Have you ever considered taking a step back when trying to see the bigger picture? It can help, doesn’t it? The Austrian School of Economics offers a step back on how we shall understand economics, this step backward gives us not only a better understanding of the macroeconomic relations but also a much more insightful way of logical deduction on how society works. Many would now say “Wait, economics without maths? That’s no fact.” But this is where they are wrong, in the eyes of an Austrian economist. You see, Austrian economists don’t use complicated mathematical equations as their premise for an argument, they don’t seek out complicated models and statistical predictions, an Austrian only uses his head and what’s in there. And this, in my eyes, is already very powerful and a very compelling reason why you should know about it at least on a fundamental level.
Hang on, I have more reasons being listed below, make sure to stick around until the end, I am going to give you a link to a free college-level course about Austrian economics and more.
Keynesian School of Economics or the traditional School of Economics taught in schools all around the planet can only be fully understood with a bachelor’s degree, at least. The system is so complicated that it makes all sense to give your economic powers to someone with expertise in the financial/ banking field. Austrians despise this idea, they argue that economic relations are subjective, making the whole idea of giving away your economic capabilities idiotic. Every single one has an influence on the market and its relations. The market reflects a functioning society, so once the subject is removed from this equation, is the market still a reflection of what state the society’s health is?Austrian Economists argue with the strength of deductive reasoning and logic. Having said so, this approach is very market-wise laissez-faire and is standing for trade not influenced by government or other counterfeiters trying to manipulate the economic relations of societies. Governments have no reason to play with economic relations because fundamentally they can only make human action from an objective point of view possible. Realizing the objective view of governments is flawed and more often harmful than constructive is like thoughtfully embracing the Austrian School of economics. Realizing that economic laws can be played is dangerous, realizing that they shouldn’t be played with, is the way to go. How is this helpful?
Well, we as humans can take market action, remember? So, let’s take some action!
Having fiat currency is already a prerequisite for being part of the problem. Money is the link between subjectivities, it helps to market participants to agree upon the value and market action of buying and selling. Fiat currencies such as the dollar are not covered by real-term value, they are covered by debt. Look at the debt pile of major countries, all of them are in huge debts to finance their expenses. Look even closer and see how every government is spending more than they are making. But not least, we still have an inflation target of 2% per year. When a government produces more of a currency, it increases the supply of the dollar e.g., and by doing so, effectively decreasing the remaining value of each dollar in the market. Once a government can produce more of your money, they control your money. Austrians say that this is the problem of all our economic problems. The exchange between humans using the dollar is an exchange based on trust. It should be of real value. Buying gold or Bitcoin can help you to avoid human influence on monetary exchange. A medium of exchange that offers limited supply is of most importance here. When humans influence monetary supply, they influence our economies.
By simply buying or selling a monetary asset with limited supply will have an influence on the price of remaining units of this good making the market action as pure as it can get.
Having a bachelor’s in finance is nothing everyone can get, buying and selling is something that we do daily. Why should we be dictated on how we buy and sell on a day-to-day basis from someone that does not recognize subjective importance? Austrian economics is much more than a way of describing how humans interact and exchange, it is also critical thinking and logical deduction enabling everyone to equip themselves with thinking that is worth more than a college degree.
If you want to learn more about human action, marginal utility, and Austrian economics principles be sure to visit the links below.
Full College Degree Course on Austrian Economics by Saifedean Ammous for free:
The Bitcoin Standard – By Saifedean Ammous
We have a strong-looking market out there. It is great to see everything going again after months of consolidation, this is what I needed now.
In all my time in Bitcoin, I have never experienced as much fear, uncertainty, and depression as in the past few weeks. Elon Musk, Donald Trump, and the IMF entered the circle of oblivious market manipulation to increase uncertainty and fear. However, Bitcoin has been crab-walking since then, why this makes me bullish on Bitcoin will be further discussed in this article.
