June 17, 2022

Your four year plan: HODL and chill

Bitcoin acts like a meme stock – year after year after year. But, if you understand what is really going on, you will see bitcoin for what it is.

Joe Lupo
Joe Lupo

Operations

Your four year plan: HODL and chill

Table of contents

Your four year plan: HODL and chill

Bitcoin's meteoric rise has given it it a public relations problem.

But, because it is a decentralized network, it has no public relations team.

It's up to the individual users of bitcoin to build the knowledge necessary to understand what is really going on.

And what is really going on is shocking. Bitcoin has produced over 200% average annual returns – making it look like a long-shot unicorn startup or meme stock. However, if you understand macroeconomic dynamics, you will see bitcoin for what it really is.

Bitcoin's incredible price appreciation over the past decade is partly because of dollar debasement. That is, part of the rise in bitcoin's price in dollars is caused by the decrease in value of the dollar. As the dollar continues to depreciate in value, other assets, including bitcoin, appreciate in dollar terms.

So, don't focus on bitcoin's price in dollars.

Focus on its purchasing power.

After all, bitcoin's purchasing power is one of its strongest value propositions. While fiat currencies debase over time, purchasing less and less as time goes on, bitcoin is designed to so that its purchasing power increases as long as the size of the global economy grows.

In order to grasp bitcoin's rise in purchasing power, you have to account for real inflation, not the government-defined measure of inflation called the Consumer Price Index (CPI).

While the CPI is currently 7.9%, commodity prices over the last year tell a completely different story.

This perspective sheds light on why bitcoin seemed to get so expensive so fast.

Bitcoin is not a meme stock

It is a tool to shelter your wealth from dollar debasement over the long term.

To make matters better, bitcoin does preserve value in the short term, too.

We often say you should think long term when buying bitcoin. This is supported by data. But, what's traditionally considered short-term in the investment world is actually long-term for bitcoin. Case in point: Bitcoin has never lost purchasing power over four years or more.

HODL it for 4 years

If you have bought bitcoin any time in its 13-year life span and held it for 4 years, you’ve seen a positive return.

But not just a positive return. You’ve likely generated an incredible return.

Here's how bitcoin measures up to traditional asset classes over the last decade.


This chart shows a few things. One, bitcoin is the best performing asset of the last decade by far. Second, bitcoin is a new asset class, and with that novelty comes volatility.

However, even though bitcoin is volatile, the chart makes clear that bitcoin's price hasn't stayed low for long. It has never even had two negative years in a row.

OK, but what about other cryptocurrencies?

This next bit of information will save you a lot of headaches – and money. Bitcoin doesn't just outperform traditional asset classes. It also outperforms all other cryptocurrencies when your time span is long enough.

Many crypto projects have had their day in the sun. But they all trend negative against bitcoin.

Here's the trick: Denominate these cryptocurrencies in bitcoin, rather than dollars.

Take a look at these charts, where cryptocurrencies are priced in terms of bitcoin (orange), and USD (green).

Bitcoin holds even more promise in the long term

What is does "long term" mean to serious bitcoiners? Try forever!

"Look, if you’re going to invest in bitcoin, a short time horizon is four years. A mid-time horizon is 10 years. The right time horizon is forever. You know, Warren Buffett said if you wouldn’t hold it for 10 years, you shouldn’t hold it for 10 minutes... So it’s a blessing and a curse. The blessing is it makes it the most exciting, interesting thing in the financial universe everywhere in the world. And the curse is it can induce anxiety for people that have a short attention span or are focused on a narrow time horizon." – Michael Saylor

Forever is a long time. But if you believe that the bitcoin network will one day serve as the world's settlement layer, as many do, there will never be a reason to convert your bitcoin to a less valuable form of money. Just HODL and chill, and when the world catches up, you will have the advantage.

The incredible returns bitcoin has produced are enticing. It's reassuring to know bitcoin has never had two negative years in a row. It's also encouraging to know that over four years, bitcoin has been up 365x on average. But if we focus on the merits of bitcoin, we realize the returns are simply a byproduct of holding the best form of money ever invented.

