Storing all assets in Bitcoin is a good decision (to be faster in a heart attack and higher stress) lol.
With a fluctuating market, it is certainly not a good option for financial health.
This is the worst financial strategy to store all your assets in bitcoin because when their is a drastic dump in price,it will look like your doom day has arrived. A very bad way of financial management.
Part of the rationale to diversify at least a little bit in terms of NOT holding all your wealth in one asset class.. especially one as volatile as bitcoin, even though surely there are some people who engage in such a practice.. which does not seem to be good financial management or even advisable absent some pretty special circumstances. such as perhaps if they were to have a pretty guaranteed cashflow that allows them to NOT have to be reliant upon the value of their investment in any kind of way... but even then, for sure, there does seem to be some value in any ability that any of us might retain to be able to continue to buy on the dip or to DCA during dipping times, rather than completely losing confidence because our investment might have had gone down greatly.. such as greater than 70% and stayed at such depressed levels for extended periods of time.. including potential uncertainties regarding if such asset might continue to drop in value further and for much longer periods, too.
Those who store all their asset in bitcoin will end up not being able to hold all their bitcoin for a very long time,they will only be able to hold little fraction of 20% after a long time, due to the fact that we will be faced with an unforeseen financial challenges and before you know it since this is there only assets they will have no any other option but to use from their portfolio to tackle the problem.
Sure.. but there is still a balance even if choosing when to start diversifying if at all. Of course, a very early investor might spend a lot of time in which s/he has no other investment except for bitcoin, so it does not make a lot of sense to diversify for the mere sake of diversifying - even though I do seem to understand and agree with your point that at minimum, there may well be a need for some cash reserves in order to be able to take advantage of likely ongoing and potentially severe BTC price fluctuations and surely one of the ONLY thing that might get closed to being guaranteed in bitcoin is that it is going to be volatile.. even if we might not know exactly in what direction such volatility might end up happening.
As you say the only guarantee we have is that Bitcoin will be volatile. But what can we conclude from that? The only ones who don't have to care as much about where Bitcoin is going are the exchanges as they make their money on volume. Wouldn't it be a reasonable approach hen as part of a diversification strategy to also own shares in the infrastructure in addition to Bitcoin itself?
I know that centralized exchanges are not the optimal investments as some of them are prone to collapse even when nobody saw it coming, but I am not only referring to centralized exchanges. When there are decentralized solutions that have some integrated DAO function where people can acquire shares by holding a token in the DAO, wouldn't that also have a diversifying effect against Bitcoin's volatility? Whether it goes up or down, the share and the total $ value in volume would count and as a shareholder you would benefit from volatility no matter which way it goes.
What do you think about that?
When Bitcoin goes down and trading volume goes up, an exchange like Binance might be suffering from devaluation of their Bitcoin reserves, but they probably have a diversification strategy and convert enough of their revenue into "stable" currencies like fiat or USDT. I often think that all these exchange owners care more about volatility than about Bitcoin's price going up. Owning a part of the more solid infrastructure has been like owning a gold mine over the last decade (if the exchange was managed well and didn't go bankrupt).
Unless the industry collapses disappears, in my opinion it could be a good hedge to own both Bitcoin and the infrastructure facilitating trade and transactions. I know that the options to own a share in the infrastructure are not as manyfold and sometimes carry their own risk, for example when you buy BNB hoping that the burning will go on forever, ignoring the risk that even Binance could collapse as FTX has proven that nothing is impossible.