How to operate in the Bitcoin surge

Both Bitcoin and Ethereum have seen significant increases in value in recent days.

As of the time of writing, Bitcoin has exceeded $57,000, and Ethereum is about to cross $3,300.

Whenever the crypto market sees a surge, there are always readers asking whether there will be a pullback, or even more specifically, how much it will pull back.

Long-time readers of my articles know that I cannot answer such questions.

If I knew whether there would be a pullback or even how much it would pull back to, I could just use leverage to short and become rich instantly. There would be no need to spend time and effort on fixed investments.

In the previous articles, I have said many times: As a fixed investment investor, we do not need to watch the market every day, we only need to check the market when our fixed investment time comes. The purpose of checking the market is not to guess whether the market will continue to rise or will experience a correction, but to see whether the market at that time is within the fixed investment price we set.

If it is within the fixed investment price, continue with the fixed investment. Otherwise, immediately shift your attention away from the market, forget about the market and the market conditions, and focus on the project, its progress, learning, and thinking.

When we truly regard regular investment as the basic investment strategy, most of the time we don’t need or have to pay attention to the market.

Take myself as an example. My understanding of the market is often out of touch. Most of the time, it is only after my friends send me messages that I find out: XXX has risen so high, or XXX has fallen so low.

Another reader raised another question:

His fixed investment started relatively late, in the second half of last year, so he still has a lot of bullets left. However, the prices of Bitcoin and Ethereum are now so much higher than the set fixed investment price, so what should he do next?

I remember that many readers asked this question during the last bear market. This is a problem that many investors will encounter.

To be frank, I don't have a very good solution. I only have some very compromise and necessary options for reference.

Let’s take Bitcoin as an example to analyze the embarrassing situations that investors may encounter now.

First, let’s go back to a fundamental criterion: How big is the potential return on investment now?

As of this writing, the price of Bitcoin has surpassed $57,000.

My more confident guess about the price of Bitcoin in the next bull market is that it will exceed $100,000.

If we take the price of $100,000 as the target, and continue to invest now, and if the price of Bitcoin does not fall below $57,000, then our potential return will definitely be less than 1 times. For this potential rate of return, investors have to ask themselves a question:

Can I accept it?

If so, then the second question will immediately pop up: Since it is a fixed investment, what price do I plan to keep investing until? $60,000, $70,000, or higher?

Based on the reader's description, I guess he still has a lot of bullets in his hand, and he hopes to use them quickly before Bitcoin really hits a big market. If you follow the fixed investment method, it means that the fixed investment price must be set relatively high. However, the higher the fixed investment price is set, the higher the average cost and the smaller the return. Maybe the actual return realized at that time will be far less than 1 times.

Can investors accept this situation?

Seeing this, some investors may have another idea: why not just stop investing and invest all at once at the price line of $57,000 to lock in a return of nearly 1 times to avoid unnecessary trouble in the future.

If you are lucky, then there will be no problem if Bitcoin continues to rise or even if it falls back, the price will not fall below $57,000.

But if you are unlucky and the market experiences a big correction and the price drops below $57,000 or even more, then investors will feel extremely tormented when they see the ridiculously low chips and their empty hands:

I really shouldn't have been so impulsive at that time. It would be great now if I had saved some bullets.

Faced with this kind of torment, can investors accept and face it calmly?

Of course there is another simpler way:

Let go completely and don’t invest anymore.

This method avoids all the previous emotions but will fall into another kind of hardship:

When everyone is watching the market prices rising steadily, I only have a few chips and a handful of stablecoins in my hand. The feeling of loss and abandonment makes people regretful.

Therefore, at this stage, no matter what choice investors make, they cannot have the best of both worlds and must face the possible consequences.

Therefore, the only way for investors to determine which approach is appropriate at this stage is to ask themselves:

Among the above embarrassments, whichever one I can bear is the right method for me.