The past few weeks have been boring if we look at price action. Bitcoin has been bouncing between 30 and 40k, the consolidation is obvious at this point. Many still fear market manipulation and who can blame them? After Elon Musk’s tweets, crypto tends to move in a range of 5 to 20% depending on the tweet’s mood. But even Elon Musk could not get Bitcoin to move below 30k breaking its support. Moreover, Donald Trump could not accelerate the “fall of Bitcoin”. The IMF came out, denying El Salvador’s move of making Bitcoin a legal tender by quickly saying that the cryptocurrency industry is the “wild west” and needs regulations. Not even this moved price below 30k.
After all this fear and market manipulation, Bitcoin stays above 30k and a 500 billion USD market cap. At this point it is clear, newcomers let themselves be influenced too much by the market manipulators. However, old Bitcoiners are not influenced, this is reflected in price staying above 30k, the majority hodls. People being influenced tend to be more reactive to fear of missing out.
Bitcoin has its way of punishing people that sell their coins. Since Bitcoins price action is fast, many will miss the opportunity to re-enter the market at a lower price as they were probably selling. Once Bitcoin breaks certain price levels, FOMO will pick up. Thanks to all the manipulators, there are now more people watching the space than ever. Therefore, it is only a matter of time until many will realize that Bitcoin is not planning to stop at 60k.
So, what must be done for FOMO to kick in?
Bitcoin will not need much this time for FOMO to kick in. 42k has been a resistance before, perfectly setting the scene for a breakout trade, this will be a trade, anticipated by many market participators. But price alone will not help Bitcoin reclaim its all-time high levels. FOMO will be the most important factor. Market participators are waiting on the side-line for around 8 weeks, waiting for a once-in-a-lifetime opportunity, once the sentiment is established, People will craze for Bitcoin. Moreover, there are many models, predicting Bitcoin’s price to be above 100k. The Stock to Flow model of Plan B predicts 220k Bitcoin by the end of 2021, while influencers such as Max Kaiser say the same thing.
So, is Bitcoin set to break its all-time highs?
It is very hard to predict what Bitcoin will be doing next, but one thing is certain, the Bitcoin space is gaining in massive popularity, making a bull run more and more likely. Even TV channels can not shut up about it anymore. People get more and more sensitive to the topic, making a purchase more probable. Big announcements such as MicroStrategy and El Salvador will make people think about Bitcoin. Thinking about Bitcoin is a self-fulfilling prophecy.
Why is the bottom in?
Easy! Market manipulators will not bring prices under 30k, they tried and not even the IMF had accomplished it.
Should you be buying now?
Never buy without a strategy, Bitcoin prices are very volatile, and you never know when the next market manipulation will hit prices. Dollar-cost averaging is and will always be the best way to buy Bitcoin.
Bitcoin’s value is derived from the subjective valuation of the coin. Bitcoin staying above 30k shows me that people subjectively value Bitcoin more than what manipulators have to say. Bad news for Elon and good news for Coiners. Keep calm, stack, and never invest more than you can afford to lose!
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This is my first complete Bitcoin market analysis. See how I look at the chart and understand the key levels for Bitcoin to be reached or broken.
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We cannot build a time machine. Traveling back 10 years from now and buying Bitcoin does not work. All we are left with is watching Bitcoin’s price skyrocket away, leaving us enjoying the ride and being sad about the price Bitcoin will never go back to, and we missed the chance of buying it. Possessing one Bitcoin nowadays is a privilege that not many people can enjoy. Since there is only 21 million Bitcoin on the planet, most of us will not owe one full Bitcoin. Approximately 4 million of the 21 have been lost on keys that can not be recovered anymore. As a result of that, we are very unlikely to own one full Bitcoin in our lifetime. I would like to provide you with a chance to fulfill the unspoken desire of owning one whole Bitcoin without exposing yourself to too much risk or volatility. Stick around to let me explain further.
Satoshi is the minimal divisible unit of Bitcoin. It is a 100 millionth of a Bitcoin and named after its founders’ pseudonym Satoshi Nakamoto. The divisibility of Bitcoin gives it a massive advantage. It facilitates buying lower quantities of Bitcoin. If you only want to buy 50 dollars of a Bitcoin, you can do that without any problem.
