News - PlanB comes up with investment strategy: "From $5 to $130,000"

By Luc Vesters

PlanB comes up with investment strategy: "From $5 to $130,000"

Bitcoin (BTC)
Investing

Disclaimer: All content on the website is for informational purposes only and does not constitute a buying or selling recommendation. In addition, it is important to note that PlanB's investment strategy has failed before as well.

In April 2024, the time will come: for the fourth time in Bitcoin history, the amount of BTC distributed to miners per new block will be cut in half. Instead of 6.25 BTC, only 3,125 new BTC will enter the network. In the past, this halving was considered a major driver of the price. According to Perma-Bulle and the brains behind the stock-to-flow model, PlanB, investors could have made significant profits from the halving - with the right strategy.

PlanB analyzes Bitcoin halving

The Thesis: If you had only invested at the time of the last three halves and then sold again, the profit would be significantly greater than if you simply held the Bitcoin you bought. The optimal time would be between six months before the halving and a full 18 months after.

PlanB supports his argument with an example: With this strategy, you could have turned $5 into a total of $130,000. In the opposite case, if you had hodled the BTC, five US dollars would have become "only" 37,000 US dollars.

Admittedly, it is easy to infer such strategies based on past stock price movements. Looking ahead is much more complex. After all, past (stock price) successes cannot guarantee the future. Moreover, PlanB was already clearly wrong with its stock-to-flow model. Bitcoin's most cited price prediction model finally failed on Jan. 1, 2022.

Savings plan or trade: is the risk worth it?

Analyzing quotes is something you should learn in any case. Anyone who does not belong to the rare breed of profitable day traders should invest for the long term - especially when it comes to the volatile crypto market. This means putting the portfolio on autopilot and at regular intervals - such as every week or every month - converting a predetermined amount into digital gold via a standing order. This so-called Bitcoin savings plan is less profitable, but also carries less risk.

After all, anyone who has invested in Bitcoin since 2013 - at just one US dollar a day - is now quite rich. The 3,780 invested would have turned into about 126,390 US dollars.

Bitcoin wallet on autopilot

A Bitcoin savings plan has two main advantages. Investors psychologically detach themselves from the vagaries of the market and can, in extreme situations - such as the FTX crash - sit back and relax. Second, over time you build up a buffer of digital assets that grows automatically without really reaching into your pocket.

Dollar-cost averaging (DCA) is not a Bitcoin-specific investment strategy. However, it is particularly suitable because of the high volatility of the digital currency. A savings plan is especially worthwhile for long-term investors. By investing regularly, they can gradually increase their Bitcoin holdings. In the Bitcoin scene, they talk about "stacking sats."

Despite its many benefits, critics doubt the usefulness of the dollar cost averaging effect. Especially compared to a direct investment, higher returns are not necessarily guaranteed. The argument: In the long run, markets rise anyway. This also applies to Bitcoin. If you had invested $3,780 in 2013 (as in the example above), you would now be a millionaire several times over. Still, how Bitcoin will evolve in the future remains a mystery. With a savings plan, you are much safer along the way.

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