Bitcoin Drops to $107,000! Should You Worry?

Hey everyone, the price of Bitcoin is about $107,000 right now. It's down from the last few days, which were down from the few days before. James Czech, my favorite Bitcoin analyst, came out with an update this morning that was much more cautious and potentially pessimistic than his previous updates. and he identifies in those, and if you're a $29 a month subscriber, you get all of the detail here. But he basically says at $105,000, you're starting to get a meaningful number of people who have bought Bitcoin recently that are underwater on their investment. That tends to make them pessimistic. At $100,000, even more people. And on about $95,000, that's what he calls the bull's last stand, meaning the Bitcoin optimist last stand, where if you can't hold $95,000, you're probably going to touch $80,000, which is about 25% below the current price. So, let's talk about how to think about that. So, earlier this week when the price was $114,000, it had bounced off of about 109 or 110 back to 114. James Ch said he thought the probability that we'd go into a bare market, which is a down pessimistic market, was about 30%. The probability that we rip to much higher highs, was about 70%. The fact that we're down in the 107 108 range right now, I'm guessing makes him more pessimistic. I'm guessing he would say the probability is more like 40%, we keep go down before we go up in only 60%. Or maybe it's 55 44. So let's talk about how to think about all of that. First off, the same principles that apply every step of the way, which is we've been here a million times. The price has gone through price corrections. The most recent one down to just under $74,000 was actually in April of this year. So that's only like 6 months ago. So if anybody feels like, wow, we're in uncharted territory and I don't know what to do and we've never been here before. Seriously, we were here less than 6 months ago. We were in this exact same position where the price was coming off all-time highs and it dipped below $74,000 very briefly. So if the price does go down to $80,000, so what you wait it out. If you bought I've got Bitcoin I bought as high as $122,000. In fact, I think one of my paychecks hit somewhere in there and I probably have some Bitcoin I bought at somewhere between 124 and 125. I've got meaningful amounts of Bitcoin I bought above $120,000. So what? You wait. And if you wait long enough, you end up being way up on your Bitcoin investment and it doesn't matter. And if you wait long enough after that, you wish you had bought a lot more Bitcoin back when it was $126,000 and really wish you had bought more when it was 107. But the short take is we don't know. there's still a greater than 50% chance that the price sets new all-time highs and is off to the races as compared that it grinds down below $95,000. We just don't know. So, the only thing we do know is what the potential upside is and what the potential downside is. There's a lot of reasons to believe that the price won't go below $80,000 and almost certainly will not go below 75. And even if it does, it'll be so very temporarily it doesn't matter. But we also know that the price of gold is ripping higher. Uh gold is like 28 trillion market cap. Bitcoin's like 2.3 or 2.2 something like that. So gold is somewhere between 12 and 15 times the size of Bitcoin, which means Bitcoin can grow 12 to 15 times its current size before it's larger than the size of the gold market. That tells you what the sort of easy upside for Bitcoin is. Now, admittedly, we could have a debate about how much better Bitcoin is than gold. Maybe it's twice as good. Maybe it's five times as good. But nobody would argue that knows anything about Bitcoin that it's not as good as gold. So, that means you've got a pretty easy 12 to 15x on top of where we are today with Bitcoin. The downside to $80,000 is 25%. So, let's compare those two numbers. potential downside 25%. Potential upside between 1,200% and 1,500% just to catch up with gold. So even if you take round that down to the nearest thousand of 1,000%, you're dealing with a,000% upside, 25% downside. So it still makes no sense. It never makes any sense not to hold the Bitcoin you have because even if people try to get smart and they're like, "I'll sell my Bitcoin now and I'll buy back later," they almost always get burned on that because again, you're potentially forfeiting more than a,000% upside trying to capture passively a 45% chance of a 25% downside. And even if you try to capture that downside, you're probably going to cheat yourself out of a bunch of Bitcoin because you don't know where it's going to bottom. You don't know if the lowest it's ever going to touch is 95 or 92 or 88 or 85 or 80 or 76. Nobody knows. Not a soul knows. And everybody who thinks they're going to capture downside by waiting to buy at a lower price either one the price never hits the price that they were planning on hitting. So they were like 88's my number and then it bottoms at 90 and it takes back off and leaves them sitting there by their loans themselves waiting for $88,000 Bitcoin. That will never happen. Either that happens, which is the most likely option, or second most likely option, it does hit their number, but because the price is falling, they're scared and they don't pull the trigger. As I've shared many times, I bought Bitcoin initially around $9,000 and I said if it drops to half that $4,500, I'm going to buy a lot more. It did drop to that half that in 2018. I did not buy any more Bitcoin that low because I was scared because I had not done the work to understand Bitcoin. I freaked out as the price was falling. And even though I had told myself I was going to buy a bunch of Bitcoin if it got that low, I didn't. I never pulled the trigger. I would have a lot more Bitcoin today than I actually have. So, the same thing is true now. You don't know where that bottom is. Do not try to catch it. You're going to time it wrong. You're going to end up not buying because your number was below the dip. There's no way to get that right. or even if you have a number in your mind that you're super solid on and it does dip below that number, you're probably going to check it out and not pull the trigger because that's what almost everyone does, especially if you're new to an asset. Once you've been around a long time and you have a huge degree of comfort, you might actually pull the trigger when it hits some magic number. But if Bitcoin represents less than 50% of your total assets, you're probably not going to pull the trigger when it hits your number. You're going to change your number to a lower number. You're gonna say, "If it ever hits 80, I'm pulling the trigger. I'm all in." You then, let's assume it does hit 80. Then you're going to say, "Wow, 75." If it ever hits 75 and then it never will, then boom, leaves you behind and now you're sitting on no Bitcoin. So, don't play those games. So, when you're dealing with a possible downside of 25% and an upside of more than a,000%. It just doesn't make sense to do anything other than buy as much Bitcoin as you can and hold on to it for as long as conceivably possible. That's just the only good option. So, my recommendation has not changed. Bitcoin is on sale. Buy as much Bitcoin as you can and hold on to it for as long as conceivably possible. That's my recommendation at 126,000. That's my recommendation. At 107,000, that will be my recommendation. If we touch 95,000 or any other number anywhere in there, my recommendation is going to be the same. Buy as much Bitcoin as you can and hold on to it for as long as conceivably possible. So, it's not that hard. And if you do that, and if you do it long enough, you'll be glad you did. And I remember now, the difference between 80,000 and 120,000 is exactly the same percentage difference between 8,000 and 12,000. And back when Bitcoin was between 8,000 and 12,000, everybody on the planet was all wound in knots about whether they were buying Bitcoin at 8 or 9 or 11. And all the people that bought Bitcoin at $12,000 in 2017 and were then underwater for part of 2018. They were all worried. Give it a break. It's not that hard. They should have just bought as much Bitcoin as they could at $12,000 back in 2018. That price in retrospect was an amazing price to buy Bitcoin. and they were all worried that they had bought it and it was too expensive. The same will be true now. It always is. Buy as much Bitcoin as you can. Hold on to it for as long as conceivably possible. It's not that hard.