Letter #239: Volatility Is As Volatility Does
Read now to learn how volatility might not matter as much once you understand the true purpose of Bitcoin.
Dear Readers,
Given the events of this week, many of us are probably of the opinion that 2024 is off to a rocky start: after a long climb from a USD value of $16,000 this time last year to nearly $46,000 early this week, Bitcoin moved into Wednesday with a precipitous drop, losing over ten percent of its value in USD terms in just over an hour.
Par For The Course?
Throughout its existence, Bitcoin has often been criticized for its ‘volatility’, with opponents using that volatility to stoke fears that Bitcoin could never be money, or even never retain value – an essential part of helping people save their way to a better future – for very long.
If you're hearing those choruses, and perhaps even somewhat lending credence to them, know that you're not alone. We’ve likely all been taken in by such shortsighted criticisms at some point during our Bitcoin journey.
In fact, for those of you who have joined the Bitcoin community in the last year or so, this may be the first ‘flash crash' you've ever experienced. And if you've put some of your life savings into Bitcoin, seeing it shed ten percent of its worth in such a short amount of time can be nerve-wracking.
Reliving My Early Days
I’d like to think that I know how you feel. My first flash crash, or at least the first one I remember, was in March 2020 when, in reaction to the COVID-19 pandemic going global, Bitcoin lost over half of its USD-based value in less than a day. At that point, I myself was still relatively new to Bitcoin, so I was extremely concerned to say the least.
In the years since that day, I've seen Bitcoin’s value jump and drop by huge amounts many times. In a number of ways, it's become easier for me to deal with that volatility, especially as I've grown to understand Bitcoin's true potential: Bitcoin is not a new type of investment vehicle, to be lambasted if it doesn't cater to every whim of Wall Street. It also isn't a fad destined to pass us by and cease to exist in a few years. Rather, Bitcoin is a new way (and, actually, the only true way) of doing money and finance that finally puts us fully in control of our lives and our livelihoods.
With that deeper understanding always present in my mind, getting through the ups and downs of Bitcoin is nowhere near as hard as it used to be. Perhaps that knowledge can be of some assistance to you as well.
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This is not financial or business advice. This newsletter and related content are for informational purposes only. Cryptocurrencies and digital assets can be risky. Always do your own research before making any sort of investment.