This is how you get into the crypto world cheaply and comfortably

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Mikael Syding
07/09/2023 | 4 min read
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Bitcoin and Ether have fluctuated rapidly in August. Bitcoin, for example, fell at its peak by 16% from just over $30,000 on August 8-9 to about $25,000 a week later. Then the positive ETF verdict for Grayscale brought a short-term bounce of 8.5% from $25,900 to $28,100. Just two days later, however, that entire gain was erased.

At the time of writing, Friday, September 1st, the Bitcoin price is exactly $26,000, and the uptrend from last fall unfortunately appears to have been broken. In such cases, there may be psychological support at the flat $20,000 level, but rather it is 12-month lows right down around $16,000 that are at risk if negative momentum takes hold this fall.

Ether shows a similar pattern. There, I also foresee a rising Principal Debt, which can be interpreted as the price falling by a third from today's $1,645 to last fall's lowest point of around $1,100.

Ether (USD)

Source: Past performance is not a reliable indicator of future performance

Despite this short-term negative view, I am positive about both Ether and Bitcoin, especially Ether, in the long term. But, since it is unfortunately impossible to know when prices will turn up again, you should therefore start accumulating at a slow pace now. "Stack a little at a time" is the general advice, or "stack rate" as the crypto tweeters on X call it.

Maybe we have already seen the bottom of this cycle, maybe it will take another year or two. Or even longer. Nobody knows, of course. I therefore believe that all investors who want to be exposed to cryptocurrencies should take advantage of the high volatility to buy on significant dips (for example at least 10% down from the last local price peak). "Buy the dip" in other words. The conditions for even higher volatility in the coming year are very good. There is a presidential election and the risk of a recession in the US in 2024 is high. When the job hoarding reaches its logical end and the labor market declines more clearly than before, the Federal Reserve will face a difficult choice. It is likely to abandon its austerity policy and make a "pivot" to interest rate cuts and QE again.

With some delay, it should lift the price of the somewhat contradictory asset class of real monetary assets (sic.) that includes gold, Bitcoin and Ether. This is especially true given the upcoming reward halving for Bitcoin. The last price surges were in 2013, 2017 and 2021, with the most recent surge preceded by a small false start in 2019. If the pattern is to repeat itself, 2025 will be Bitcoin's golden year. It also coincides with this year's mini-rally, i.e. two years before the real rally.

Bitcoin (USD)

Source: Past performance is not a reliable indicator of future performance

It is important not to be too smart and stingy in the crypto context. Historically, it has paid to just hold on through the ups and downs. As with stocks, but much more so. So even though I expect a weak start to 2024 for most risky assets, I don't think you should risk luring yourself out of crypto by selling on upswings in a way that matches the dip purchases. This is because I expect significantly higher prices in the future, roughly double the previous price records of $69,000 and $4,865 respectively. It is therefore mainly about getting into the cryptocurrencies both a little more comfortable psychologically and a little cheaper than pure monthly savings. If you want to funnel a little more actively, I would suggest an asymmetrical strategy where, for example, you buy for the same amount of -10% and sell for the same given amount of +20%, or buy for more each time than you sell for. This way you are constantly increasing your exposure.

I know I will feel FOMO (fear of missing out) every time the price rises by 20% if I don't have a large enough holding yet. With eyes on $150,000 per Bitcoin and $10,000 for Ether in 2025/2026, it seems unnecessary to be too careful with the timing. Now it's about finding a balance between owning enough for the rise and having the strength to buy significantly more if we are lucky enough for the price to fall as far as the lows last fall. Around $20,000 and $1,250 are my stopping points for slightly larger purchases. At $16,000 and $1,000 respectively, I can back up the truck against the crypto cranes and fill the truck, but I won't have that much fun.

The timing of the absolute bottom will mainly be determined by macro factors, such as the 'halving', the presidential elections and Fed decisions. Together, these are as unpredictable as the weather. It is therefore unnecessary to even try. However, it is easier to guess what the seasons will look like than next month's chance of sun or rain. Just as every fourth quarter is sunnier and warmer, every fourth year attracts extra eager Bitcoin buyers. This may be partly due to the "halving", but it may also turn out to have been something else that drove the movements. Maybe it's just the extremely positive monetary policy of central banks since 2008. Well, there is only more of that to come anyway. That's for sure, because budget deficits and debt mountains are not going to decrease in the future. Quite the contrary.

If it's true that crypto is the answer to clueless and incompetent politicians, to geopolitical turmoil, to inflation, to money printing, to the need to control one's own assets in turbulent times, and that the price is driven by the "halving", by steadily increasing usage, by higher "market share" among different asset classes and decreasing volatility and increasing confidence, well then I get FOMO already. Have you found your portfolio balance between gold, uranium, silver and crypto relative to cash, bonds, housing and more traditional operating companies? It's best to think ahead, before panic or FOMO sets in.

Gold price at an all-time high of 690 kr/gram

Source: Past performance is not a reliable indicator of future performance.


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