Figured I'd make this post because of the recent BTC price action. If you're solely focusing on crypto, then you're most likely missing the forest for the trees. It's not just crypto that's tanking. Let me repeat: it's not just crypto that's tanking. Everything is tanking. And I do mean everything.
- Stocks are now officially in a bear market with no bottom in sight as it falls below the 20% threshold.
- High yield investment grade bonds are collapsing, also with no end in sight. (Yes, 15% is a collapse in bond terms).
- Even safe assets like 7-10 year treasuries are sinking as well. My bond bros can back me up. A 12% drop in a fixed income ETF? That's really, really bad.
- National currencies like the Yen aren't safe either.
- Real estate and gold are the last legs to fall. Why are they last? Liquidity. Gold doesn't move very often and real estate tends to lag other assets due to its lengthier acquisition process. But we're already seeing signs that real estate is going to tank.
The only safe place to be is cold hard United States Dollar. Cash is going to be king for the foreseeable future and I don't anticipate that changing anytime soon. So if you're living outside America, I feel sorry for you, I really do. I have no advice other than try to get more $USD. For those in the States, here's what you should be doing going forward:
- Don't over leverage. That means don't borrow money, don't mortgage your house, and don't max out your credit cards if you can help it.
- Do cut spending and save as much cash as possible.
- Don't buy the dip. It's not a dip, it's a falling knife.
- Do re-evaluation your allocation. I've put 10% of my net worth into crypto and it's now sitting at 5%. I don't plan on re-allocating back to 10% because I was clearly over-exposed. I'm going to camp at 5% and see what happens next. I'll be moving the other 5% into cash.
- Don't panic sell. The time for selling has long passed. You lost that opportunity when BTC was at $40k. Now you fucking HODL.
- Do stay the course. Whatever your investment strategy was, make sure to re-assess and keep investing. Slowly and deliberately.
- Don't try to time the market. You can't. If you didn't sell at the top, then you sure as shit aren't buying at the bottom.
- Do diversify going forward. There is no such thing as a "guarantee" in investing and there is no one "true" asset. Otherwise, we'd all be holding that one asset. All investments have risks of going to 0, never think otherwise.
- Don't beat yourself up. The bears are out in the woods today for a picnic and they'll be relentlessly mocking you. Every bear will suddenly be an expert who "saw all this coming" and they'll say that you were a fool to invest in "tulip bulbs". Unless those bears actually made money from this crash, they're just shit talking cowards.
There's more pain to come, folks. Much more. We're nowhere near max pain, so don't get brave yet. Bitcoin is an asset like any other. Don't fall in love with it, don't feel emotional about it. If it's keeping you up at night, maybe consider trimming it. Thanks for listening to my Ted Talk.