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Bitcoin HODL' ing strategies change when Bitcoin is down more than 50 percent

I'm going to very quickly look at a daily chart. None of you should be focused on the daily chart. I just want to illustrate here that ever since we topped here in June at around about the just shy of the $14,000 range, we have been in a significant downtrend of more than 50% at this point from a shorter term cycle perspective. What is very clear here is that we have a series of lower highs that are emotion and for the most part lower lows. That is a classic cycle downtrend. That's the definition of a downtrend. And for that reason in the short term, the um, the bias here is to the downside adventurously or at some point I firmly and strongly believe that this downtrend will end, will come to its conclusion. I thought it was going to come to a conclusion here in October.

 

I was not right on that. But again, from a longterm perspective, it's irrelevant. Um, it's possible that this here in November becomes the low and the end of this down trend. But the way the market has responded over the last couple of weeks leads me to believe that there is still a significant chance that we still going to see lower action for the remainder of December and possibly into January before we could see an end to this downtrend. But flipping to a weekly chart, again, what we have here is a market that went way too fast, way too quickly coming out of the four year cycle lows, adding a 300%, um, rally, um, providing or creating too much separation between sort of the say the 10 week moving average. And in essence it became a little mini parabola that obviously burse and topped and has since now seen the market correct in a very significant fashion.

Unfortunately, this is just a symptom of, of where Bitcoin is and its evolution. The, the volatility levels that we see in something like Bitcoin go both ways that cut both ways. And for a Huddler, we can't enjoy 300% rallies without bracing ourselves and being prepared for 50% declines. You know, when you've got volatility of 70 and 80%, um, these types of moves are in its nature, um, expected in default. So I always find the interesting when, um, people look for reasons for Bitcoin being down 30 and 40% in any given timeframe or up 50 and a hundred percent. You know, that, and they point to hacks and they point to distribution and all sorts of reasons for, for the market behaving a certain way. But the reality is that this is a highly speculative market. It's driven by pure speculation. And for that reason, we're going to see and we'll continue to see in the future, these massive moves to the upside and downside.

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So what's the point then? The point is that as a hustler and somebody looking at the investment from a three to four year timeframe, these intermediate cycles that you know, that rally by up to a hundred percent and declined by 30 or 40% are really part of the journey. And until we embrace and accept the fact that we're going to get these massive swings at certain times. Now these are probably as big as you're going to see of course, but they are still well within, um, you know, a couple of standard deviations of expectation. So we need to be just accepting of this fact and again, focus on the longer term perspective and the longer term goal, which is a cycle that is an uptrend cycle that over the four years is more likely to rally and move in an uptrend fashion for three to four of those years with the exception that we're going to see these massive countertrend moves or even corrections in bear markets within a larger four year cycle.

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And if we're not prepared for those types of moves, then essentially what happens is we move from that from hollow mindset and we allow the more recent and intermediate price action to influence our decision making. So decision making and our intentions are on the longer timeframe and the longer goal. But we end up sort of panicking to a large extent on a, on the more intermediate timeframe, losing sight of really what the goal is about. And I've talked about many, many times about position sizing and position sizing. Some people think that in a longer investment thesis that position sizing doesn't matter, but that's not true. Position sizing is absolutely critical on all timeframes and all investment. So another reason why I keep in every single video emphasizing that your position needs to be structured where you can sleep at night and you're not allowing 30 and 40% declines in the market to significantly throw you off your overall thesis and your overall strategy.

And that's what's happening to many of you right now. I know it is because I know from the questions and the emails and the DMS I'm receiving that people are not all of you. Many of you are affirm and strong, but many are capitulating and they're selling always at the wrong time. So if your timeframe is three years out, uh, and you're allowing yourself to be influenced by action over a two or three month period, then you're essentially going against your thesis. You're going against your process and you're allowing short term price to dictate how you trade this. And again, so that's why my allocation overall is 5% on the huddle standpoint to my wealth. Getting in early obviously helps me. So, you know, I, I wouldn't, I would need to see Bitcoin well below the $4,000 range before my position even goes into the negative.

But even so, uh, that's something that I've again talked about that I'm prepared to experience. It has not been my expectation. I did not see price falling below. So the $6,000 range, if it does, then I would be seriously concerned with where the four year cycle was heading. I would seriously begin to consider that this $14,000 high is the high for the four year cycle. And that we could be looking at a three year, I wouldn't call it, well it's a bear market. It doesn't necessarily mean straight down, but a three year period where we kind of just churn and turn, um, maybe going down to the four, $3,000 level again and then back up again. Making it very clear, not my expectation, but in a sound investment strategy, all possibilities have to be factored in and considered, especially again looking at a market that has such extreme volatility that is so early in its development.