Divisibility is a game-changer. If you want to acquire a full Bitcoin, but you do not have the 30k to pay for it straight away, you are better off buying small quantities over a more extended period. In fact, I urge you to purchase stacks of Satoshi’s and not buy in bulks. Here is why.
Buying small quantities of Bitcoin every now and then will make you control volatility much better. If you buy the low and the top of the Bitcoin cycle, your average value will be the middle of the price, so as long as Bitcoin is staying above your average, you will be positive. This is a great way to control your risk since it will no longer matter if you bought the top of the market cycle or bought the crash. Just keep your long-term goal in mind and focus on that one Bitcoin you are trying to acquire.
Since Bitcoin is moving in cycles, you have the chance to reduce your risk by spreading your investment out over a considerable period.
Use a strategy
If you want to buy a full Bitcoin by stacking up Sats, you should have a strategy in place. Strategies help you to buy the lows. If you analyze every time you are trying to buy Bitcoin and wait for a good entry before buying, you will master price and return on your investment even more. The more work you do in the short-term the more profits you can squeeze in the long-term. The strategy will be your consciousness dictating your next actions in the market. This reduces your risk of buying on an impulse or even spend more than you should.
Buying a full Bitcoin is hard nowadays since they cost a lot of money. You have a much better chance of acquiring a full one when you try to stack Satoshis until you have an entire coin. This not even gives you an incentive, but it also helps you to focus on the long-term. Spreading out your purchases reduce risk and cancel volatility. The only thing left to do is have a strategy that enables you to identify the right moments to buy. You can worry about the selling at a later time.
If you need help with your strategy, check out my content on how I approach the markets. Get in touch with me if you want to know more about my strategy.
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Bitcoin panic is notorious. People are terrified by the idea that Bitcoin can go in a bearish direction. As soon as Bitcoin abandons its trend in a bull market, panic picks up. The bloodbath after 2018 has still left its scars on many Bitcoiners. Therefore, it is a common sight to people selling out of panic because everyone is doing so too. Many have lost a lot of gains or money because they sold in the trend, few have held on to their coins in 2018, but those are the ones with good profits now in 2021. But how can we actually stop worrying about something sure to come? How can we make money from our Bitcoins if we bought the top?
(Side note: Never invest more than you can afford to lose)
Cancel the short-term, focus on long-term
Investing Bitcoins means that you shift your time preference. This suggests that you understand that you will not see a direct return on your investment. But if you have the patience to stay for long, you will almost always make gains in the long run. Coiners who bought the high in 2018 held on to their coins until 2021 have good profits today. A friend of mine (one of the coiners that held on) made a 75% gain on that investment in 2 years. This is still a far better return on investment than if you threw your money at the stock market for the same amount of time. Short-term news only distracts from your long-term goal. Do not be distracted and focus long-term.
There is no such thing as negative PR
Negative PR (public relations) often backlash and give the subject more attention. More attention when it comes to Bitcoin means more demand, ultimately resulting in a price increase. Negative news will maybe affect price in the short-term, but negative news is a positive thing for us since we are not focusing on that. Negative news will bring more attention to Bitcoin. Awareness is excellent because people will try to understand what Bitcoin is once they have read about it. By reading about Bitcoin, many will become exposed to the ideas and the concept of Bitcoin, which will surely convince one or two to buy it.
Average and diversify
The best strategy to invest in Bitcoin is to buy the same amount of Bitcoin over a year. Let us say you want to buy 10’000$ worth of Bitcoin. You would actually better handle the volatility if you bought 500$ Worth of Bitcoin every two or three weeks. This would help you avoid buying high and selling low. You would just average your entries out. Using this strategy reduces your risk dramatically but could increase your gains just as much if done right. Just keep on holding your entries
Diversifying into other cryptocurrencies or assets always makes sense. Reducing the risk of losing money through buying other investments like stocks or other cryptocurrencies. If Bitcoin takes a dip, you could still have the gains from the different markets. Since many of them are not related, you could expect others to stay stable while Bitcoin goes the other direction.
