The 6 Questions That Will Make You Rich
We are facing one of the biggest stress tests in the history of cryptocurrencies. Very few will come out.
In 2008 Satoshi Nakamoto created Bitcoin as a response to the subprime mortgage crisis that led the entire world into one of the biggest economic crises in history. Since then, Bitcoin has appreciated from $0.00001 to $18,000.
The conditions for this to happen have been idyllic: constant injections of liquidity, lower interest rates, controlled inflation, etc.
The situation has changed, and the crypto world is facing one of the biggest stress tests in history. A stress test from which there is a good chance that it will not emerge.
This chart would look very weird if #Bitcoin didn't drop down to the yellow support line. My guess is that there will be some kind of dead-cat bounce off that line, but don't get too excited #HODLers. That bounce may be your last change to get out above $10K. Enjoy the weekend. pic.twitter.com/v06Lghvkoq— Peter Schiff (@PeterSchiff) June 18, 2022
Moments of real panic
If you’re around here, I’m sure you’ve had your stomach churned more than once since November as the markets have fallen.
The payoff to being paid for a high reward in the stock markets is always the same, volatility.
But it is in these moments of panic that we must ask ourselves the following questions and consider whether or not our investment is worthwhile:
- Have Bitcoin’s fundamentals changed?
No. Bitcoin’s fundamentals remain the same as when it was invented. There are 21M Bitcoin in the world, not one more, not one less. We know when they will all be available, as well as the maximum rate of Bitcoins that can be mined daily.
It continues to meet all the conditions to be called money: scarcity, divisibility, acceptability, portability, durability, and resistance to counterfeiting.
The stock-to-flow model is also still perfectly fulfilled.
- Has the security of Bitcoin changed?
No. Bitcoin is still much more secure than any banking institution, but remember that if you don’t have your keys, the Bitcoins are not yours. Leaving them in any exchange can lead to losses, as has been the case with Celsius.
However, I think a small part of the portfolio can be interesting to have in this type of exchange to earn a yield.
- Has the hash rate decreased?
No. The hash rate is the average estimated number of hashes per second produced by the miners in the network.
Currently, the hash rate is at record highs despite recent market declines.
- When was the hash rate at an all-time high before?
This is a very curious fact. Previously the hash rate had been at record highs after big rises and very close to record lows before catapulting back to new highs.
- Will there be more or fewer dollars in circulation 10 years from now?
The FED is doing everything possible to reduce inflation by raising rates and reducing liquidity injections. But there is something that has never happened before, and that is that the debt is higher than the GDP, and therefore, they are not going to risk producing massive sell-offs that could lead to the total destruction of the economy.
Once this moment approaches, they will go back to unprecedented printing as they have always done. However, in the case of Bitcoin, there will always be the same ones, and this is immutable.
- Want to get rich?
The biggest opportunities occur during bear markets. If you want to build great wealth, maybe now is one of the best times in history. Maybe in 10 years, you’ll look back and say, “How could I let that opportunity slip away.”
The other day talking to one of the smartest people I know, he was commenting to me that with Bitcoin, there are two possibilities the first is that it will significantly decrease adoption and continue to be used as an ancillary asset class. This would take BTC to $1,000. On the other hand, there is a strong possibility that it will continue to be adopted because of the enormous number of possibilities it offers. If so, we could see BTC at $1M in about 10 years.
Regardless of what the end result is, this looks to be one of the most lopsided investments in history.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.