3 things you should know and what I am buying
In the 2008 crash, Lehman Brother's the 4th biggest investment bank went bankrupt (source).
It took 2 years for the market to recover.
In 2022, FTX the 4th biggest crypto exchange went bust (source).
Bitcoin took 2 months to recover.
Given the devastation, the speed of the recovery is astonishing, here's what it predicts.
1. Is FTX’s collapse proving Bitcoin is unstoppable?
We all know BTC is very volatile, there is no guarantee that it’s price won’t retreat down and test the $16K range again, but the fact that BTC was able to brush off the catastrophic FTX collapse so quickly and revisit its price prior to the collapse a mere 2 months later shows very little can hold it back.
In the last week, a massive influx of money has flowed into BTC, ETH and the larger crypto space showing that investors are bullish and don’t want to miss out on the next bull run.
2. Is Bitcoin predicting the future?
When the stock market crashes, risky assets get sold first, investors rotate into safer sectors to protect their money.
We saw this with risky growth stocks, which are down 50-60%. Bitcoin is viewed as a risky asset and similarly its down 70% from its high.
Typically when markets recover money goes back into large, safe, stable companies first and then finally into risky assets.
But this is different, we are seeing money going into a risky asset like Bitcoin, which is a very positive sign. It signals that many investors think we have hit bottom and the market is on its path to recovery.
3. What am I buying and when?
Per my money sandwich portfolio workshop (watch here) - I recommend three things;
>> Go in slow - Dollar cost average into the market a bit at a time, don't invest large chunks at a time.
>> Focus on BTC and ETH - They are the most stable and both have plenty of upside.
>> Keep crypto as a small part of your portfolio - Don't invest with a 2 year time horizon.
Don't get swept up in all the noise and fear in the market, always take a long term outlook. The current selloff and reduced prices in both the stock market and crypto will look like sales when we look back a few years from now.
Even if we look back just a week, BTC's $16K price seemed cheap compared to where it is at now, and not even one of the biggest collapses in crypto history had much effect on it.
That's it for now! Thanks for reading.
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