Do your due diligence carefully. Always be sure to invest where you want to invest. Never buy or sell something out of hype or an emotional decision.
Fight analysis paralysis
Checking the charts every 2 minutes will only expose you to the short-term actions on the market and might panic you into a decision that could be regretted. I have been there, checking the charts will not make you any money. Your behavior and decision-making are of more importance here. Do not be distracted by short-term price action or news. Keep your strategy in mind and focus on the long-term. It is enough if you check the charts once every day. But there is no need for more if you are only investing.
Learn about the market
Learning about the market is far better than being distracted and blinded by the news. Use your spare time to study the market you have chosen to invest in. Find profitable opportunities and stick to your strategy while looking for them. Doing so will take away fear and your need to listen to all the analysts making big noise out there. Knowledge is the best weapon against fear, so be sure to make fair use of it.
The Bitcoin pullback is always linked to people panicking, but those who keep a cool head and focus on the long-term are the ones making good money. By understanding that Bitcoin is designed to move in the way it moves, you will realize that you need a different market approach. By using these steps, you will surely do well in dealing with volatility. If you need more content or tips on investing or trading, be sure to check out my website for more content and leave me a follow to stay up-to-date.
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This article is a thought-experiment and by no means fact.
For a long time, human beings have told themselves that if we can control something and bend its workings’ rules to our advantage, we would exploit it ethically (or not). By exploitation, we often enriched ourselves and never really thought about the consequences of doing it. This is a repeating pattern of mistakes done over and over again, and even history books tell the same story.
The human life cycle is relatively short.
The problem with that is that new generations have not experienced the hardships of their elderly relatives; therefore, we are keen on making the same mistakes as our relatives because the system has been left to make these mistakes again. Monetary decisions have the same pattern. Keynesian decisions were made decades ago, their ideology was tailored to that time. However, we are still using this system in a time that needs different solutions. We are starting to realize that we should not mess with inflation since it is one of the most significant problems. Funny enough, we had to endure the Weimar Republic, Venezuela, and nearly all other currencies that do not exist anymore to still not realizing that human control over monetary systems cannot work. But here we are, still inflating our money as if we had not learned a single thing. Humans nowadays do not know how money based on commodities works, nor do they understand why human beings always chose the scarcest materials to use as their preferred payment method. Fiat currencies were used to avoid a recession and solve the problem of the divisibility of gold. They were left in place because monetary policies tend to stimulate economic growth in the short term, which seduced us into thinking that this kind of growth should be expected. But since money produced more by a button press does not match the picture of scarcity, I would argue that fiat currencies are about to share the same destiny as all the other inflationary currencies before them. Knowing all that, why should Bitcoin win in this case?
Bitcoin cannot be controlled by humans.
We value everything infinitely more that we can control than things that we cannot control. This makes sense. Who does not love their pet? We learned that we have more options to react to a situation that gets out of hand if we are in control. That is why you bring the leash while taking our dog outside. But this might be true for the dog, but certainly not with money. Once the need for inflation is stimulated, it will be hard to go back. New generations will not understand the normality of a monetary cycle because they are brought up under a flawed system designed to centralize value control. Moreover, can we not go back because once this psychology of “ah, we can print more if there is a problem” sets in, it is irreversible to think differently again. There will always be the more comfortable option of printing as demanded.
I am trying to suggest that Bitcoin is desirable and better than the fiat currency system because it cuts out one crucial and flawed error: us. Humans cannot change physics; therefore, we will never change how our car rolls or how planet earth pulls us toward it. Why should our monetary system be any different from that? Human control is only useful if we control metrics that have no chance of taking the upper hand on us. Money has controlled us since it exists. It is ridiculous to think that we can control money if money outlives humans. Everything humans’ control does not outlive humans. The dog does not get older than humans, gold, however, does, and we have no control over the metrics set by gold. Fiat currencies fit into the picture of not outliving a generation of human beings. With this logic, it does not sound desirable to know that some of the fiats currently available will disappear someday. Really makes me think if fiat currencies are a good store of value. Why should we choose to take a fiat currency as a payment even though gold has been around forever?
