Original: Liu Jiaolian
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Overnight, Bitcoin rose slightly above 28k again. Michael Saylor, the founder of Microstrategy, tweeted that Microstrategy made another move and bought 1045 bitcoins. The purchase cost about US$29.3 million, and the average increase cost was US$28,016. As of April 4, 2023, MicroStrategy holds a total of 140,000 BTC. The total purchase cost is about US$4.17 billion, and the average holding cost is US$29,803. [1]
Slight loss.
But to congratulate MicroStrategy, it is one step away from turning losses into profits. Thirty thousand knives are within reach.
In retrospect, MicroStrategy should have started building positions before the bull market officially started at the end of 2020. With the ups and downs of the entire bull market, it has also been adding to the dips.
Entering the market on the eve of the start of the bull market is a "tailwind".
However, the tailwind is actually the worst start. Because the market heats up too fast, and the price rises too high in a short period of time. On the one hand, this rapidly increases the cost of opening a warehouse, and on the other hand, it creates a huge floating profit, which makes people lose the calmness they should have in risk control.
The tailwind allowed most positions to be built at higher positions during the bull market. Even if the strategy of increasing positions on dips is adopted, it can still only reduce local costs, but cannot reduce overall costs.
The high cost makes escape from the top a must. And escaping from the top is extremely difficult. Failure to escape the top will make the extremely thick high-cost positions suffer from the endless declines of bulls and bears, and it will also make it difficult to continue to increase positions during the decline in order to amortize costs.
Blessings never come, but misfortunes never come singly. Often when the entire economic system enters a deleveraging cycle, not only the assets in hand are shrinking, but also the off-market cash flow begins to dry up. The company began to lay off employees and cut salaries, increased psychological pressure, increased illness expenses, and life was in trouble, unable to support investment, and even forced to sell assets.
Contrary to many people's intuition, the best starting point is to enter the market at the highest point at the end of the bull market, that is, to open a "headwind".
Although the headwind situation is frustrating as you buy more and more fall, and lose more and more, but on the downhill road, you insist on fixed investment all the way, and you increase your position when you fall, and build up a sufficient position on the entire slope. In particular, because the decline is steeper in the early stage and gentler in the later stage, the buying strategy of Bazijue will generate more buying points in the low price stage, thereby establishing a thick position with a lower average cost.
Like a bowl. A small ball slides down one side of the bowl, across the bottom, and up the other side to the rim.
The decline on this side, the more you fall, the more you buy, the more you buy, the more you fall. In fact, the rise on the other side, the more you buy, the more you buy, the more you buy, they are mirror images of each other and are equivalent.
Starting with a headwind, you will buy the whole bowl, so as to obtain a reasonable price and a sufficiently thick bottom position.
The second class starts when the descent is close to the bottom. Buy the bottom flat period, and the entire rising period. In terms of price and psychology, it will be more comfortable than suffering from headwinds, but due to the lack of time to add half a bowl, the thickness of the position is not as good as buying a full bowl.
Judging from the characteristics of the "jump" of Bitcoin's price in each cycle, if there is a headwind in one cycle, Bazijue will basically not fall into a loss if it persists until the next round; and after two rounds, it will initially have Eligibility to sell. Because after two rounds, the price height is already much higher than the average holding cost, and you can withdraw on demand without timing.
References: [1] https://twitter.com/saylor/status/1643586872839471105
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(Disclaimer: The content of this article does not constitute any investment advice. Cryptocurrency is a very high-risk product, and there is a risk of zeroing at any time. Please participate carefully and be responsible for yourself.)