Is your crypto journey over?

Author: Matt Hougan, Chief Investment Officer of Bitwise

Compiled by: Ken, Chaincatcher

The world outside feels incredibly harsh and hopeless. Everything is over, you've missed the opportunity, and you've messed up once again.

Everyone feels angry and confused. Even those who foresaw this scene feel relieved, but they also understand the extent of the damage this price movement has caused to others. It feels like the worst of times.

I have been in the market for 38 years (today's sell-off is quite a birthday gift, along with my food poisoning last night!). I've witnessed all kinds of crashes and panics.

They all feel the same. Terrible.

I got into cryptocurrency in 2013. At that time, I bought Bitcoin for $200 for the first time.

After buying, it went up a bit, then plummeted by 75%… and this was during a bull market, eventually rising to over 10 times my entry price. I didn't sell because it was a long-term investment, and I understood the risks.

Then in the bear market of 2014, it dropped by 87%.

The subsequent bull market lasted until 2017, during which I experienced three sell-offs of 35% to 45%… it was brutal. Ultimately, due to the Bitcoin fork wars, I sold at $2,000 (the previous high in 2013).

I made 10 times my initial entry point. But before starting another massive, ugly bear market, it rose another 10 times (!!).

I avoided that entire bear market, and it felt pretty good.

I re-entered during the COVID crash at $6,500 (3.5 times higher than when I sold). That was a costly mistake, even though I thought I was doing the "right thing" at the time.

In 2021, Bitcoin dropped 50% from April to July, and the market conditions were very similar to now. The sentiment on Twitter was terrible. Really bad. But at that time, the market wasn't as oversold as it is today…

By November 2021, the market returned to all-time highs. Solana rebounded 13 times from its low. Ethereum doubled. Bitcoin reached a new high, rebounding 150%.

I experienced all of this firsthand. Every terrifying, gut-wrenching moment happened within a long-term structural bull market.

My first entry price was $200. The current price is $65,000. In between, I missed out on 3.5 times the gains by trying to time the market (and doing a poor job of it).

The first key lesson here (for me) is that in a long-term rising asset, what you need to do is nothing. The reason "HODL" became a meme is that there is ample justification for it. It is far more powerful than the meme of a 4-year cycle.

My second lesson is to aggressively accumulate during sell-offs. Even if the timing is off, buying in batches during weakness to increase your overall position will greatly compound returns over time, even better than dollar-cost averaging.

I don't always have cash to buy heavily during sell-offs, but I always buy a little because it helps train the mindset.

You always feel like you've missed the opportunity, that it will never come back, and that everything is going to be completely ruined. That's not true.
Ask yourself two questions:

1. Will tomorrow be more digital than today?

2. Will fiat currency be more devalued than today?

If the answer is yes, then keep going. Buy the dips and let "time in the market" beat "timing the market," because the results always are. Accumulating during a massive sell-off will lower your average cost. This makes a huge difference.

In this process, stress, fear, and self-doubt are the expected "taxes."

Position management is crucial for your risk tolerance. Don't worry, everyone feels overexposed during downturns and underexposed during upswings. You just need to manage those emotions and find your comfort zone.

Another key point is not to blindly trust others' opinions. Doing your own research is a very important principle. Without it, you won't survive these tough times.

You must earn your conviction through strength. Renting conviction is like leverage; it will ultimately leave you with nothing.

Remember------when you're busy blaming others, you're really just blaming yourself.

Yes, it feels very dark outside. The sun will rise again soon; this is just another scar on the journey (as long as you don't use leverage! Leverage can lead to permanent capital loss because you'll be betting against the house). Never lose your principal.

When will all this end? I don't know, but I think it feels more like the panic from April to November 2021------in a bull market. I believe it will end soon. If I'm wrong, I won't change anything. As long as I have cash, I will continue to accumulate.

But for you, the situation may be different. Try to build a portfolio that minimizes regret. Can you withstand a 50% drop from here? If not, reduce your position, even if it feels stupid to do so. Having the right mindset is crucial for survival. And my mindset has shifted to "how can I buy more," even if your thoughts may be the exact opposite.

There will always be some market timers who can accurately predict sell-off timings, close positions, or short. This situation will always exist. But honestly, you just need to tell yourself that this is predictable at any time. That way, when it actually happens, you won't feel stressed because you anticipated it! It becomes part of the story, not the whole.

What am I doing now?

I have also started buying some digital art (which also counts as accumulating Ethereum), and next week I will seek to increase my cryptocurrency allocation, just like I do every time this opportunity arises.

I bought during the COVID sell-off, the 2021 sell-off, the 2022 sell-off, and the 2023 sell-off, and I will do the same in 2024 and 2025! This time I will do it again. Each time my gains and losses have set new highs ahead of the market. This strategy is simply brilliant. Once again… buy the dips!

Good luck to everyone. This road has never been easy.

Volatility is the price we pay for assets that provide long-term compounding returns. Embrace it.