Inspired by the @jrcornel's post: Bitcoin returns were negative only 2 times in the last decade, I came up with idea for Steem's yearly gain post.
The idea is that you will buy $1000 worth of Steem every year at the beginning and sell at the end. You will consume to loss or take the profit. For example, you bought $1000 worth of Steem, and at the year end it became $168, then you lost $832. The next day or beginning of new year you will adjust and invest $1000 again and keep continue.
|Steem||Jan 01||Dec 31||Change %||$1,000||Profit/Loss|
|2016||1.07 (April 18)||0.18||-83.18||168.2||-$832|
Interestingly, you could have earned staggering $14596 profit with your $1000 investment strategy for Steem even today.
In the last four years, Steem's gain was negative for three years and positive for one year. Incidentally, one year's gain would have covered up all your loss.
However, there is a caveat that you have to reshuffle your investment. It means you have to have $1000 worth of Steem at the beginning of each year. It means that if you lost some money, you have to pull in the difference. For example, in the January 1st, 2017, you had to put another $832 to make it $1000 though you already have invested $1000 on April, 18, 2016. Steem was started trading on April, 2016.
However, for BTC it is different. BTC had one year negative out of four. The year is after the bull run or, 2nd year after BTC halving. For example, BTC's reward halved in 2012 and 2016, its gain was negative in 2014 and 2018.
If this pattern continues then you would not buy BTC in the beginning of 2022. But you can buy at the beginning of 2019, 2020, 2021, and would make profit. Or, you will buy at the beginning of 2019 and sell at the end of 2021.
Now can we apply, this strategies for Steem and BTC.
It is hard to tell.
However, for Steem we now have a range: 7 cents to $8.5. If someone's buying average for Steem is 10-20 cents, they sell at some point at bull market, they should make a big profit.
However, the lesson also tells us that not selling during the bull market and HODLing would not help at all. For example, if you HODL $1000 worth of Steem from its beginning on April, 18, 2016, you would have lost $879 at the year end of 2019.
But for BTC unless you did not bought after the bull market ($20-7K) during 2018, then HODLing BTC would be the better thing going forward. The best strategy would have been if you sold at the peak which depended when you bought.
The lesson from analysis is that if you are an investor in Steem, your goal would be lowering dollar cost average (DCA) of Steem at this low price if you believe in Steem's ecosystem. If your DCA for Steem close to the lower bound (7 cents), and there is another altcoin bull run and you are not too greedy to sell, then you should able to make some handsome profit.
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions. This opinion is only for educational purpose.
Image sources: Most images are open sourced (e.g. Pixabay, Wikimedia etc.) with Creative common license. Some images are used with due courtesy to respected owners.
Thanks for reading.
Cryptominer , occasional trader and tech blogger since 2013