On risk considerations in a bull market

In last Saturday’s exchange, an audience member asked this question:

What if we knew that in the next bull market, Bitcoin would exceed $100,000. If you still have some spare money that you don’t need in your daily life, why not use it all to buy Bitcoin now, and get some returns in any way?

Nowadays, many investors are very sure that Bitcoin will have extraordinary performance in the next bull market, and even think that exceeding US$100,000 is no problem without thinking.

The more this happens, the more we must be wary of this emotion.

I say this not to say that Bitcoin cannot exceed $100,000, but to remind our investors that the sentiment behind this view is worth noting. And this emotion will expand more and more as the atmosphere in the bull market gets hotter and hotter, eventually going to our heads and making us lose our rationality.

If you don’t anticipate victory, you anticipate defeat.

I consider very extreme risks in any situation. The same is true for speculation on the peaks of Bitcoin and Ethereum in the bull market.

Everything is subject to probability, and we suspect that the same will be true for Bitcoin to exceed $100,000 in the next bull market.

Since it is a probability, then I will definitely consider another situation:

If Bitcoin does not exceed US$100,000 in the next bull market, or even falls below US$100,000, Then will we still consider investing all the funds in our hands now?

If this probability occurs, then it will be the beginning of a new round of bear market, and we will enter a new, relatively long period of suffering.

The worst thing is, because we had no idea beforehand that Bitcoin’s peak would not even reach 100,000 US dollars, so most of us did not sell and profit in this bull market. Bitcoin and Ethereum will continue to fall.

What’s worse is that because we fired all the last bullets beforehand, we now have no spare money.

In this way, during the relatively long period of suffering that follows, we cannot bear to sell the declining Bitcoin and Ethereum, and we have no spare money to participate in fixed investments. We can only watch helplessly as the market goes into a deep bear step by step. Our emotions continue to sink and our will continues to disappear.

In order to deal with this situation and also consider that Bitcoin has a high probability of exceeding $100,000, my approach is:

In the next bull market, hold Bitcoins worth less than $100,000 will not be considered for liquidation.

Keep your current spare money and never buy Bitcoin, Ethereum or any other currency unless you see a project you like. Once the above small probability event occurs, I will use the spare money to start fixed investment again in the next bear market.

In addition, I will also be mentally prepared. When this probability occurs, I will take the Bitcoin, Ethereum and other coins that have not been realized in my hands and follow the market to survive the bear market until the new period. The arrival of a bull market.

Any investment market is full of risks and extremely cruel. Any inconspicuous risk in the market may swallow us up at any time. The market wipes out each of us just as humans wipe out ants one by one, without leaving any trace.

Therefore, I always believe that in the investment market, profit is only the second most important thing that we retail investors should consider; our first consideration must always be to prevent risks.

In any case, we must have backup options to guard against the impact of extreme risks. Only in this way can we live longer and longer in the market.