A guide to the Bitcoin bull market

As Bitcoin price pumps, it's easy to get greedy and make mistakes

As I write this, the dollar value of Bitcoin is hovering around $70,000. Since dropping to nearly $15,000 back in 2022, Bitcoin has made quite a rally.

It seems as though a Bitcoin bull market is confirmed.

Many early Bitcoiners recognize this as familiar territory and believe the run up is just getting started. Some are thinking this is the time we hit that $1M value. Who knows, but at the end of the day, 1 Bitcoin = 1 Bitcoin.

I am still newer in my journey, but was there to see much of the crypto space blowup back in 2022. I learned a lot that year, and the most important thing I learned was “Bitcoin ≠ crypto.”

But Bitcoin requires humility. It’s easy to get taken away by the upward momentum and make mistakes. Indeed many people have less Bitcoin today than they did just a couple of years back.

Here are a few things to avoid if you were jumping into Bitcoin for the first time.

Seeking yield

In 2022, we saw the collapse of crypto companies like Celsius and BlockFi. They offered a yield for storing your Bitcoin with them. Enticing indeed.

Well, guess what? Bitcoin doesn’t offer cashflow or dividends.

The only way these companies could provide “yield” on Bitcoin was to use that Bitcoin to engage in even riskier forms of lending or speculation.

When those companies’ investments blew up, so did their clients’ Bitcoin (or what they even had of it to begin with).

Bitcoin doesn’t have yield, nor does it need it; it’s up an average of 150% annually over the last decade. If you are offered a return for holding your Bitcoin, run away.

Leverage

Everyone has a unique appetite for risk, but generally speaking, taking on debt to buy Bitcoin is a bad idea. Many were wiped out with margin calls in the 2022 crypto collapses.

I have a friend that had this happen; he took out a loan at BlockFi for which his Bitcoin served as collateral. He used those funds to then purchase more Bitcoin. When the price of Bitcoin plummeted in late 2022, BlockFi called in his loan and he lost most of what he’d accumulated over the years and is still working his way out of the pit.

Bonus: Don’t buy more than you can afford. Some people make the mistake of over-investing in Bitcoin and then have to sell, sometimes at unfavorable levels for taxes, to cover living or emergency expenses. Have your fiat-denominated life figured out, and then figure out how much Bitcoin you can tolerate.

Overthinking prices

Don’t worry about the dollar value of Bitcoin. The right time to buy is “now and regularly,” not at a certain price.

Dollar cost averaging has proven a useful model for acquiring Bitcoin - why wouldn’t you want to trade out your melting fiat dollars for a scarce, pristine asset like Bitcoin on a regular basis?

If you get a windfall of cash, great. Maybe you buy more than you otherwise would have in those moments. But don’t worry about price, just stay humble and keep stacking.

Trading

Many overthink price because they are trading Bitcoin. If you believe, long-term, Bitcoin is increasing in value, don’t do this.

You just may trade out before the top, or sell too high, or maybe you’re sitting on cash waiting to buy and Bitcoin never comes down to your buy price and you are left wishing you’d just bought Bitcoin when you could.

Someday, Bitcoin won’t have an 80% drawdown after reaching an all-time high; it will just keep going up forever. And when that day comes, many will miss out. Remember, the goal is more Bitcoin, not more fiat.

Another bonus: Bitcoin is best viewed as long-term savings. If your time horizon and intent to hold is less than four years (and preferably longer - say, 10 years), then maybe Bitcoin isn’t for you right now (or you haven’t taken the time to understand it).

Proper custody

As you increase your Bitcoin stack, there are innumerable ways to store a bitcoin.

The worst option is keeping it on an exchange. As we often say, "not your keys, not your coin.” You don't want to merely have an IOU from Coinbase or any other third party for this once in a lifetime asset. You want to hold the keys to it yourself.

On the other end of the spectrum, your best option is pure self-custody. Part of the value of Bitcoin is that you don't need to trust a third-party. You can, and should, be your own bank. I'd be remiss if I didn't share that my company, The Bitcoin Way, can walk you through this to avoid the most common pitfalls.

Self-custody is the way to go, but many have lost their Bitcoin because of a failed set up. Don't risk it and get professional help if you aren't 100% sure you know what you are doing.

There are other, in-between, options that allow you to manage some of your keys, but do compromise on privacy and in other ways.

Regardless, I would encourage you to look into your options and take this seriously.

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There are many other considerations when adopting Bitcoin generally, but these are some of the common errors made by people particularly during a bull market. It's easy to get out over your skis if you haven't done the research or are trying to, needlessly, play "catch up” with people who have been in the space longer.

Instead, put in the time to understand this new monetary technology. Stay humble. Avoid scams. Keep stacking Bitcoin at all prices. Move it into a good storage solution.

And, whatever you do, enjoy the ride.