Bitcoin Just Dropped 31% In 48 Hours! Surely It’s Doomed!
I’d better sell all my Crypto and put my miners on eBay. Well maybe not. If we look at the history of bitcoin, even 70% crashes are not rare. Yet, it is the best performing asset of all time. How can this be? The key is looking at market trends and how Bitcoin has behaved over time. These huge crashes have always been followed with a great rebound; it just might not happen right away. And this is why miners have a fantastic opportunity, and why miners that have stuck with it during bear markets (consistently low prices) have come out winning. So right now I’m going to give you 5 great reasons why “experienced” cryptocurrency miners love crashes and bear markets and why you should, too! But, first, what happens in the INITIAL stages of a cryptocurrency crash?
What Happens With Crypto Mining In A Crash?
All the accounts you hold with your hard mined crypto look terrible. Notice I said “look terrible” and I didn’t say “lost money?” That’s because there’s a difference between realized gains/losses and unrealized gains/losses. When you sell, you lock in that gain or loss, but only if you sell. The most common question I get from new miners during a crash is “should I sell all the crypto before it goes lower?” As always that depends. I am not a financial advisor and I do not give financial advice, but I do ask them a question…
Do You Think Bitcoin Is Going To Cost More Or Less In 2 Years?
If you think it’s going to cost more in 2 years then why sell at a lesser price? Just wait, you haven’t lost anything until you lock in that gain or loss by selling. It’s a lot like mining in general. We keep the mined coins until the prices rise and then we sell them. That means we’ve made that great profit over the multiple other days we’ve mined. We don’t sell low, we hold low and sell high. It’s the same with the alt coins. Does anyone think Kadena will be $4 in 2 years? Not anyone I know. Most have it on track for $100 so why sell my hard mined coins for $4 when I can just wait?
Panic Sets In And Bad News Sells (Literally)
The news loves a good crash, so everyone will be on the news telling you the world has ended and you’d better get out now. It will also tell you how silly you’ve been to even try trading, investing, or mining and your family will agree. This leads to more people panic-selling and prices going lower.
Miners Turn Off Miners!
Some countries have higher cost for electric so it becomes a negative for them to mine cryptocurrencies if the coin prices are really low. So they turn off the miners and lick their wounds or sell them on the second-hand market.
I Was Trying To Hide It
I was trying to hide it, but even just these couple of things might get you seeing the opportunities. Of course a lot more happens but as I’m writing a quick post I’ve skipped a few. Even just those couple of things may have triggered a response where you can see why there is a golden opportunity. But now to what you came for:
5 Reasons Why Miners Love Crashes And Bear Markets, And Why You Should Too!
1: Everything’s On Sale
Which of us wished we’d bought Kadena at $4, or bought the KD5 miner when it was $16k? When bitcoin rocketed to $69k, who wished they bought the last dip at $29k? Thought you’d missed the chance to get into ADA or XRP, well maybe you haven’t. Everything’s on sale. Buy low, sell high is the trader’s mantra, but when it comes to mining, most people seem to get it the wrong way around. When there’s a crash the phone stops ringing at the sales desk, but when bitcoin’s at all-time highs, then the sales team can’t keep up. That’s why now might be the time to add that coin or buy that miner because the prices may never get this low again. We got a second chance at great prices. But that takes us to point 2.
2: No One Is Buying Miners And Everyone Is Selling
I had a successful businessman come to me about mining. He had lots of real estate and lots of places to start mining and due to his good fortune he came to me at the time of the Chinese mining ban. This correlated with a crash and decreased demand for miners so the miners where 50% off. The flagship model was selling for $7k, when 2 weeks before it had been selling for $14k. I told him “now’s the time, everything’s on sale”. He then double guessed the correction (maybe it will fall further) all the way up to the same miner costing $15k. He still hasn’t bought any miners. We always suggest dollar cost averaging in of miners so he had very little to lose and buying low and selling high is how money is generated. The old trading adage “buy when there’s blood in the streets” is as true in mining as it is in trading. For experienced miners we welcome the lower prices that come, but they don’t come straight away. A crash, correction or bear market has to do one of two things for prices to change. It either has to be a very severe crash or correction , think 40-50%, or it has to last for over 4-6 weeks then prices start to change. Of course the second a coin price increase happens the manufacturer raises the miner price. So lower prices are good for miners because it can lead to much better return on investment (ROI) and sometimes you can get 2 for the price of 1. So supply and demand work in our favor in down markets, the opposite is true when we are in a bull market so the miner has an advantage in a down or bear market. Don’t get me started on the second-hand market. It can get flooded in bear markets with cheap second-hand miners and whilst I’ve never had luck with second-hand miners, there’s still bargains to be had.
3: Time In The Market Beats Timing The Market
Did you manage to sell at the all-time high? I didn’t and I’ve been doing this for years and most high profile or successful traders will tell you they didn’t either. That’s where this next trader’s saying helps us out: “Time in the market beats timing the market.” It’s very hard to time the market. People lose millions a year trying. However, having more “time” in the market leads to success over the long-term. Did you miss the all-time high? good! Now you know a great placer to take some profit as it passes it next time. Michael Saylor, probably the most well-known Bitcoin holder, says that the short-term timeframe for Bitcoin is 4 years! Medium term is 10 years! And long term is forever. He also points out that anybody in Bitcoin that has held over 3 years has not lost money. Not a single one, as long as they didn’t sell. Most of our stress comes because our timeframes are wrong. Zoom out to see the long-term Bitcoin chart and you will see we are currently worrying about a tiny dip. Mining allows us to have “time” in the market because new coins turn up every day and we get to perfect our trading with fresh coins everyday. We get 365 second chances a year with mining. This doesn’t change in a bear market, it actually gets better! Why? Because of a difficulty.
4: The Difficulty Decreases
Remember earlier when I said some countries turn off their miners in a crash? Well, that affects things for the better. During the initial stages of a crash, you may be checking ‘whattomine.com’ and shaking your head at the terrible returns, then a few days later, even though the prices haven’t changed, ‘whattomine.com’ says you are making more money. How can that be? Every 2 weeks the Bitcoin algorithm checks the hash-rate – the amount of computing power dedicated to Bitcoin*, and if it has dropped (what happens when people turn miners off) it gives more rewards to those still mining. Therefore, a crash or bear market gives you more coins than you were getting before, and more coins are great when the prices return. It literally made millionaires of bitcoin miners overnight during the last bear market rebound. And that takes us to the culmination of these points.
5: More Millionaires Are Made In Bear Markets And Recessions
You may have heard of the true statistic that shows that more millionaires are made in recessions than in boom times. You notice I said “made.” They set themselves up with cheap deals and discounted assets and when the good times came, those assets paid off. So let’s run through a potential scenario.
A crash happens. Coins are on sale so you buy those hot coins you thought you’d missed out on. The miners also went down in price which means you are able to buy them at 35% off. That means you are able to buy 35% more miners than you thought. The difficulty level dropped so those miners are now mining more coins. If the bear market lasts a year, then you have been able to have 35% more miners delivering more coins than before and save those coins for that bear market year. Then, the day comes when the coin goes up over 10 times (Just like the Bitcoin bear market rebound in 2020). Those extra miners delivering extra coins now make you seem like a genius and those decisions that you made in the down market bear enormous results in the up market. “More millionaires are made in recessions.”
Oh! And those hot coins you bought at a discount? well that was just the cherry on top.
Steps You Can Take During A Crash (Not Financial Advice):