Now luckily, we do not have to use gold anymore. Gold is out to date because it is materialistic, hard to transport and divide. Ergo, we need a better solution. We need a currency that has the durability to outlive humans with metrics set to preserve or even increase its value in the long-term. Bitcoin brings all properties gold has (and even gets scarcer than gold with every Bitcoin halving to come) and replaces the human variable with mathematics. The human mistake will be cut out of the market, ending a streak of inability to handle money. Moreover, generations to come will be prevented from making all of our mistakes again. Bitcoin offers a currency free of entities to control your purchasing power and gives back naturalism to a market artificially kept on steroids for decades.
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“Bitcoin is a Ponzi scheme” and “Bitcoin has no value” are my favorite Keynesian counter-arguments to why Bitcoin is a valuable investment alternative. For many years, Bitcoiners had to endure the Wallstreet’s bashing and institutional investors that saw Bitcoin as a no-go. It felt like a cult, organized against the magical internet bean that everyone underestimated. However, the cult is now part of the Ponzi scheme, and there are only a few lefts to preach the flaws of Bitcoin. What has changed? Why is suddenly everyone jumping onto the train?
After seeing 2018, Bitcoins’ increase in price became more important than the negative press around cryptocurrencies and Bitcoin. This was a game-changer in many regards. It taught many how Bitcoin really works.
The volatility of Bitcoin is of paramount importance to understand when you try to trade it. It is nearly impossible to foresee the price movement of Bitcoin because the price is directly susceptible to the human need for it (demand). Since Bitcoin has a limited supply, selling and buying do have a direct influence on the price, this is not likely to change much in the long term, sure the volatility will decrease with a higher market capitalization, but the fact that everyone’s buy or sell order will affect the price will not change. But what does that mean for you? How can you learn to deal with it?
Volatility is actually a great thing. There are so many more positive aspects of volatility than negative ones. Volatility enables you to buy the lows and sell the high (trading). Since the cryptocurrency market offers high rates of volatility, it also provides high gains. The cryptocurrency market can not be compared to the conventional markets. The crypto market offers much more return and loss. Do not expect it to be easy to master, but investing time and money will surely help you understand how it works.
Another strategy is to HODL, keep your money, and hold it as long as you feel the need to save it. Many Bitcoiners (including me) hold their coins until they are dead, probably. Hodling is actually a great way to avoid volatility and even out your losses. For example, a good friend of mine bought his Bitcoin in 2018, right on the peak at around 18k. Bitcoin fell right after and was devasted (he didn’t need the money, he was sad that he lost it), he kept on holding it and buying more throughout the months and years. His Bitcoin in 2018 doubled in value in 2020. Keep on hodling your coin, and your return on investment will be almost 100% in the long term. Do not be distracted by short-term news. Keep on holding it, and you will be okay eventually.
Average your entries out. You can also buy Bitcoin by, let us say, in 1-month intervals, not looking at the price at all. Every month you buy Bitcoin at the same time for the same amount. This would help you even out losing investments. If you purchased the high as my friend did in 2018, you could have bought it at a lower value. The price increase Bitcoin did on that entry could compensate for the losses you endured earlier. This is the best way to fight volatility but makes the calculations much harder, be sure that you are on top here and record your entries to come back and check your gains.
Bitcoin and other cryptocurrencies offer significant volatility and great gains. Getting your fair share of the cake is not hard. HODL, trade or average out, do one of these, and you are likely to see gains in the long term. Look at this as a long-term investment, and your mentality will shift, and volatility will become your friend.
Investors and the public are realizing this in big style today. It is no secret that Bitcoin is here to stay. Buying into it now means that you understood how Bitcoin works. Since Bitcoin has limited supply and everyone is trying to escape the Keynesian economies’ inflation, demand for Bitcoin is picking up and will pick up further. Trust in the economics of Bitcoin, and you will see how much sense it truly makes.
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