Investment officer explains what Bitcoin investors need to know about psychology

The first week of 2022 ended on a rather gloomy note as Bitcoin crashed below $43,000. Even at press time, there was no cheery message from the President of El Salvador urging people to buy the dip.

Understandably, even smaller Bitcoin investors might be feeling blue right now, as the king coin rolls deeper into the red. To that end, What Bitcoin Did host Peter McCormack spoke to investment officer Cullen Roche to learn his views on the flagship coin – and his advice for investors.

Feeling exposed right now?

Roche quickly admitted that an investor’s “hyper-exposure” to one asset made him worry. He noted how even short-term price drops could cause trauma and said,

“I don’t think most people need that amount of risk. But you can build a really diversified portfolio that holds things like, you know, Bitcoin and these other like, really volatile assets that don’t overexpose you to the amount of volatility.”

McCormack admitted that he might be overexposed when it came to Bitcoin. The podcast host also said that he had come very close to even losing his home.

For his part, Roche reminded viewers that a fall in stock prices could be linked to changes such as job redundancy, faltering portfolios, and family conflicts due to the same. However, he denied that he was a Bitcoin critic, and instead stressed caution.

Coming to investors’ psychology, Roche suggested that not many would be able to see their portfolio lose a huge amount of value before cutting their losses. He explained

“Most people could not really sustain seeing their overall financial assets go down 50% for a sustained like, three to five year period. They’d reach a breaking point in there at some point where they’d say, ‘this isn’t worth it.’ “

Roche also added this could be extreme when it came to an asset that investors really believed in – like Bitcoin.

Inflated hopes vs inflated prices

Former Twitter CEO Jack Dorsey’s tweet about hyperinflation certainly stirred things up in the fall of 2021 and ignited fears that hyperinflation could also hit the USA.

However, investors might feel relieved to learn that Roche did not agree. The investment exec called the prediction a “bad showing” and said that he thought the chances of hyperinflation in the USA were “astronomically low.”

Building on that, Roche made it clear that he didn’t think Americans would be forced to use Bitcoin as an inflation hedge any time soon.