The Bitcoin and its associated blockchain and mining software were released on August 18, 2008. The creation of the first block happened on January 03, 3009. Between then and today, 3824 days or 546 weeks and two days have passed. 10 years, 5 months and 21 days of the cryptocurrency that is changing the world in many ways.
Since its beginnings and the current date/time of this paragraph, 582,010 blocks for a total of 17,775,125 bitcoin has been mined. The current time between blocks is about 8.49 minutes and the last daily output of new bitcoins was 159.
Currently, Bitcoin is unrestricted in 113 of the 251 countries in the world, while nine regions/countries forbid it explicitly: Afganistan, Algeria, Bangladesh, Bolivia, Pakistan, Republic of Macedonia, Saudi Arabia, Vanuatu and Vietnam.
Figure 1 – Bitcoin legality Around the World
The current Bitcoin Market Capitalisation is $189.1 billion, or 60.13% of the total cryptocurrency universe.
Figure 2 – Cryptocurrency Market cap
What Bitcoin means for a buy-and-hold Investor?
The table below shows historical price appreciation. Since its beginnings, it has appreciated a whopping 68,849.58%
Table 1 – Bitcoin Appreciation, Source: Coin.Dance
Below is the weekly chart of this amazing currency since 2015. The chart shows the only moments in its history in which a buy-and-hold investor currently is in the red.
The chart points that, currently, the worst weeks to have purchased bitcoin as a buy-and-hold investment were the between weeks from Nov 27, 2017, and Jan 29, 2018, and from Feb 12 and March 18, 2018. Exactly 14 weeks out of 546, or 2.56% of the weeks. Very unlucky guys indeed!.
If they had held their investment until today, they would have to endure a tremendous drawdown. The guys/girls who bought at the top have had an 84.5% drawdown, the guys who bought at about the current valuation would have had a 70% drawdown to just break-even.
But, what would have happened if an investor bought all the way down from the top and up again till now?
Let’s say the investor’s first purchase was on bitcoin right at the topping week’s close, and then every week he would add the same amount to his position at the closing price of that week. He would have invested $573,245 and will have a 80 BTC in his wallet valued at the current price at $846,960 and 47.8% return.
Of course, that is crystal-balling a bit, but this exercise shows that, for long-term investors, averaging is an excellent method of investment.
Let’s consider another methodology. In this case the investor will buy only if the weekly close is below the previous week close. Doing the same exercise for the investor who bought at the top, of the last 80 weeks, there were only 37 weeks closing below the previous one for a total investment of $278,381 dollars on 37 bitcoins, whose current valuation is about $388,500. That means 39.56% capital valuation.
Let’s do a third scenario: The investor buys only if the closing week is higher than the previous week. Here, the number of weeks closing above the previous one was 43, for an investment of $310,498. At the current price, 43 Bitcoins are valued at 451,500. A capital Valuation of about 45.5%
It seems counterintuitive that buying on deeps could result in less return on investment than buying on highs, but we must consider also that investing using the bullish momentum allowed investors to keep adding positions while the price moved upwards. On the other hand, buying on dips did not allow the investor to profit from many consecutive bullish weeks.
Averaging for investors is a well-known strategy. Our small exercise shows that, technical analysis aside, the best strategy seems to be a total averaging, disregarding the close.
Credits for the statistical images: https://coin.dance/stats#price