Will Bitcoiners Sell at $100,000?
As the price of Bitcoin nears the psyschological threshold, it's the question everyone is asking
I'm going to be buying the top forever.
Michael Saylor, Executive Chairman of MicroStrategy
It’s this time of the Bitcoin cycle again. Like clockwork, six to nine months after the halving - the process through which the issuance of new Bitcoin is halved every four years - the crypto market goes parabolic. The latest halving happened on April 20, 2024.
I usually know when a new bull cycle is well under way: When I start receiving messages asking me if now is the time to buy, and lately, my WhatsApp has been inundated with messages.
I have been writing about Bitcoin since early 2016 (first article here), so I have seen this movie before. History may not repeat itself, but it definitely rhymes with Bitcoin. Can you spot a pattern when you look at the annual returns since 2010?
What makes Bitcoin such an unusual asset is the psychology of Bitcoin holders. Back in 2020, legendary investor Paul Tudor Jones made a fascinating observation about Bitcoin investors during the 2018 crash: 86% of people who held Bitcoin at $17,000 never sold when it crashed to $3,000. As he put it, these weren’t just investors – they were “religious zealots.” He had never seen anything like this before. This observation became part of his investment thesis for buying Bitcoin.
Bitcoin holders who have stayed in the market are veterans of multiple brutal crashes. They watched Bitcoin plummet from $17,000 to $3,000 in 2018 and then again from $67,000 to $16,000 in 2022. For these battle-hardened investors, volatility isn’t something to fear—it’s something they’ve learned to embrace as part of Bitcoin’s path to monetary supremacy.
With Bitcoin approaching $100,000, many wonder if this “diamond hands” mentality will finally crack.
So far, Bitcoin is up 6x compared to the bottom of the previous cycle in November 2022.
For true Bitcoiners, selling for dollars is like trading down, not up. Think about it this way: if you lived in Argentina and had managed to convert your rapidly devaluing pesos into US dollars a few years ago, would you ever consider “taking profits” by converting back to pesos? Of course not. The appreciation of your dollars against pesos isn’t a profit – it’s a measurement of how much value the peso has lost.
This same logic applies as you move up the “hierarchy of money.” Gold holders don’t typically sell their gold for dollars that can be printed infinitely. Similarly, Bitcoin holders who view it as the apex predator of monetary assets, with its hard cap of 21 million coins, see no reason to trade it for inferior stores of value.
But what if you have no Bitcoin exposure right now? Should you buy? With Bitcoin at its all-time high, it’s not an easy call. In hindsight, of course, the FTX collapse in November 2022 was the best time to buy, when sentiment was at rock bottom, and everyone declared crypto dead, again. But no one was asking me if it was the right time to buy then…
I wrote a piece in the middle of the 2022 crypto winter when Bitcoin was at $20,000 (see below), but it was a hard time to buy.
The good news is that Bitcoin price corrections already happened before, many times actually. And every time it feels like it’s the end of the world, but every time it recovered.
Vincent’s Corner, June 2022.
There is an eternal truth about investing: great investments are painful when you make them. They have to be, or everyone would do it. It has to be painful to buy because market sentiment is terrible, and it has to be painful to sell because it’s euphoria, and you want to hold on to your appreciating assets.
On November 22, 2024, when Bitcoin hit its all-time high - just under $100,000 - some Bitcoin holders decided to cash out. On that single day, over $10 billion in profits were taken by Bitcoin holders.
But while some were selling, others were buying – most notably Michael Saylor’s MicroStrategy, which has emerged as the most aggressive institutional Bitcoin accumulator.
MicroStrategy’s recent moves are staggering. In November 2024 alone, the company raised $7.6 billion through equity sales and zero-percent convertible notes. This is part of its ambitious “21/21 plan” to raise $42 billion over three years—all to buy more Bitcoin (read my previous newsletter about this plan below if you’re interested).
But MicroStrategy isn’t the only one that is buying. The Bitcoin Exchange Traded Funds (ETFs) launched earlier this year have accumulated about 1.1 million Bitcoins. This is more than $100 billion worth of Bitcoin stored in these US ETFs.
In January this year, I wrote a piece on the launch of Bitcoin ETFs in the US. In it, I showed the impact of the launch of the first Gold ETF 20 years ago. Spoiler alert if you didn’t read this post: the price of gold went vertical in the years after the launch of the ETF.
Just a few months later, the numbers are mind blowing: Bitcoin ETFs have attracted $20 billion of inflows, and the year isn’t over.
For investors looking to enter any market at all-time highs - whether it’s Bitcoin approaching $100,000, gold surging past $2,700, or the S&P 500 breaking new records - there’s a tried-and-true strategy that helps manage the psychological burden of buying at these levels: dollar-cost averaging.
Instead of trying to time these seemingly expensive markets, decide on an amount you’re willing to invest and spread it out over time – whether that’s weekly, monthly, or quarterly purchases. This approach removes emotion from the equation and helps avoid both the paralysis of thinking “everything is too expensive” and the trap of FOMO (Fear Of Missing Out). Markets can remain at what seems like “expensive” levels much longer than most investors expect, and sitting on the sidelines entirely often proves more costly than a disciplined approach to gradually building positions.
It’s time to return to the original question: Will Bitcoiners Sell at $100,000? Some certainly will, some have even already started, and a correction from current levels wouldn’t be surprising. But Bitcoin isn’t just a $1.9 trillion financial asset – it’s become a movement. As I’ve written in my pieces about the debasement of fiat currency, an increasingly larger number of people view Bitcoin as their exit strategy from the traditional financial system. There is no “exit strategy” back to dollars for these holders. They’ve already made their exit – from fiat to Bitcoin.
