How Bitcoin Price Surges Mess With Your Value Perception

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  • Many who bought bitcoin in years gone by have less than in previous years
  • It can be demoralizing to look at a bitcoin balance much reduced compared to previous years
  • The key to getting past this is to reframe the value of Bitcoin or to focus on the dollar value instead

Bitcoin’s extraordinary price rise in the past few months has led to many rubbing their eyes in disbelief as the value of their portfolios has increased rapidly. However, those who joined the market in time for the 2017 silly season might be looking at their vastly reduced bitcoin holdings in something approaching despair, despite the dollar value potentially now having caught up. This feeling of loss is natural, but it must be overcome in order to make the most of the upcoming bull market.

First Bitcoin Purchase Forms Price Association

The reason why many who joined the cryptocurrency market in 2017 are now looking with a sense of sadness at their bitcoin holdings isn’t as simple as them literally having less bitcoin. Many of these individuals are still thinking of Bitcoin compared to when they first bought in, as that was when they first made an association with Bitcoin and dollar value. This association is hard to break, and is made even harder given how much Bitcoin has risen since 2017.

Even as late as September 2017 you could still pick up a whole bitcoin for $3,700, whereas that same bitcoin will now set you back $37,000. When something changes so much in such a short space of time it is hard to bring our frame of reference with it – the fact that the $3,700 that could buy you a whole bitcoin in September 2017 can only buy you one tenth of a bitcoin today is hard to wrap your head around. It makes you feel like you have suffered a huge loss in the intervening years, despite the fact that the dollar value is exactly the same.

Constant Reminders

Unfortunately we get reminders of this phenomenon every time we look at our balance – looking at 0.1 on the screen doesn’t look anywhere near as impressive as seeing 1 or more, but it is important to remember that despite the fact you have less bitcoin you haven’t lost dollar value. This is particularly important to remember given that we are at the start of a bull market where the chance to make money is much higher.

Most new entrants to the cryptocurrency market will be buying up fractions of a bitcoin and will not have any such feelings attached to their holdings because their frame of reference starts today. Indeed, every generation of Bitcoin buyer has the same feeling of loss once they have completed a full cycle.

Change Your Frame of Reference

The only way to get past this mental block is to change your frame of reference, to start living in the present and leave the past behind. This is easier said than done, as it is not easy to train yourself to realize that the 0.1 you now hold is worth the exact same dollar value as your 1 was in 2017. The number is lower, much lower, and you feel poorer as a result.

If you can’t change your frame of reference in terms of Bitcoin then it is worth focusing on the dollar value of your holding instead (or your equivalent local currency). This should act as a solid grounding of its real world value, and will help you when you are assessing your level of risk when it comes to portfolio balancing.

Reframing your perception of Bitcoin’s price is important if you want to flourish in the markets. If you spend the entire bull run thinking about what you had rather than making the most of what you currently have, however little it might be, you will miss out on the opportunity to maximize it.

And if the worst comes to the worst, if you really can’t reframe your perception of the Bitcoin price as it is now, then just take a moment to think about the guys who bought in at $10, and those who have lost or destroyed fortunes along the way.