How to Mentally Prepare Yourself for Market Pullbacks

How to Mentally Prepare Yourself for Market Pullbacks

Even if every single aspect of your investment research is correct, there will be down days along your wealth-building journey no matter what asset you own.

Whether you’re buying in a bull market and expecting higher prices… or in a bear market and looking for bargains… At some point, your position will experience a pullback in price.

Sometimes it happens right after you buy in. At other times, it happens after you are already in profit. No matter when or where it happens in your ownership cycle, pullbacks can be a nerve-wracking time.

As the price declines, it’s natural to question yourself, your decisions and your convictions.

It’s easy to have conviction in an investment when its prices are roaring higher… Much more difficult when it’s getting whacked about by market forces.

I bring this up because bitcoin is in the midst of such a pull back.

Since hitting a new all-time high of $73,738 on March 14, bitcoin’s price has retreated to a low of $62,500. That’s about a 15% drop in five days.

Now as far as bitcoin goes, this is pretty tame action. Even during a bull market – such as we’re in right now – bitcoin has a history of pulling back between 15% and 40% or more all while being in an uptrend.

As I wrote in a previous essay, this type of volatility is the nature of the beast when it comes to bitcoin. It’s the price we pay for the chance at life-changing gains.

Regardless, the rollercoaster ride to riches can be gut-wrenching. And those who aren’t prepared will panic-sell out of a position too early at the first sign of trouble.

Friends, I don’t want that to be you. So in this essay, I’ll show you how to mentally prepare for the inevitable down days on your wealth-building journey.

Step 1: Is the Trend With or Against You

When one of my investments experiences a pullback, the first thing I always ask myself is this: Am I in an uptrend or a down trend?

Am I early in the bull market or am I late. So how do you answer those questions?

Fortunately, when it comes to bitcoin, those questions are easy to answer.

Bitcoin broke through its previous all-time high set in 2021 just two weeks ago. You don’t hit a brand new all-time high for the first time in a bear market.

So that automatically means we’re in a bull market.

Ok, that’s good intel for us. But where are we in the bull market? Early stage, mid stage or late stage? This is another important question to ask yourself.

Again, this is quite easy to answer.

During the last cycle, bitcoin peaked at about $68,000. It then dropped to $15,000 and didn’t make its first all-time new high until March 5. That was just 14 days ago.

Mmmm OK… Looks like a pretty new bull market to me.

Let’s take a look at the early innings of the previous bull cycle and examine it for clues that can tell us where we are in this cycle.

In December 2017, bitcoin peaked at about $20,000. It then dropped to about $3,500.

It didn’t break to a new all-time high again until approximately December 2020. Prices didn’t peak until a full year later — at about $68,000 in November 2021.

This suggests we have at a minimum another year of substantial gains ahead. Except this go around, we have a much larger pool of buyers coming into bitcoin because of the launch of the bitcoin exchange-traded funds (ETFs).

My research suggests this could result in the longest-running, largest bull market we have ever seen in crypto assets.

Treat this Pullback As a Buying Opportunity

But let’s forget all that for a moment… Just looking at where we are in this cycle tells you that this is simply the first pull back of the brand new bull market in bitcoin.

Since I have been involved in bitcoin, if you’ve held for at least one month you have never lost money buying into the first pull back after the first new all-time high coming out of a protracted bear market.

It is rare that we get such a compelling buying opportunity with such good metrics behind it. This is one of those times.

Now, I don’t know how far bitcoin can drop from here. In the past, it has dropped as much as 30% after hitting its first new all-time new high after exiting a bear market.

Trying to predict how much bitcoin’s price will drop from here is a waste of your time.

Instead, get clear on how much money you want to commit and either just put it all to work now or put 50% to work now and daily dollar-cost average in the rest.

The point is this: We’re just experiencing the first pullback after hitting the first all-time new high of a new bull market. Buying opportunities in bitcoin don’t get much better than this.

Let The Game Come to You!™

Big T