers enter the market vs where more buyers enter the market.
Just like you and me as an investor looking to have more dollars in the future, we sell our assets when we need to or want to.
The point of the price chart is to show how investors move from short term to long term investments into bitcoin. Longer term buyers are making investments when more sellers are willing to let go of their bitcoin.
Hopefully this helps ground you with understanding how the price changes over years of time and why you need to identify how you are using bitcoin as an investment. You should never “time” the top/bottom during the moment
In part 2, we will dive into the basics of bitcoin.
