Transcription
Let's talk about an asset that is back in fashion: Bitcoin. It's at historical highs, approaching $100,000, then it drops, then it rises again. There are people saying outrageous things, claiming it could reach half a million very soon.
We’re going to analyze this with an expert because neither Sergio nor I are experts in this. How do we analyze Bitcoin? It’s a very complicated asset because it has very little history. People say, "No, it dates back to 2010," but I say, "Well, that’s still very little history."
When people say it’s digital gold, I think gold deserves the respect it has earned. Gold has been with us for a long time and has proven its ability to maintain purchasing power over centuries. So, comparing Bitcoin to gold seems premature.
That said, as we’ve mentioned, fiat money is systematically losing value. It seems reasonable to look for alternatives to fiat money, and Bitcoin is probably the only real cryptocurrency in the crypto world. The others are altcoins that depend on projects, like Ethereum, Solana, Cardano, and others.
I see Bitcoin as a place to preserve the value of my money in the long term. Although it can serve as a means of payment, given its volatility, we can’t really call it a payment currency. It doesn’t make sense for something that can fluctuate by 7% or 8% in a single day.
How do I value it? You have three or four possibilities. The first, which we’ve made popular and is quite fun, is the famous halving. You say, "Well, due to the process of creating the 21 million Bitcoins that will exist in total, we know that almost 91% is already in the market. Approximately 4 million Bitcoins are unrecoverable, from the early ones where people forgot their keys, etc."
So, almost everything is in the market. What can I use to project prices? I say each halving has led to an increase in Bitcoin's valuation. The halving is simply the reward miners receive for solving mathematical problems to mine Bitcoin.
Every 210,000 blocks, the reward is halved. People say it happens every four years, but those 210,000 blocks are usually achieved in about four years. You can study how much Bitcoin's price has appreciated each time we reach a new halving, and you find that while it keeps increasing, the rate of increase is slowing down.
Based on just three previous halvings, you could project that it might reach $130,000 or $140,000. That’s one metric, statistically defendable, but it’s based on a sample of just three occasions, so it’s not robust statistically.
What else can I do? I can perform technical analysis. As for fundamental analysis, I honestly believe there’s no clear model to determine Bitcoin's value.
In technical analysis, using price action from the chart, I say, "Yes, the target was $100,000, $108,000, $104,000," using different techniques. We’ve already met three of those targets; the fourth would be that ambitious $130,000 or $140,000.
So, should I sell? I have what we call a dynamic stop. If it drops below $90,000, I will liquidate a significant portion of my Bitcoin investment. This doesn’t mean that if it falls below $90,000, it will collapse. It means that, in my view and methodology, if it drops below $90,000, the risk of a severe correction is high.
Since I don’t want to assume that risk, and we’ve already reached our targets, I’ll take my profits and wait for a better opportunity.
No one knows what will happen. You make decisions based on your perception of potential risk increases that may not justify the returns you’re missing out on. As long as that problem doesn’t materialize, you stay invested, aiming for that ambitious target, which we hope will be reached, but it might not happen.
All investments are like this. At least for me, what I try to teach is not what you should do, but how to approach the analysis of each investment decision you need to make. If you ask me for a meal, I won’t teach you how to cook eggs, tortillas, or chicken. I’ll teach you the method because if you rely on my food, you’ll always depend on me.
The beauty is when you can teach people what you’ve learned and how you learned it so they can adapt it to their risk profile, their time frame, and what they need.
From that perspective, there are people who genuinely want to learn. This aligns with what one should do at the beginning. Some people really want to learn and understand that this isn’t a quick process; it’s not something that will happen in a month or two. They seek you out as a tutor or mentor.
Then, there are those who want shortcuts, who want to hit it big, who want Bitcoin to reach half a million and multiply their investment by 50 times to buy a Ferrari. They’ve been told that achieving this is easy, which is the saddest part of the whole situation.