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One might expect institutions to be nearly perfect in timing their crypto purchases. After all, they are whales with access to endless resources.
The past year has shown that not even major institutions can time a Bitcoin top or bottom. CEOs appear to be geniuses when they publicly announce their purchases and price skyrockets, but they are not immune to the corrective nature of Bitcoin. During the current Bitcoin corrections, MicroStrategy, Tesla, and Square have all seen at least some of their trades in the red. Let’s take a closer look.
MicroStrategy owns the most Bitcoin of the corporate giants and has executed the most trades to accumulate their stack. By my count, Michael Saylor has publicly bought Bitcoin roughly 15 times. Of these 15 times, I would guess that at least ¾ths of them have gone straight into the red just within days. It’s pretty much become a meme at this point that MicroStrategy buys the top, although it’s untrue. Remember, Saylor has endless resources and advisors, yet he still timed the market “poorly” most of the time. Some argue that Saylor is a fool for continuing to buy Bitcoin regardless of price. Couldn’t have just waited until now when the price is dropping?
The above perspective is an incredibly foolish way to view trades and investments. Saylor was not trying to time the bottom, he was merely adding to his stack as his resources allowed. That’s a sound investing strategy - dollar cost averaging on a grand scale, even if he is forced to average up.
Square made its second Bitcoin purchase for an aggregate price of about $50,000 per coin. By the above logic, Jack Dorsey had worse market timing than Saylor. And Tesla saw a negative return for a short amount of time from the previous correction. Perhaps worst of all in the eyes of naysayers? Tesla’s “late” arrival to the game. Elon could have bought much sooner and for far less.
The excuses and terrible takes are endless, but given enough time, all three of these men and their companies will likely be viewed as geniuses by even their staunchest critics. As traders and investors, we are no different than the corporations above - we are merely operating on a smaller scale. Hindsight is 20/20 and we can all look back with regret for “not buying earlier” or for poorly timed purchases. Things change. Through time we may have access to more cash, similar to how MicroStrategy sold bonds to raise money, or our conviction may grow, similar to how Square doubled down on their position after Q4 interest affirmed their thesis on Bitcoin.
If you have accepted that the path to wealth is rocky on the way up, then do yourself a favor and acknowledge that it is equally unstable on the way down. Corporations, you, and I will all be tempted to question how and when we bought and sold our crypto, and look back with regret at the additional profit that we could have made had we done it differently. Don’t beat yourself up - we have the pleasure of watching the greats publicly buy-in, proving that they too are not perfect. They provide real-time proof that we are all just human.
In This Issue:
- Timing The Market
- Bitcoin Thoughts And Analysis
- Making Sense Of The FED
- Craig Wright Sues Coinbase
- MicroStrategy’s Liquidation Price
- My Recommended Platforms And Tools
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