March 29, 2022

Your four year plan: HODL and chill

Bitcoin acts like a meme stock – year after year after year. But, if you understand what is really going on, you will see bitcoin for what it is.

Joe Lupo
Joe Lupo

Investor Relations

Your four year plan: HODL and chill

Bitcoin's meteoric rise has given it it a public relations problem.

But, because it is a decentralized network, it has no public relations team.

It's up to the individual users of bitcoin to build the knowledge necessary to understand what is really going on.

And what is really going on is shocking. Bitcoin has produced over 200% average annual returns – making it look like a long-shot unicorn startup or meme stock. However, if you understand macroeconomic dynamics, you will see bitcoin for what it really is.

Bitcoin's incredible price appreciation over the past decade is partly because of dollar debasement. That is, part of the rise in bitcoin's price in dollars is caused by the decrease in value of the dollar. As the dollar continues to depreciate in value, other assets, including bitcoin, appreciate in dollar terms.

So, don't focus on bitcoin's price in dollars.

Focus on its purchasing power.

After all, bitcoin's purchasing power is one of its strongest value propositions. While fiat currencies debase over time, purchasing less and less as time goes on, bitcoin is designed to so that its purchasing power increases as long as the size of the global economy grows.

In order to grasp bitcoin's rise in purchasing power, you have to account for real inflation, not the government-defined measure of inflation called the Consumer Price Index (CPI).

While the CPI is currently 7.9%, commodity prices over the last year tell a completely different story.

This perspective sheds light on why bitcoin seemed to get so expensive so fast.

Bitcoin is not a meme stock

It is a tool to shelter your wealth from dollar debasement over the long term.

To make matters better, bitcoin does preserve value in the short term, too.

We often say you should think long term when buying bitcoin. This is supported by data. But, what's traditionally considered short-term in the investment world is actually long-term for bitcoin. Case in point: Bitcoin has never lost purchasing power over four years or more.

HODL it for 4 years

If you have bought bitcoin any time in its 13-year life span and held it for 4 years, you’ve seen a positive return.

But not just a positive return. You’ve likely generated an incredible return.

Here's how bitcoin measures up to traditional asset classes over the last decade.


This chart shows a few things. One, bitcoin is the best performing asset of the last decade by far. Second, bitcoin is a new asset class, and with that novelty comes volatility.

However, even though bitcoin is volatile, the chart makes clear that bitcoin's price hasn't stayed low for long. It has never even had two negative years in a row.

OK, but what about other cryptocurrencies?

This next bit of information will save you a lot of headaches – and money. Bitcoin doesn't just outperform traditional asset classes. It also outperforms all other cryptocurrencies when your time span is long enough.

Many crypto projects have had their day in the sun. But they all trend negative against bitcoin.

Here's the trick: Denominate these cryptocurrencies in bitcoin, rather than dollars.

Take a look at these charts, where cryptocurrencies are priced in terms of bitcoin (orange), and USD (green).

Bitcoin holds even more promise in the long term

What is does "long term" mean to serious bitcoiners? Try forever!

"Look, if you’re going to invest in bitcoin, a short time horizon is four years. A mid-time horizon is 10 years. The right time horizon is forever. You know, Warren Buffett said if you wouldn’t hold it for 10 years, you shouldn’t hold it for 10 minutes... So it’s a blessing and a curse. The blessing is it makes it the most exciting, interesting thing in the financial universe everywhere in the world. And the curse is it can induce anxiety for people that have a short attention span or are focused on a narrow time horizon." – Michael Saylor

Forever is a long time. But if you believe that the bitcoin network will one day serve as the world's settlement layer, as many do, there will never be a reason to convert your bitcoin to a less valuable form of money. Just HODL and chill, and when the world catches up, you will have the advantage.

The incredible returns bitcoin has produced are enticing. It's reassuring to know bitcoin has never had two negative years in a row. It's also encouraging to know that over four years, bitcoin has been up 365x on average. But if we focus on the merits of bitcoin, we realize the returns are simply a byproduct of holding the best form of money ever invented.