How To Get Started With Bitcoin
We get a common question at Swan Private when helping our high net worth clients. How do you start taking a Bitcoin position? Should you take an initial lump sum or use regular purchases to average into the position slowly?
Mathematically
Generally speaking, Bitcoin has been on an uptrend for its short life. The Bitcoin investor/saver has fared best by taking an initial lump sum and then simply having the conviction to hold for the long term. Now the trick comes in: How much confidence do you have? Would you be comfortable holding through 60% drawdowns from top to bottom?
Bitcoin goes up a lot every year on average, but it does have years and moments where it drops significantly and quickly. It's pretty standard for newcoiners (those new to Bitcoin) to overstate their risk tolerance and appetite for weathering drawdowns. You won't know until you're tested.
There are different ways to deal with this, but mostly it comes from having education and a support network. You can have friends who you chat with Bitcoin about, whether these are connections you've made at a local bitcoin meetup or conference or online via chat rooms.
Psychologically
Psychologically it might make sense to start with a small investment to take the time to become more comfortable. Some people prefer to start with a small amount and then continue learning by reading about Bitcoin's economics, technology, and history.
This approach has the benefit of allowing you to start by risking less, and it represents 'baby-stepping' into Bitcoin. The downside here is that you may miss out on some upside of Bitcoin compared to if you had taken that initial lump sum for the maximum possible amount. Not immediately buying more is a common regret that many Bitcoiners have. Nevertheless, you don't want to buy more than you are ready to hold for the long term. If you proverbially bite off more than you can chew, you risk selling out during dips or bear cycles.
The Integrated Approach
What generally works for most people is to:
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Make an initial lump sum purchase - as much as you can hold without touching it for at least four years.
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Set up an automated bitcoin accumulation plan. Your plan might involve regularly buying or earning Bitcoin, or it could mean Bitcoin mining.
Generally, this process is best done alongside practical use of Bitcoin, learning how to use smartphone bitcoin/lightning wallets, hardware wallets, and running a Bitcoin node. Confidence comes with time in the market and exposure to the right kinds of learning materials, such as books , podcasts, and online education tools .
If you're a high net worth investor or business looking for a guided pathway into Bitcoin with a real person who you can call, please get started at Swan Private .
Stephan Livera hosts one of Bitcoin's leading podcasts, and he is also Managing Director, Swan Bitcoin International. He is also a partner in Bitcoiner Ventures and co-founder of the Ministry of Nodes. He contributes to various outlets and publications, such as Ticker News, Bitcoin Magazine, Mises Institute as well as speaking at Bitcoin conferences internationally. He is recognized as a Bitcoin educator and industry figure with over 100k Twitter followers and in the top 10 globally for Bitcoin relevance. Previously he worked as an Australian Chartered Accountant for Deloitte, Commonwealth Bank of Australia, and Macquarie Bank. Stephan grew up in Sydney, Australia, and studied at the University of New South Wales.
