Overnight, Bitcoin remains above $30,000, maintaining its consolidation for the 25th day since June 23rd.
What is the key to successful investment? Many have witnessed people abandoning beta (average returns) in pursuit of alpha (excess returns), selling Bitcoin for meme coins, only to end up not outperforming the market and suffering significant losses. While some courageous individuals may regroup and start again, others might become disheartened and exit the market.
Whether Bitcoin serves as the beta for the cryptocurrency market depends on your worldview. If Bitcoin is considered the beta, then alpha would mean outperforming Bitcoin.
If we take a certain index representing the cryptocurrency market (with or without Bitcoin) as the beta, the first question is whether this index can consistently outperform Bitcoin. If not, holding Bitcoin would naturally provide risk-free alpha. If it can, then we need to revisit why some investments fail to outpace Bitcoin.
Many have tried numerous methods to achieve alpha over Bitcoin, such as buying altcoins, chasing memes, leveraging, trading contracts, and more. However, only a few have succeeded, and most end up with minimal gains or even losses. It becomes a zero-sum or negative-sum game, where success is not true investment success but rather survivorship bias.
In my view, the ultimate winning alpha is the ability to consistently make money. If you excel at working, then your job income is your best alpha. If you have your own business, then the profits from it are your best alpha. If you are a landlord, the rental income is your best alpha. In short, the ability to generate income is the best alpha.
Warren Buffett’s Berkshire Hathaway sticks to acquiring and controlling businesses with good fundamentals, allowing these subsidiaries to continuously generate profits. Through control, they become Buffett’s cash cows. Without control, Buffett might become a victim. Ownership makes a world of difference in the value game.
Michael Saylor’s MicroStrategy (MSTR) creatively accumulates Bitcoin in various ways, amassing tens of thousands of coins. More importantly, MicroStrategy not only holds Bitcoin but also operates a software business that generates continuous cash flow, sustaining their Bitcoin accumulation without management fees.
The “Eight Characters” investment strategy involves not just buying more, but a complete set of investment principles. “From Investment Novice to Financial Freedom” advocates holding Bitcoin while earning money and investing idle funds for the long term.
Avoid getting trapped in a zero-sum game because if you cannot ensure you’re the reaper, you’ll likely become the crop.
Furthermore, steer clear of negative-sum games, as all participants in such games end up as fish on the chopping board.
When you buy a coin, you’re participating in a game designed by someone else. Before joining any game, make sure to understand its nature.
If your limited knowledge prevents you from seeing through the essence of the game, it’s best to stay away. Most of the time, not losing is winning, and not losing means not decreasing your Bitcoin holdings.
Trading your earning ability for steady growth in Bitcoin holdings is unassailable, ensuring a prosperous and enduring journey.
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