Uh, we, we need to be mindful of that. And by going in leverage deep by borrowing money to trade or to invest, what do I tip up? Putting in an allocation that you cannot handle the downside with is only going to lead to a disaster and could lead to a situation where because you have a tube too big a position that any sort of move down, let's just say 5,000, 200 or 300 in December or even in, let's just call it January for example, could lead you to experience a significant amount of stress and dump your position thinking that it's all over. It's failed and it's going back to two or 3000. I already see a ton of $3,000 Kohls and charts now peripheral dating, Twitter and all the social media channels. That's a nature of a bear market. It turns sentiment to one extreme from the other and everybody becomes fearful and that's typically around the time when a market, at least a market in a longer term uptrend is ready to turn.

 

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So don't fall victim to the possibility of puking selling, capitulating or positions in this type of situation before the next move and the next market hire or the next sort of trend higher then begins. Now, when I first posted a video just you know, 10 months, 11 months ago, I essentially outlined an idea or a thesis that price would stay below this sort of five thousand six thousand range for the majority to most of the year. I even said in my first video that it may not even be in 2019 that we see a break kind of above this 5,800 level, which was the, um, the level of that provided some support before breaking down in December of last year. I kind of thought that we may take a while to get above that. Of course I was wrong there. It came up very, very quickly, but my point is that um, around the six to $7,000 range by the end of this year was really the overall expectation based on how Bitcoin has behaved in previous four year cycles and it's typical structure in those markets.

Just looking back here, kind of a similar thing where you have a year of cumulation or consolidation to begin with an accumulation before breaking out and beginning the next big bull trend higher and I think that's just what's going on here. Again, we just went too high, too fast and now we've had to come back and revert back to sort of the main line before we can begin to experience that next up highest. So overall from a structural standpoint, I'm not concerned. My original thinking and thesis for getting in here at a four year cycle low still holds perfectly true in my opinion and my, with my type of allocation, I feel absolutely no reason to be panicked or concerned at this point being up still, you know over you know, nearly 80 and 90% from sort of the $4,000 level and with Bitcoin's still up 120% for the year to date.

Bitcoin still is one of those funny asset classes where we have a lot of inexperienced traders and investors in this space. People complaining about a market that's up 130% year to date and all they can see is doom and gloom and the bearish scenario with prices 7,400 just six months ago when price was going through that 7,400 area, everybody was excited. People were talking about 20,000 by the end of the year and and sell one in 30,000 how quickly that narrative changes, right? So realize that it's more about sentiment and it's more about how we view the market than it is anything else. We're allowing the idea of riches to influence our trading as opposed to focusing on the process and allowing price over time to take care of itself. If you can concentrate on your process, concentrate on the goal that we have and allow the market to get up to this point up into the uh, the six figure range within the next two or three years.

You need to be laser focused on how you view the market, you know, your emotions and your psychology and stick to your plan to be able to realize that goal. Now, there are no guarantees, zero guarantees in any trading, whether this longterm thesis plays out or not. I don't have the answer to that. All I know is what I've seen in prior cycles and my belief in Bitcoin overall as a revolutionary technology and a solution for a digital age money. I believe in that firmly and that's why I stay invested and I did not with what I know today. I did not want to see a situation where price is up at that six figure range in the next two years and I don't have, and I didn't execute on my plan, that would be the biggest sin in my opinion. Um, I can handle the market going in a three year bear market because I'm positioned to be able to support something like that where it's not going to hurt me, but I will not allow a thesis that I believe in to unfold and for me to not participate in the outcome of something like that.

So this is all about process. It's not about price action necessary at this point. Um, it's just about sticking to your overall goal and your overall plan and seeing it through.

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Okay, let's go onto exit strategy here. So, exit strategy for me, what that looks like is, um, obviously I want to have a decent position in the event that Bitcoin gets above the a hundred thousand dollars range by the say late 2020 or into the 2021 period. That's my overall objective. That's my thesis here. So I want to be positioned to be able to take advantage of that outcome. It doesn't mean though that I'll just let everything ride all the way up. As the market goes higher and gets into or above the $20,000 range and beyond, I want to look for some opportunity to begin to take some off the table knowing that I'm possibly giving up some future gains if indeed it gets up to that, you know, 120 150 to $200,000 range that I'm hoping for and I'm doing that purposely because I want to be able to hold firmly and strongly on a position without feeling the need to sell or panic on a 20 or 30% correction.

That will inevitably come throughout that process. Going up to up to that sort of big six figure dollar range. Um, when you're holding, she's just, it's the same in reverse. Uh, you've experiencing pain here potentially as the market corrects by 50%, as the market goes up and your position doubles and triples and quadruples and then eventually goes into sort of a 10X situation, the gains become, uh, something begins to overwhelm you. And it's, it's a difficult thing to express if you haven't gone through it the past. But, uh, it's very, it's almost harder to hold big gaining positions holding those profits, uh, higher as it is. Um, you know, holding onto a loser. Most people can hold onto losers longer than they can hold onto winners and I want to be able to take profit in a way up to allow me to ride the 20th, 30, and maybe even 40% corrections that we'll see as we go up.

