Pierre Rochard, VP of Research at Riot Platforms (NASDAQ: RIOT), recently shared valuable advice for Bitcoin users on social media platform X (formerly known as Twitter). His tips are aimed at ensuring prudent management and understanding of Bitcoin.
Here’s a detailed breakdown of each piece of advice and its importance:
Rochard’s Don’ts for Bitcoin Management
- Don’t Borrow Against Your BTC: Borrowing against Bitcoin can be risky due to Bitcoin’s price volatility. If the value of Bitcoin drops significantly, borrowers might face margin calls, requiring additional collateral or risk liquidation. This could lead to a loss of Bitcoin holdings or financial strain.
- Don’t Lend Your BTC: Lending Bitcoin involves credit risk. If the borrower defaults or the lending platform faces issues (like bankruptcy or hacks), lenders may lose their Bitcoin. Given Bitcoin’s value and potential for appreciation, the risk of lending it out may outweigh the potential interest earnings.
- Don’t Daytrade Your BTC: Day trading Bitcoin is highly speculative and risky, especially given the cryptocurrency’s volatility. It requires constant market monitoring and can lead to significant losses. Rochard suggests that holding Bitcoin for the long term is a safer and potentially more profitable strategy.
Rochard’s Dos for Bitcoin Management
- Do Gradually Accumulate BTC: Gradual accumulation, often through dollar-cost averaging, reduces the impact of volatility. By purchasing fixed amounts of Bitcoin at regular intervals, investors can mitigate the risks associated with timing the market and build their holdings steadily over time.
- Do Self-Custody Your BTC: Self-custody means storing your Bitcoin in a wallet where you control the private keys. This reduces the risk of losing your Bitcoin to exchange hacks or third-party mismanagement. It empowers users with full control over their assets, aligning with Bitcoin’s ethos of decentralization.
- Do Study How Bitcoin Works: Understanding the technology and economics behind Bitcoin is crucial for informed decision-making. It helps users appreciate Bitcoin’s value proposition, make educated choices about holding and using it, and stay updated on developments in the space.
Eric Wall’s Recommendation
At the end of his post, Rochard asked if anyone had other valuable Bitcoin tips. This is what another Bitcoin OG, Eric Wall, offered in reply:
“Don’t believe that a mathematical formula you read about on the Internet can tell you what the price of Bitcoin is going to be.“
Featured Image via Pixabay