Buy Crypto… Even When It Feels Like Hell
Robert Ross|May 7, 2024
The crypto naysayers are back.
It’s obvious why.
Bitcoin hasn’t hit a new all-time high since March 13 despite the long-awaited Bitcoin halving and relentless buying in newly introduced Bitcoin ETFs.
Rising geopolitical tensions, tepid U.S. economic growth, and a less-dovish-than-expected Federal Reserve have all contributed to rising fear in the crypto market… and brought forth the skeptics once again.
Things are certainly not “perfect” out there.
But crypto investors need to keep a level head and ignore the naysayers…
Because the outlook for crypto is as strong as ever.
Corrections Are Normal
The crypto bull market is not over.
My analysis shows this is a correction in the context of a broader bull market.
Bitcoin is in “correction mode” after an insane run over the last 18 months that saw the cryptocurrency surge as much as 325%.
Many smaller “speculative” tokens like Fetch.ai (FET) surged 4,500% or more.
Yes, Bitcoin and other cryptocurrencies have given back some of these gains over the last few months. But these types of corrections are completely normal… even in bull markets.
During the 2017 rally, Bitcoin experienced multiple corrections of over 30% before ultimately hitting its peak in December of that year.
Each time, the corrections shook out weak hands and set the stage for the next leg up. Similar patterns occurred during the 2020-2021 bull run. Despite severe drops, the overall market trend remained upward.
And it’s the same story for the world’s second-largest cryptocurrency: Ethereum (ETH).
In the last cycle, Ethereum saw its fair share of dramatic pullbacks. For instance, during its monumental rise in 2017, Ethereum fell by over 40% multiple times throughout the year, only to rebound to higher highs each time.
This pattern of sharp declines followed by robust recoveries highlights the volatile yet upward trending nature of major cryptocurrencies… something crypto critics refuse to accept.
Volatility Is a Feature (Not a Bug)
I’m fond of saying, “When it’s time to buy, you won’t want to.”
And that applies to crypto more than any other asset class. When crypto prices are rising fast – as they were until this last month – I received countless inquiries about which crypto projects people should invest in.
But over the last month? Crickets.
This is the psychological phenomenon known as “recency bias.” Investors often overemphasize recent events over historical data, leading to reactionary decision-making. This fear-driven response during downturns causes folks to shy away just when opportunities are ripest.
Understanding this can be your advantage.
Remember, high volatility in the crypto market means both rapid increases and sharp declines in price. It’s not just about enduring the dips. It’s about recognizing them as potential buying opportunities if you believe in the long-term fundamentals of the assets.
The key is not to get swept up in the emotional rollercoaster of the market’s ups and downs. Instead, you must have a strategy that takes advantage of these movements.
The current pullback should be viewed through a pragmatic filter. It’s a filter that separates the short-term speculators from long-term investors.
For those who have done their research and believe in the future of blockchain technology and cryptocurrency… these corrections are viewed not as signs of doom but as moments to potentially increase exposure at lower prices.
To Hell and Back
Buying crypto during a pullback is easier said than done.
When the short-term trend is lower, you often need to buy while crypto prices are still falling. This can be painful. Nobody likes to see their account lose value, even for a few weeks.
But if you’ve stayed on the sidelines, now is a good time to start averaging into your long-term positions (you can see my top buys here). And keep in mind you will never time the bottom perfectly. Instead, you need to tolerate short-term losses in your positions for long-term gains.
As famed technical analyst Walter Deemer said, you really won’t want to buy when it’s best to. The market is not here to make you feel “good” about opening positions.
And in my career, I’ve made the most money buying crypto when it felt like hell to do so (like in March 2020 or October 2022).
So if it feels bad to buy, just know that’s probably a good thing.
And soon enough… the crypto skeptics will be silenced once more.
Robert Ross
Robert Ross’s unique style of clear and direct stock research helped him build a massive following in the investment research industry, starting his career at investment research company Mauldin Economics and quickly rising through the ranks to become one of the youngest chief analysts in the industry. Today, over a million investors turn to Ross every month for his take on investing, economics, and personal finance. He now shares his unique insights in Total Wealth and Manward Money Report.
