Chief Investment Officer Explains What Bitcoin Investors Need To Know About Psychology

The first week of 2022 ended on a rather bleak note as Bitcoin crashed below $ 43,000. Even at the time of going to press, there were no cheerful messages from the President of El Salvador urging people to buy the dip.

Understandably, even the smallest Bitcoin investors might be feeling blue right now, as the royal coin rolls deeper into the red. To this end, What Bitcoin Has Done Host Peter McCormack sat down with chief investment officer Cullen Roche to get his take on the flagship coin – and his advice to investors.

Do you feel exposed right now?

Roche quickly admitted that an investor “Hyper-exposure” to an asset made him worry. He noted that even short-term price drops can cause trauma and noted,

“I don’t think most people need such a risk. But you can build a very diverse portfolio that has things like, you know, Bitcoin and these other very volatile assets that don’t overexpose you to volatility.

McCormack admitted that he might be overexposed when it comes to Bitcoin. The podcast host also said he even nearly lost his home.

For its part, Roche recalled Viewers that a fall in stock prices could be linked to changes such as layoffs, failed portfolios and family disputes due to it. However, he denied being a Bitcoin critic and instead insisted on caution.

Coming to investor psychology, Roche suggested that few people could see their portfolios lose a lot of value before reducing their losses. He Explain,

“Most people couldn’t really bear to see their overall financial assets drop by 50% for a sustained period of three to five years. They’d hit a breaking point in there at some point where they’d say, “it’s not worth it.” “

Roche also added that it could be extreme when it comes to an asset that investors really believe in – like Bitcoin.

Inflated hopes vs inflated prices

Former Twitter CEO Jack Dorsey’s tweet about hyperinflation certainly got the ball rolling in the fall of 2021 and raised fears that hyperinflation is hitting the United States as well.

However, investors might be relieved to learn that Roche disagreed. The investment executive called prediction one “Bad presentation” and said he believed the risks of hyperinflation in the United States were “Astronomically low. “

On this basis, Roche was clear that he didn’t think Americans would be forced to use Bitcoin as an inflation hedge anytime soon.