Why Long Crypto In The Long Run Will Win?

Cover image is from Real Vision Finance and it shows the current users adopting cryptocurrency versus internet and future projections. It is interesting to see near 2030 there will be more users adopting cryptocurrency than there was at the same rate of internet users. Even at current cryptocurrency adoption it is already ahead of internet adoption. This likely means in the long run more demand for cryptocurrency.

High Volatility Big Rewards

In the first 7 years BTC price relatively didn't exceed more than $1,000, yet in the past 7 years BTC price has went from $4,000ish up over $60,000. In the past 4 years since 2018 BTC has went in a range averaging 50% draw down from low $30kish to $60kish and back. This has lead to great opportunities to buy in on dips as prices went to all time highs.

Relatively speaking without volatility the price of BTC would have remain similar to that of the first seven years of its existence. Yet with volatility there is a potential for meteoric rise in price. It is worth mentioning quick change in prices can be up or down but the fact that it can go up leads some to want to hold BTC and favorite altcoins for the long haul to ride through the price swings in hopes of selling at higher evaluation.

Draw Downs Don't Matter In The Long Run

Charlie Munger in 2008 Financial Crisis, associate of Warren Buffet had this to say regarding to asset draw downs.

This is the 3rd time Warren and I have seen Berkshire go down by 50%. I think its in the nature of the long-term holder and markets if you're not willing to act with equanimity to a market price decline of 50% then you deserve the mediocre result you're going to get.

Even with the 2008 draw down Berkshire Hathaway Inc, main holding of Charlie Munger went down 50% but it has since went over 800% since. A remarkable amount of gain that could have only been earned for those who had held on to the asset.

It goes to show that although volatility in crypto is large and draw downs can be significant the outcome can be a very profitable trade.

Conclusions

Setting another example in stocks is the dot com bubble. Tech related cryptocurrency can lose its hype just like what happened to tech investments in 2000. Yet since then the additional gains in price since dot com for the tech sector has more than 3 folds.

There is much more to this but you get the idea. The longer you hold the asset the more likely it will appreciate down the road. With current inflation in real world assets it only adds fuel toward a massive price increase in cryptocurrency. Yet if it does not hold true if history is a guide it has proven that crypto can rise higher in the future.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!

LeoFinance = Financial Blog
LeoDex = Hive trading exchange for Secondary Tokens, Low 0.25% fees for deposits and withdraws.
HiveStats = Hive stats per user
LeoPedia = Informative content related to anything about Crypto and how to make financial gains in crypto!
CubDefi = LEO Finance's Defi with CUB Token