In a long-term secular bull market, volatility is the "entrance tax" that must be paid, and true wealth often belongs to those "fools" who can overcome human instincts, steadfastly increase their holdings during panic, and hold for the long term.
Author: Raoul Pal
Translation: Shenchao TechFlow
Original link: https://x.com/RaoulGMI/status/2019541941663285274
Shenchao Guide: In the face of the recent severe volatility in the crypto market, a veteran with 38 years of market experience and 13 years in the crypto field shares his journey. He has witnessed Bitcoin rise from $200 to $75,000 and has experienced countless moments of net worth drawdowns of 50% or even 80%. Through this article, he conveys a core idea to investors who feel despair and anger: in a long-term secular bull market, volatility is the "entrance tax" that must be paid, and true wealth often belongs to those "fools" who can overcome human instincts, steadfastly increase their holdings during panic, and hold for the long term.
The current market feels very brutal, seemingly hopeless. Everything is over. You missed the opportunity. You messed things up again.
Everyone is filled with anger and confusion. Those who foresaw this situation may feel relieved, but many can also see how deeply such price volatility hurts people. It feels like the worst of times.
I have been in the market for 38 years (today's sell-off is a nice birthday gift, perfectly timed with my food poisoning last night!), and I have seen all kinds of crashes and panics.
They all feel the same: damn awful.
I started getting involved in cryptocurrencies in 2013. That was when I first bought BTC at $200.
After buying, it rebounded for a while, then dropped -75%… and this happened during a bull market that eventually rose to over 10 times my entry price. I didn't sell because it was a long-term investment, and I understood the risks.
Then, during the bear market of 2014, it plummeted -87%.
In the subsequent bull market of 2017, I suffered three severe sell-offs ranging from -35% to -45%… it was very brutal. Due to the Bitcoin fork wars at the time, I ultimately chose to exit at $2,000 (the previous high in 2013).
At that time, my original investment had already made 10 times. However, by the end of that year, it had risen another 10 times (!!), before starting another long, ugly bear market.
I successfully avoided that entire bear market, and it felt great.
But I made a costly mistake: to do the "right thing" (buying the dip), I re-entered during the COVID-19 crash at $6,500—3.5 times higher than my exit price.
In 2021, BTC also experienced a -50% drop from April to July, and the market sentiment was very similar to now. The atmosphere on Twitter was extremely bad. Really bad. But at that time, the market was not as oversold as it is today…
By November 2021, the market had returned to historical highs. SOL rebounded 13 times from its low, ETH doubled, and BTC hit new highs, rebounding 150%.
I experienced all of this. Every heartbreaking, gut-wrenching moment occurred within a large secular bull market.
My initial buy price was $200. The current price is $65,000. In between, I even missed out on a 3.5 times increase because I tried to time the market (and did it poorly).
First key lesson: (for me) the best practice for a secularly rising asset is to "do nothing." HODL (hold on for dear life) has become a meme for a profound reason; it is far more powerful than the so-called "four-year cycle" theory.
Second lesson: Aggressively add to your position during sell-offs. Even if I couldn't perfectly time the bottom, increasing my total position by averaging into weakness over time has a massive compounding effect, even more effective than dollar-cost averaging (DCA).
I don't always have enough cash to buy heavily during every sell-off, but I always buy a little because it helps train your mental resilience.
In these moments, you always feel like you've missed the opportunity, that the bull market will never return, and that everything is doomed forever. This is not the case.
Ask yourself two questions:
- Will tomorrow be more digital than today?
- Will the value of fiat currency be lower in the future than it is today?
If the answer to both questions is yes, then keep moving forward. Buy the dip (BTFD), let "time in the market" beat "timing the market," because the former always wins. Adding to your position during severe sell-offs will lower your high-cost holdings, which makes a huge difference.
On this journey, stress, fear, and self-doubt are the "taxes" you should expect.
Position size is crucial to an individual's risk tolerance. Don't worry; everyone feels overexposed during downturns and underexposed during upturns. You just need to manage those emotions and find your balance.
Another key point is: do not "rent" other people's beliefs. DYOR (do your own research) is a very important creed. Without it, you cannot get through these tough times. You need to earn your beliefs on your own. Rented beliefs are like leverage; they can blow you up at any moment.
Remember—when you are busy blaming others, you are actually just blaming yourself.
Yes, the outside world feels very dark right now. But the sun will rise again soon; this is just another scar on your journey (as long as you don't use leverage! Leverage can lead to permanent capital loss because you will lose your chips at the casino). Never lose your chips.
When will all this pass? I don't know, but I think it resembles the situation from April to November 2021—a panic within a bull market. I believe it will end soon. If I'm wrong, I won't change my approach; I will just continue to add to my position when I have cash.
But for you, the situation may be different. Try to build a "minimum regret portfolio." Can you withstand a further 50% drop from here? If not, then reduce your position, even if it feels stupid to do so now. Having the right mindset is key to survival. My mindset has shifted to "how to buy more," while yours may be the opposite.
There will always be some timing experts who can perfectly avoid sell-offs or short the market. There are indeed such people. But honestly, you just need to tell yourself that these fluctuations are always expected. When you anticipate volatility, you won't feel pressure when it happens! It becomes part of the story, not the whole story.
I am now starting to buy more digital art (which also increases my ETH holdings) and plan to increase my crypto asset allocation next week, just as I have done every time an opportunity has arisen.
I bought during the COVID-19 sell-off, and I bought during every sell-off in 2021, 2022, 2023, 2024, and 2025! I will do the same this time. Every time, my P&L has set new highs ahead of the market. It works like magic. Again… BTFD (buy the dip)!
Good luck to everyone. It has never been easy.
Volatility is the price we pay for this long-term compounding return asset. Embrace it.
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