My costly mistake with Bitcoin

I first heard about cryptocurrencies and bitcoin back Dec. 2013. I was fascinated by the story of a man who paid 10000 bitcoins to order two pizzas. 10,000 bitcoin nowadays would be more than $100 million dollars in USD. This was the first bitcoin transaction in history and the pizzas bought with the bitcoins probably will be the highest pizzas ever paid in human history. I quickly got attached to the concepts such as distributed ledger, blockchain, and a finite number of bitcoin blocks that could be mined by computing hardware. Bitcoin at the time was still very new to most people but I instinctively felt that this is the future, the next big thing.

Below was the price of bitcoin between April 2013 and Dec 2013. Data is from coinmarketcap.com. Bitcoin was up 10X during this period.

After some research, I made my first bitcoin purchase in coinbase, which seemed easy to use and secure. On 1/3/2014, I bought 10 bitcoins at $723.34 per BTC.

After my first purchase, I saw 13% increase in less than 2 weeks. It seemed like a no-brainer investment. I bought 2 more BTCs at $825.11 each.

Chart below represents the bitcoin price movement between Dec 2013 and Feb 2014. Green dot represents the price/btc and the date I purchased bitcoin.

Soon after my 2nd purchase, Mt.Gox, the biggest bitcoin exchange at the time was hacked and the firm filed bankrupt. Since then every news about bitcoin was negative and the price was rapidly going south. I was pretty new to investing in general and I could not handle this turmoil. On 3/19/2014, I sold all my bitcoins to stop loss. At the time, it felt like a logical thing to do. I was going to take a quick loss and re-enter when the price has bottomed. It took me a few years for me to actually realize “buying low and selling high” is not always that easy.

Below is my transaction on 3/19/2014. After my initial purchases, I gave about .14 BTCs to friends and family, which left me with 11.86 BTC. My cost of buying 12 bitcoins was about $8900. I sold everything at $7127.28. I lost about $1800 in just a couple of months, which was about 20% loss. The amount I lost was not small to me at the time.

Below shows the bitcoin price movement at the time and my buy/sell points. It wasn’t easy to see where bitcoin price was headed back then.

Since that day, the bitcoin price slowly kept going down and fell below $200 on Jan 14, 2015. It felt like bitcoin was slowly going to fade away. Then it slowly recovered back to the price level I sold in Oct 2016. The chart below shows how silly I was to buy and sell so quickly when there was a big rally coming in just a few more years. Only if I knew, bitcoin would touch $20000 in 2018, I could have made about 3000% gain on my investments.

Bitcoin price started to gain momentum in March 2017. On Dec 17, 2017, the price of bitcoin skyrocketed up to $20,000. I started buying again in Oct 2017 when each bitcoin was about $5500. It was painful to realize how little I could buy with the same amount of money just a few years ago. After hitting the all-time high in Dec 2017, the bubble popped again. This time I didn’t sell. The bitcoin price at the time of this writing is about $11500.

Conclusion

I learned my lesson not to time the market especially for volatile assets like cryptocurrency. I have not sold any of my cryptocurrencies since 2014. I have only been buying and hodling. Cryptocurrencies have experienced such a rollercoaster ride past years but I am fairly confident that crypto is not going away. Nowadays, there are so many contributors working on various projects. I see crypto is slowly getting accepted by the mainstream.

I am bullish on cryptocurrencies and have no doubt they will be hitting ATHs again in the future. I believe Crypto might be the best assets to invest in the long term.

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