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Riff. You recall the prior bull market? We had 30% corrections often along the way. And I know many who were in that space at the time couldn't handle these corrections thinking that, you know, they're held on, they're held on that so much paper profit in their portfolio that when they saw a 30% correction, they were concerned that that was the top, the major top for the move. And they sold out at those, at those drops and I'm ready to see the market reverse. And then what they ended up doing is, because they reduced the allocation significantly and then realize that it was not the end of the move, they bought back significantly higher. And then what that ended up doing was dramatically increasing their average cost of Bitcoin, which, which essentially took away a future profits. So I want to avoid doing that by taking profits at certain points.

Now, not an extreme amount, but enough where I feel as if I can get my initial capital back and then as the market goes higher, taking some profit way and reallocating because again, 5% of wealth here, if Bitcoin doubles and then goes into a, you know, a five X and a 10X situation. So for example, at 40,000 we're looking at a 10 X at 10 X. Now from initial allocation, it's now a significantly larger percentage of my overall wealth and that becomes again, difficult to manage for that reason. So I want to begin to trim and take profits, but not on a 20 or 30% decline. I want to start taking those at the peaks. So I want to start taking those at spikes in the market as it goes higher. Now from a predetermined level. Initially when I started out here earlier in the year, I had a price target of 18,000 for the first cell that has now moved up to 28,000 and the reason for that is as we moved up significantly to this $14,000 range and pulled back, if we now go back above this $14,000 range and continue higher, then I'm fairly confident that the longterm narrative going up to a six figure range is um, is is right and is real.

Um, I don't see a situation where we go back above sort of 14,000 but then fail to break above 20 just based on where this is. So this is either a major top in play and we're going to have a two or three year bear market and we'll have to deal with that all we're going and we're going to continue on as I expect. So I want to move up that level to a $28,000 range knowing that that's well, well short of my goal, but it's taking some off the table right? And at $28,000 taking say five Bitcoin off the table from the 30 that I have allocated to. This will make me feel um, confident in holding the rest of the position as it goes higher from then on though it's not going to be as arbitrary as a certain price target. I'll probably just be looking at the market and getting a sense for how I feel where it is in timing from a four year standpoint, how much longer do I think this is market has blood probably would they look towards a $56,000 range in or in that range at least for possibly the second cell and taking some more off the table at that point cause 56,000 or 55,000 at some level there it represents roughly a 1 trillion market capitalization for Bitcoin and I think that's going to be a significant number and at that point it's a, it's also possible that we could be looking at a cycle that just doesn't do anywhere near the type of gains that the prior cycles did.

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But a $50,000 level is still significant amount of money to take off a table here. But I'm knowing that, you know, for whatever reason, we just don't get a six-figure peak in this four year cycle. So again, I'm protecting myself from a situation where the market peaks much earlier than I think, and then begins a real Bamaga quickly leaving me in a position where I can't sell worried that I'm selling on a drop or a 30% capitulation, but the market keeps going lower. So I don't want to be in a paper profit situation where I'm up 10 X on my position and then watch it just fade and fade and fade month after month by taking some profit at certain predetermined levels. I'm banking and I'm reallocating my wealth into other endeavors and uh, and I'm feel confident and comfortable in my position at that point.

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Okay. But from that point on, I would say the second cell, let's just call it the 55 $56,000 range. At that point, I'll probably then go into more of a more of a technical stamp of view on when to exit the market. So looking for other and we'll cover that in the future and there's nothing that's going to be a long way away from today, but looking more at a, you know, rate of change in price, um, you know, standard deviation type moves or where it is on a weekly level, um, to in relation to its Ballinger band, which is a standard deviation, uh, looking at it from an extension to say a 10 week moving average, couple of different sort of metrics like that. And of course taking, uh, taking us, taking stock of sentiment at the time and the day and getting an overall feel for who's talking about Bitcoin, who's buying Bitcoin at that point.

And that's going to give me a better indication of whether or not a topic is in place. Now, timing the absolute top is probably going to be very difficult to do. I think I did a very good job in the prior cycle with a large position near the $20,000 range. But there are no guarantees. It's very difficult to time absolute tops. Uh, I'm not necessarily looking to time at the top in the next move because we're in early as far as I'm concerned. If the market goes up into the 50 and then the 100,000 and above area, essentially getting out of the market at some point with the majority of your Bitcoin at those higher levels is success. And that's how I define my goal. Um, and, and that's what success looks like to me. And that's what I'm focused on. I'm not going to look back and say, well, look, you know, you lost a 20,000 a coin if you held on, that's a, that's not a good game to play. Looking back in hindsight and the revision mirror for me, I like to have a plan in place and then focus day to day, week to week, month to month on executing on that plan. And that's what makes, that's what I think ends up, uh, allowing me to become successful in executing on this idea.

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