This is one of those brutal honesty and reflection pieces that I hope you can learn something from.
If you follow this sort of thing, you may know that Bitcoin reached an all time high (ATH) price this week of $72,000. That got me reflecting on my experience with crypto and investing generally.
Back in mid-2021, I started dabbling in crypto. Not a lot at first. Shortly thereafter, Bitcoin soared to hit a then ATH of $69,400. Everything I touched in crypto turned to gold. I thought I was the smartest person ever. I started buying more and more.
I continued to invest and learn about the subject and did pretty well. Most of my funds slated for investment went into crypto at this point. Then over the course of the next year, crypto began falling and then crashed as platforms like Luna and FTX went down in huge scandals, and Bitcoin and most other cryptocurrencies dropped 80-90% in value. Bitcoin hit a local bottom of $15,787 in November 2022, one year after hitting the ATH.
I was lucky that I sold most of my holdings before it got really bad. But I did take a few nasty losses. At present I own very little crypto. Overall I lost more money than I made.
The point of this post isn’t to give you my opinion on cryptocurrency. Any investment in any field can be just like this. The reason it was that way for me wasn’t because crypto is good or bad. It’s because I forgot The Rules of Gold.
The Rules of Gold is from the book “Richest Man in Babylon” by George Clauson. It’s one of those foundational books in my life that changed everything.
One such rule is “Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep”. I got away from the subject that I knew well. I did seek some knowledge and help, but I did not fully understand what I was investing in and it showed.
The second rule is “Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.” Crypto has always been very volatile. And many investments are completely ludicrous and unsustainable. Those were the ones that went belly up in 2022. I should have known it was too good to be true.
So as Bitcoin hits another ATH I am happy owning none, and continuing my plan of investing in real estate where I have knowledge and expect reasonable returns. Hopefully next time something is too good to be true, you think about this post and realize that it probably is.