Escuchar
There is a phrase that I always liked that says: “Being happy is simple, the difficult thing is being simple”. It occurred to me to adapt it to investments in general and to bitcoin in particular: “Making money with bitcoin costs nothing, if you have the courage to do nothing.” Where does this statement come from? Purely and exclusively from statistics and a “homemade” study that we are going to carry out together today, based on the price history of bitcoin. The objective is to present the arguments so that this type of investment begins to be evaluated as a real possibility for the millions of Argentine investors looking for alternatives so that their money does not depreciate in the claws of inflation. But before moving on to the numbers, let us lay the foundations of the analysis.. Understanding this theory is not only crucial to taking advantage of the opportunities presented by bitcoin, but also to managing expectations and emotions that come with the volatility inherent to this crypto asset. Let’s get started!
Let’s get down to business: I am going to show how an investor who buys bitcoin and holds it for three years obtains a return that could hardly be achieved in other investments.. The strategy is as simple as it gets: Buy Bitcoin on July 4th and hold it for exactly three years, then sell it. But let’s remember what we learned in the introduction: the simple is often the hardest. Over the course of those three years, there will be times when the price will plummet, some media outlets will come out and say that Bitcoin will drop to a value of 0, that it is a scam, that it will cease to exist, inciting you to sell. Or, on the contrary, it will rise sharply in price and you will be tempted to take profits for fear that it will “turn around.” But, backed up by the statistics we will see below, You will have to remain stoic and do nothing but wait for the indicated date to arrive (exactly three years after the purchase). To set the stage for what we are saying, let’s review the Bitcoin values expressed in dollars every July 4th from 2013 onwards: 2013: $80 2014: $630 2015: $260 2016: $683 2017: $2.601 2018: $6.599 2019: $11.198 2020: $9.179 2021: $35.287 2022: $19.293 2023: $30.901 2024: $58.600
Let’s look at the possible results of having carried out this strategy one by one. If you had bought on July 4th of the year 2013 (the year in which I first spoke about Bitcoin from this column), that operation would have been carried out at a value of 80 dollars for Bitcoin. The sale should have been on July 4th. 2016three years later, at a price of $683. The total profitability would then be 754%, equivalent to 251% annually. If the purchase had been made on July 4 of the year 2014, would have been executed $630and the sale on the same date of the 2017 would have been carried out at a value of 2.601 Dollars, leaving a total gain of 313%, equivalent to 104% annually. If the purchase had been made on July 4 of the year 2015would have been executed $260and the sale on the same date of the 2018 would have been carried out at a value of $6,599, leaving a total gain of 2,438%, equivalent to 813% annually. If the purchase had been made on July 4 of the year 2016, would have been executed $683and the sale on the same date of the 2019 would have been carried out at a value of $11,198, leaving a total gain of 1,539%, equivalent to 513% annually. If the purchase had been made on July 4 of the year 2017would have been executed $2,601and the sale on the same date of the 2020 would have been carried out at a value of $9,179, leaving a total gain of 253%, equivalent to 84% annually. If the purchase had been made on July 4 of the year 2018would have been executed $6,599and the sale on the same date of the 2021 would have been carried out at a value of $35,287, leaving a total gain of 434%, equivalent to 145% annually. If the purchase had been made on July 4 of the year 2019would have been executed $11,198and the sale on the same date of the 2022 would have been carried out at a value of $19,293, leaving a total gain of 72%, equivalent to 24% annually. If the purchase had been made on July 4 of the year 2020would have been executed $9,179and the sale on the same date of the 2023 would have been carried out at a value of $30,901, leaving a total gain of 236%, equivalent to 79% annually. Finally, if the purchase had been made on July 4 of the year 2021would have been executed $35,287and the sale on the same date of the 2024 would have been carried out at a value of $58,600, leaving a total gain of 66%, equivalent to 22% annually. It should be noted that any purchase on the 4th of July in subsequent years (2022, 2023 or the current 2024) would have to be evaluated only 3 years later, but that as of today they would all be “in the money” (with profits).
From the observation of the data presented we can affirm that There was not a single opportunity where this strategy would have gone wrong.with 2,438% being the best result (2015-2018) and 66% the “worst” (2021-2024). It is also observed that The gains follow a downward pattern, although not linear, which is logical: Bitcoin cannot be expected to have the same increases now that it is worth more than 60 thousand dollars as it had when it was worth 10 or 100 dollars. In any case, and as can be easily concluded, Their results are still at worst much better than those of most available financial assets.which is why large investment funds, with BlackRock and Fidelity at the forefront, are showing great interest in the most popular cryptocurrency of all, realizing that its inclusion in well-diversified long-term portfolios significantly increases the expected profitability of the same without adding extra risk. But it is not these last considerations that should matter to the retail investor, but rather their interest should be in whether they believe themselves capable of applying the famous strategy of “buy and hold” (in Spanish, buy and wait) in this new asset class, now having a verified entry and exit date where statistics show an impressive performance. It is known: Past results do not guarantee future earnings. But if they can, as in this case, help us in decision making after a correct evaluation of our degree of risk aversion and the necessary temperament to not let ourselves be tempted in the middle by greed and fearso present in investments since always. We’ll continue next week with more material on investments and personal finances!
Conocé The Trust Project
