Why don’t I trade bitcoin for the short term

When I started investing in Bitcoin (BTC -0.39% )I had a preconception that I should also learn to trade. It took me three years to learn that this is not the case. Not only am I a trader, I am a really bad trader. Anytime I tried it ended rather disastrously because I let my emotions control my trading decisions.

Any professional trader will tell you to write a system of trading rules and stick to them. Although I got the right advice, applying the advice correctly was an entirely different issue. In the end, I settled on the conclusion that I should not trade.

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You have a long horizon

Part of what I found stressful about trying to trade bitcoin was the short-term volatility. I was very pessimistic about downtrends and very optimistic about uptrends. In other words, when bitcoin was going up, I thought it was going to the moon. When bitcoin was going down, I thought it was going straight to zero. Even though I think I’ve been through this stage of naivety, I still believe that my feelings have the power to influence my decision making skills if I’m going to try trading again. This is why I chose to keep a long time horizon in terms of investing in Bitcoin.

In a sense, I started with the understanding that Bitcoin is a long-term investment. When I first bought Bitcoin in 2015, I said I would never sell it as a trial to see how big this investment could grow. I never imagined an investment would do the trick like it did. Now I have the same view of the future of Bitcoin today at $40,000 as I did in 2015 when Bitcoin was $500. It’s an investment for at least a decade, and bitcoin investors are still early days. I don’t need to risk short term bitcoin trading to increase my gains because my gains will be large enough to satisfy me if I wait long enough.

I believe that everyone investing in Bitcoin in 2022 is still early days. That’s because I also think we’re early for today’s version of the Internet itself. So what does the future hold for bitcoin? What is its potential for future growth?

Bitcoin future

Admittedly, it wouldn’t make sense for me to consider Bitcoin a long-term investment if I didn’t think it would be about 10 or 20 years from now. I first had to convince myself that bitcoin is here to stay. After looking at how it is designed, built, maintained, and operated, I have not been able to articulate a reasonable set of circumstances in which bitcoin collapses. So there is a sound logic behind bitcoin’s existence in one form or another in the future.

Given that the network of cryptocurrencies on which Bitcoin is located is here to stay, where does the price go? Is it stored for more equivalent growth? Or will growth be more modest from now on? The third option is that Bitcoin is slowly fading into obscurity over the coming years. I think the most likely scenario is that the number of people around the world using Bitcoin will continue to rise. As the user base grows, so will the demand. Since the supply of Bitcoin is strictly limited to 21 million tokens, a brief analysis of supply and demand indicates that the price of Bitcoin is likely to rise in the future. I think there is a strong reason why bitcoin should go up to at least the market capitalization of gold, which is $12 trillion, from $800 billion today. Beyond that is anyone’s best guess, and investors will have to take it one block at a time.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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