What Investors Can Learn From The Bitcoin Maximalist Strategy
This is an opinion editorial by Nicholas Otieno, a freelance writer focused on fintech and Bitcoin.
I’m aware that Bitcoin has become of great interest to many investors. But despite growing enthusiasm, sharp price volatility continues to worry and confuse many less-experienced investors.
A key way that I believe can help these investors beat their issues with bitcoin volatility is to begin following the principles of Bitcoin Maximalists. Below, I’ve highlighted my key takeaways from this philosophy that I think can help more investors find the right path.
Bitcoin Maxis Invest In What They Understand
Maximalists are a group of investors who believe that bitcoin is the only digital asset needed and that its demand will grow into the future. They believe that all other cryptocurrencies are not worth anyone’s energy or time. From my interpretation, this group includes significant names like Jack Dorsey, Adam Back, Robert Kiyosaki, Michael Saylor and others.
The maxi only invests in what they understand (bitcoin) now and into the future. According to most maximalists, investing in a proven digital asset is safer than doing so for altcoins, which put investors’ money at greater risk. With the recent rise of bitcoin’s value, many people seek ways to profit from this asset class without understanding how it works. While investors can make fiat returns with bitcoin in several ways (like trading, staking, lending, mining and gaming), maxis prefer to hold the asset.
Most maximalists are successful in their investment journeys because they understand their financial goals, inherent risks and the overall market. These contrarian investors don’t always don’t the crowd but instead look for opportunities in places where others may not. Their advocacy for Bitcoin is rooted in a deep understanding of the cryptocurrency and the role it plays in preserving and growing wealth. The maxis’ endorsement of Bitcoin is a reminder for other investors to think outside the box. The asset provides unique benefits that can help diversify investors’ portfolios and increase their wealth.
Focus On The Process
The maxis’ investing model is simple: Buy and hold bitcoin in self-custody wallets and let it accumulate value over time. The maximalists achieve this through discipline, solid intellectual frameworks and sticking to an investment process. Following one’s process and staying disciplined minimizes the likelihood of any potential emotion affecting one’s investment decisions. Maxis’ most essential but difficult trait is to have discipline. They look at an investment with a long-term horizon, which requires patience but avoids hasty decisions.
A true Bitcoin Maximalist’s mind state is not about trading in and out of an investment. This is likely true for other types of investors. But for the maxi, following the process and having discipline means buying bitcoin when prices dip. Instead of trading out after making a quick return, they hold bitcoin over a longer period and, as a result, believe they will accumulate massive gains.
The maxi believes holding bitcoin is the best way investors can increase their purchasing power due to the crypto’s growing user adoption and its hard-capped supply of 21 million BTC.
The Long-Term Approach
Many maximalists would say that their investment time frame goes for at least 10 to 20 years. This long-term approach is the only way aspiring investors can make significant money with bitcoin. After all, Bitcoin is never about the short term. The maxis don’t change their minds simply because the entire market is acting in the opposite direction. It is with this conviction within themselves that they hold their investment, no matter what.
Bitcoin maximalist Michael Saylor has described his bitcoin ownership as the “family farm” — something an investor should never sell. Last year, the crypto market suffered a significant meltdown, triggered by geopolitical and macroeconomic turmoil. Saylor expressed his disappointment for those who rushed to sell their bitcoin. Maxis’ long-term approach to bitcoin investing reminds me of the saying that people who achieve great things are the ones who set their minds to it.
So long as an investor can purchase bitcoin at reasonable prices, they can create wealth over the long term. The sooner you invest in bitcoin, the more time you have to earn returns. And the more time you have, the more returns are earned by your returns. The concept is popularly known as the “power of compounding,” which works perfectly in the case of Bitcoin. It is one of the core premises of the maxis’ investment philosophy.
Bitcoin Maximalists firmly hold the above-mentioned fundamental principles in their investment journey. When Bitcoin investors follow these investing lessons, they are guaranteed to deliver consistently good results.
This is a guest post by Nicholas Otieno. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
14 June 2023 12:00