Returns have been always higher than the downside.
However, the dominance of bitcoin bulls does not necessarily mean that it's a good idea to buy the market tops as they do not necessarily guarantee breakeven nor returns in profit versus time.
If you are an investor or a trader you know how much time matters and that time can't be bought nor sold. This means that the most valuable asset you can have is time. If you get better returns in shorter time it means you are likely to gain more in the longer run.
If you end up holding long period of time, it means:
- You are losing against the time
- Returns are coming slower
- And may not guarantee profits in the future.
Let's do some calculations:
The average number for each bear market's plunge is -84,62%, which means that you would need +550,20% in profit to recover from each -84,62% loss.
This also means that you would needed to wait 534 days (average) before reaching the previous top again. The amount of days required to reach the previous top is shorter and would only require 334 days in average before reaching the previous top again. So when buying close to the market bottoms it means 200 days less time waiting and more gains in the longer run. You wouldn't be able to get gains right a way from buying the previous tops and it's also good to remember that if your loss is large then it takes longer to breakeven or even get some profits in return.
So what we learn from here?
It's better to take smaller losses than bigger ones as the recovery takes longer time and does not guarantee better performance of your portfolio.
Learning to identify trends or a market cycle helps you to mitigate your risk exposure towards your portfolio, the market and take smaller profits or losses.
You get better performing portfolio when buying at the right time and close to the market bottoms.
How to achieve better performing portfolio?
Well, you must know first that the second most valuable asset you have is knowledge.
-> Educating yourself and gobbling up as much information as possible about trading or investing.
-> Learning about risk management (This the most important thing you can learn and it helps you to mitigate risks of your portfolio)
-> Developing a strategy that works and has been back tested.
-> Practicing with a demo account
-> Keeping a journal
-> When confident enough, start investing or trading with a small amounts (learn in practice)
To be a successful investor or a trader it takes time and losses should be expected at the beginning. This is a life long learning journey and that's why it's a great idea to keep a journal of your trades as it helps you to evaluate your habits, trades and overall performance.
So when someone says "keep hodling", it does not necessarily mean profits or well performing portfolio. This is a phrase that's generally to used to trap people in thinking that they could get their returns back in shorter time. But in reality this is actually false and usually the people who are willing to spend time on learning will have more better performing portfolios and returns in profits.
As the chart is showing that the bulls have performed better than the bears and the performance doesn't necessarily mean that it's wise to buy the market tops as you lose against the time and those who are patiently waiting for the bottom or averaging down are more likely to get better profits and in shorter time period.
SO if you are considering buying now or have already bought then there's a higher chance that you will get better performing portfolio in the longer run.
If you come up with any questions feel free to ask!
Please be aware this is not financial advice. You are responsible for your trading and investing decisions. It is highly recommended to do your own research before investing in anything.