Overnight this morning, the bears launched a beautiful and fatal sneak attack. Taking advantage of the wonderful moment when Americans were on holiday and Chinese were sleeping, they took another step and rushed to 55k, breaking through the low of 56.5k on May 1, 2024. The bears really wanted to draw a downward trend chart. This wave of violent wash-out mainly washed out the new investors who rushed into the market recklessly because of the two major positive factors, such as the spot Bitcoin ETF that has been touted by American institutions in the past six months and the well-known Bitcoin production halving event in the industry.
I work in the fields every day, so I have the most first-hand and fresh insights. Let me tell you, in which month in the past six months have the most new leeks entered the market most enthusiastically and actively?
Yes, it is March 2024. BTC first broke through the high before 2021, reaching a new all-time high of 73.8k, and formed a local top during that period...
The novice village in the financial market is completely different from that in online games. Not only does the novice village here not have novice protection, but it also has additional debuffs (online game terminology: a special effect that weakens the player).
What novices and veterans want is actually highly consistent: they both want to make money. But the biggest difference between them is that novices want to make money, but they don’t have chips in their hands. Veterans want to make money, so they can take advantage of the opportunity when novices rush into the market to sell, which is also called distributing chips.
The interesting thing about the financial market is its trick: in a time section, you cannot see who is winning and who is losing. You must examine the time dimension as a dimension to discover the secrets behind it.
At $70,000, no one is losing money. People will use such amazing words: BTC hits a new high, and all historical purchases are in profit!
In reality, the person who sold at $70,000 in March made the money of the person who sold at $57,000 in July.
Of course, if you can break through the one-dimensionality of the "arrow of time", that is, the human stereotype that time has an arrow that can only move forward and not backward, and freely imagine in your mind that the time dimension can also move in both directions like the space dimension, then you will find:
Those who sold at $70,000 in March 2024 can also be considered to have made money from those who sold at $16,000 in December 2022.
The money earned in March is equal to the money earned in July. This is called making money first and losing money later.
In March 2024, the money earned in December 2022 was taken away. This is called losing money first and making money later.
In the magical world of finance, time has become a two-dimensional elf.
In the face of such an elf that has broken through the one-dimensional constraints of time, human intelligence and imagination are a bit insufficient.
What’s worse is that this is far from over.
Did those who sold $70,000 in March really make money?
That depends on what "money" is? What is "money"?
In my eyes, when I added to my position at $55,000 in July, I made money from those who distributed chips at $70,000 in March. They lost money first, and I made money later.
However, as mentioned above, if we look at the timeline backwards, we can also think that when I bought the bottom with $16,000 in December 2022, I had already made money from those who sold $70,000 in March 2024. This means that I made money first and they lost money later.
Why did those who sold BTC at $70,000 in March 2024 lose money? Because unless they never enter the market and never buy BTC again in this life, the next life, or even their descendants, they will definitely buy it again at a higher price in the future, such as $100,000 or $1 million. If you sell 1 BTC at $70,000 today and buy it back at $100,000 in the future, you will lose $30,000.
Or, he will not buy again after selling until BTC rises to 1 million dollars in 2033, when his child buys 1 BTC for 1 million dollars. Then his child will inherit a debt of 100 - 7 = 930,000 dollars from him, and the debt will be converted into actual loss at the moment his child buys.
You might think that if he sets a family rule that prohibits buying BTC from generation to generation, then can this problem be avoided? Wrong. If he can really prohibit his descendants from buying BTC forever, then his family may have no successors in a few generations and be eliminated by this rapidly developing world.
Dear friends, if you are confused after reading the above paragraphs, it means that you are far from understanding BTC. Please learn more first!
Insufficient knowledge means that in your eyes, BTC is no different from a stock code, a bond symbol, or a fiat currency symbol. With such superficial insight, it is difficult to succeed in investment.
Only by constantly improving your cognition can you start to make real, stable and long-term money.
I then remembered a question that readers have repeatedly asked: Why should we use the "Eight-Character Formula - insist on fixed investment and increase positions when the market falls" to continue investing funds instead of "looking for the right opportunity" and going all in? But why do we still need the "Eight-Character Formula"?
Because each of us is subject to various constraints in the real world. We seek the optimal solution under many constraints, rather than investing and making decisions under an imaginary ideal situation. I have come up with the most common ability constraint: "For most people, wages are paid monthly, and business money is earned bit by bit." Even without this constraint, we still encounter another difficult hurdle: human nature.
Whenever you feel FOMO (fear of missing out) and are eager to go all in, it is often at a local high point. The all in is completed, standing guard at a high position, messy in the wind. This is the true portrayal of many new investors who went all in at a high of $70,000 in March at the beginning of the year.
The "Eight-Character Technique" forces you to slow down. Eat one mouthful at a time and walk one step at a time.
There is actually another use case for the "Eight Characters Formula", which is when you want to escape, such as in the current market crash. At this time, you are afraid, terrified, regretful, and doubtful. However, the "Eight Characters Formula" tells us to "persist" and "add to your position when the market falls."
The former is the material basis of the latter: only when you can't hold back and want to go all in and empty the magazine, you are held back by the "eight-character formula". Only then can you save bullets, and when the market plummets later, you can buy in, accept the discount, buy more as the market falls, and stick to it to the end.
Why can I stand firm and not waver in the face of the sudden collapse? Actually, there are two reasons:
1. Persist long enough, so the holding cost is low enough. Some people may see 50,000, 40,000, or 30,000, but who dares to say they will see 15,000?
Second, always control risks, always prepare for a rainy day, and always maintain sufficient off-site reserve funds and perpetual cash flow. No matter how beautiful the concept is, it must be supported by strength. Sufficient reserve funds and perpetual cash flow are the confidence to not be afraid of any market crash.
So, why do novices always lose money as soon as they buy? Generally speaking, it is because they have not yet established the cognition mentioned above, and have not done these points well.
