To You in Panic: Every Crash is a Gift to Long-Termists
- Core View: Based on nearly a decade of experience in the cryptocurrency market, the author believes the current market panic is a normal correction within a long-term bull market, and emphasizes that in assets with an upward long-term trend, holding (HODL) and decisively adding positions during declines are key strategies for achieving compound returns.
- Key Elements:
- The author reviews multiple market cycles since 2013, including several significant drawdowns (e.g., 75%, 87%) during Bitcoin's rise from $200 to $65,000, indicating that extreme volatility is the norm.
- Presents a core lesson: For assets with long-term upward potential, the best strategy is often to "do nothing" (HODL), which is more effective than trying to time the market.
- Emphasizes the importance of adding positions during declines; even if one cannot perfectly catch the bottom, it can significantly lower the average cost basis, and the long-term compounding effect is superior to dollar-cost averaging.
- Points out that market sentiment (fear, self-doubt) is an inevitable "tax," and investors must manage emotions and build positions aligned with their own risk tolerance.
- Warns against relying on others' convictions (DYOR), stating that borrowed conviction is like leverage and can lead to devastating losses; one must establish their own investment logic.
- The author compares the current market environment to the mid-bull market correction between April and November 2021 and is taking action by continuing to buy crypto assets and digital art (increasing allocation to ETH).
Original Title: Crashes, Manias and Panic's
Original Author: @RaoulGMI
Original Compilation: Peggy, BlockBeats
The feeling outside is brutal, devoid of hope. It's all over. You missed it. You screwed up again.
Everyone is angry, confused. Even those who foresaw this can't help but feel a bit smug, yet many also know how much pain such price action can inflict. These moments always feel like the worst of times.
I've been in the markets for 38 years (today's sell-off is my "birthday gift," plus food poisoning last night!), and I've seen all kinds of crashes and panics.
They all feel the same—terrible.
I entered the crypto market in 2013, buying Bitcoin for the first time at $200. It went up for a while after I bought, then dropped 75%... and that was during a bull market that ultimately went over 10x my entry price. I didn't sell because it was a long-term investment, and I understood the risks. Then, in the 2014 bear market, it dropped another 87%.
In the bull run leading up to 2017, I experienced three 35%–45% pullbacks... brutal. I eventually sold around $2,000 (the previous 2013 high) due to the Bitcoin fork wars. I was up 10x from my initial purchase. But then it went up another 10x (!!) before the year ended, only to start another big, ugly bear market.
I sat out that entire bear market. It felt good at the time.
During the COVID crash, I bought back in at $6,500 (3.5x higher than my sell price). It turned out to be an expensive mistake of "thinking I did the right thing."
From April to July 2021, Bitcoin dropped 50% in a market environment similar to today's. The sentiment on Twitter was awful, truly awful. But that time, the market wasn't as severely oversold as it is today...
By November 2021, the market was back at all-time highs: SOL was up 13x from its lows, ETH doubled, and Bitcoin hit new highs, up 150%.
I've lived through all of this. All those terrifying, gut-wrenching moments, all happening within a long-term bull market.
My first buy was at $200; the price is now $65,000. I even missed a 3.5x move in the middle due to poor timing.
The first key lesson (for me): In a long-term appreciating asset, the best strategy is often to do nothing. "HODL" became a meme for a good reason. It's more powerful than the "four-year cycle" meme.
The second lesson: Be aggressive in buying the dip. Even if you can't catch the exact bottom, continuously adding to your position during weakness and scaling up your overall exposure compounds returns even more effectively than dollar-cost averaging (DCA) in the long run.
I haven't always had enough cash to buy heavily on dips, but I buy a little every time—it's crucial for mental training.
It always feels like: The opportunity is gone, it won't come back, everything will collapse completely.
But that's not the case.
Ask yourself two questions: Will tomorrow be more digital than today? Will fiat currency be worth less tomorrow than it is today?
If the answer to both is "yes," then keep going. BTFD, let "time in the market" beat "timing the market," because it always does. Adding during major pullbacks significantly lowers your cost basis, and that makes a huge difference.
Stress, fear, and self-doubt are the unavoidable "taxes" on this journey.
Size your position according to your own risk tolerance. Don't worry, when prices fall, everyone feels overexposed; when they rise, everyone feels underexposed. All you need to do is manage these emotions and find your own "sweet spot."
Another crucial point: Don't borrow conviction from others.
"DYOR" is an incredibly important meme; without it, you simply won't survive these phases. Earn your own conviction. Borrowed conviction is like leverage—it will blow you up eventually.
Remember: When you're busy blaming others, you're actually blaming yourself.
Yes, it feels dark right now. But soon, the sun will rise again, and this will just be another scar on the journey (provided you didn't use leverage! Leverage leads to permanent capital loss—you lose your chips at the casino). Never lose your chips.
When will this end? I don't know, but I think it's more like April to November 2021—a panic within a bull market. I think it will end soon. Even if I'm wrong, I won't change my approach: I'll keep adding as long as I have some cash.
But for you, it might be different. Try to build a "regret minimization" portfolio: Could you handle another 50% drop from here? If not, then reduce your exposure, even if it seems foolish. The right mindset is crucial for survival. My mindset is "how can I buy more," while yours might be the opposite.
There will always be timing geniuses who perfectly catch the drop, go to cash, or short. They will always exist. But honestly, you just need to tell yourself: This can happen at any time. That way, when it does happen, you won't be as anxious because you already expected it! It's just part of the story, not the whole story.
So what am I doing now?
I'm starting to buy some digital art (which also increases my ETH exposure) and plan to continue raising my crypto allocation over the next week—just like I do every time this opportunity arises.
I bought the COVID crash, the 2021 pullback, the 2022 decline, the 2023 decline, and I'll do the same in 2024 and 2025. I'll do it this time too. Every single time, my P&L makes new highs before the market does. It's like magic. Once again: BTFD!
Good luck. It's never easy.
Volatility is the price we pay for long-term compounded returns. Embrace it.
