Buying Bitcoin is tricky. The past couple of months have shown that even major institutions struggle to time a Bitcoin top or bottom. CEOs appear to be geniuses when they publicly announce their purchases and price skyrockets, but they are not immune to the corrective nature of Bitcoin. During some of the more recent Bitcoin corrections, MicroStrategy, Tesla, and Square all saw at least some of their trades in the red.
MicroStrategy
MicroStrategy owns the most Bitcoin among the corporate giants and has executed the most trades to accumulate this stack. By my count, Michael Saylor has publicly bought Bitcoin at least 10 times, with around half of the purchases dipping into a negative ROI at one point. Some of these trades were sitting in the red for a couple of weeks.
Saylor has endless resources and advisors, yet he still failed to successfully time the market for maximum return every time.
So why would Saylor continue to buy Bitcoin near all-time high prices when he could have sold and bought back in a much lower range? He isn’t buying the Bitcoin bottom, but it’s also quite clear that back in the lower ranges he still held his high conviction, is his strategy foolish?
The above perspective is an incredibly naive way to view trades and investments.
True Conviction
It was never Saylor’s goal to time the bottom, he was merely adding to his portfolio as resources allowed. His strategy revolves around dollar cost averaging on a grand scale, even if he is forced to average up, and that is a sound investment strategy
This is what conviction looks like, it’s purchasing an asset as you can afford to do so with a long-term outlook.
Furthermore, it’s continuing to believe in what you buy even as the price rises (or falls) and adding to what you already own. Saylor could have kept his cost average much lower, but rather than be the popular company with a low-cost average. He believes owning more Bitcoin is paramount, not caring as much what his average is – he has chosen wealth over status.
Square
Square made its second Bitcoin purchase for an aggregate price of about $50,000 per coin. By the above logic, Jack Dorsey had worse market timing than Saylor because his purchase quickly saw time in the red and is only barely in the green at the time of writing. Tesla also saw a negative return for a short amount of time during the previous correction.
Tesla
Perhaps worse of all in the eyes of naysayers is Tesla’s late arrival to the game. Elon Musk could have bought much sooner and for far less, instead, his entry into the market was during multiple all-time highs. He is now accepting Bitcoin as a payment method for Tesla cars, stating that the payments will not be converted into fiat. Short-term price movements are irrelevant to these companies, except only as a new opportunity to invest further.
The Real Geniuses
Opinions from the wider community about these companies’ “poor strategies” are endless. Over time, however, the narrative will likely change to see all three of these men and their companies viewed as geniuses by even their staunchest critics. Many will even see them as early movers.
Hindsight
As traders and investors, we are no different than the corporations above – we are merely operating on a smaller scale. Hindsight is 20/20 and we can all look back with regret for “not buying earlier” or for poorly timed purchases. Things change. Through time we may have access to more cash, similar to how MicroStrategy sold bonds to raise money, or our conviction may grow, similar to how Square doubled down on their position after Q4 interest affirmed their thesis on Bitcoin.
No Perfect Path
If you have accepted that there is no perfect path to wealth, then do yourself a favor and acknowledge that it is almost always an unstable one with plenty of ups and downs, especially when buying Bitcoin.
Institutional and retail investors will all be tempted at some point to question how and when we bought or sold our crypto investments. But it is up to you if you look back with regret at the additional profit that we could have made or pride for taking simply the step.
Don’t beat yourself up – we have the pleasure of watching the greats publicly buy in at often sub-optimal timing, proving that they too are not perfect. At the end of the day, we are all just human.
If you have already bought crypto, now is a good time to start strategizing on if and how to sell your investment.
Written By Adam Tarlowski