Cryptocurrency is still in the speculation phase. None of this is intended as financial advice and is all opinion based, however, I maintain that nobody should be putting large amounts of money into cryptocurrency because the market is currently primed to permit accumulation. Volatility should be your friend. The psychology of somebody taking a large amount of money and buying say, three Bitcoins when people know they were $47 a pop 8 years ago, is somebody probably setting themselves up for a massive fall in the future. I heard a story of a friend's work colleague who took their life savings, purchased some Bitcoin, and lost all their money. Nobody likes hearing these tragic stories and it can only be that they bought at a high, sold at a loss, bought more when it went up, and sold more when it went down, until all their money was gone.
Relatively late to the cryptocurrency market in Summer, 2017, I lived through the epic peak of the Bitcoin bull run, only to live through the crypto winter until another epic bull run, and we again seem to be in yet another potential crypto winter. It is strange, as a technologist who worked in financial institutions for over ten years on major projects, that I hadn't heard of Bitcoin until Summer 2017, but that is true. Naturally, I FOMO'd in, but there were some key differences to most people who did this;
- Not selling on losses (rarely).
- Not putting large amounts of money in on one go.
- Having a background in finance and trading (non-control), and understanding the many asset classes such as REPOs, Stocks, Bonds, Derivatives really helps open your eyes to where cryptocurrencies fits in.
- Patience - being self-employed means you are less connected to money in terms of paycheck to paycheck.
The most powerful advantage in any market is patience - remaining calm when everybody else is panicking.
Where is the cryptocurrency market right now?
It is July 2021, Bitcoin is consolidating at around the £25k level, with a big potential next support level of around £13k, having not recently been at a level of £45k.
What are the questions any self-respecting cryptocurrency person must ask themselves?
- Why didn't I sell some at the top?
- When should I buy back at the next major bottom?
- Can I keep repeating this?
The reason these questions are so important is because anybody who is a latecomer to cryptocurrency, whilst it is still in the speculation phase, must do a certain amount of trading to try and accumulate more coins without placing a large amount of money into it.
Why is cryptocurrency so important - isn't it for drug dealers and criminals?
The US Dollar is the go to currency for criminals and drug dealers. The US dollar has been weaponised through the SWIFT system to implement sanctions and ultimately undermine confidence in the Dollar. Furthermore, anybody who recognises and tries to trade outside of the Petrodollar, tends to suffer a similar fate to Iraq.
What cryptocurrency represents is internet money - secure, fast, without counterparty risk.
Analysing, trading, and growing capital in the cryptocurrency market
To enumerate all of the possible facets of the cryptocurrency market in terms of capital is out of scope of this document. It is worth covering a few and my views on them.
Technical Analysis (TA)
Am attaching a screenshot of the YouTube cryptocurrency trading universe. People offering easy strategies to make money, others who make a lot of money putting out YouTube content on technical analysis to try and guide you on whether the market is going to go up or down. The truth is, the good traders work on probabilities, and have different positions to try and ride potential losses against gains - in finance, this is known as hedging. I follow some interesting online youtubers including;
Technical Analysts seek to look at Cryptocurrency price charts, using technical indicators to try and identify when prices will fall and collapse.
Some claim that TA is garbage - like reading tea leaves, many claim their specific choice of indicators beats everybody else, but it appears that there are many successful traders who use technical analysis.
My specific issues with Technical Analysis
- You can only look at so many charts.
- Time and time again, we hear the "It's going to moon" or "Bitcoins off to the races" and then nothing happens.
- If I followed what technical analysts are saying - I am convinced I would have lost everything.
- I have also noticed that many of the YouTube traders stays quiet when everything drops - admittedly they may be rebalancing their portfolio.
None of the above is intended to discredit TA and those who use it to become very successful at it. The major concern for me is - they never tell you when the price is going to collapse, nobody saw it coming.
Macro and Fundamental experts
Let's just call this Macro. Macro focuses on the intrinsic properties and features of cryptocurrency, with a long term view on where the market is heading. Many macro people have placed large amounts of their net worth into cryptocurrency - Raoul Pal being one, another being Simon Dixon. These are excellent people to listen to, but they can afford for Bitcoin to drop to 80% of its near time high, because they have accumulated enough net worth. Could they afford for it to drop to zero? Probably. Can we afford for it to drop to zero? Probably not. What Macro investors tends to do is to add to their position when the market has dropped a lot and never sell, using fiat money (cash).
The more extreme version of Macro trading is HODLing (holding on for dear life).
Key Macro proponents are;
As revolutionary as it sounds - why not provide services in exchange for cryptocurrency? This is particularly true if you don't provide physical goods. A great example would be providing legal or financial advice (as long as you are qualified). A main reason to sell services/products in cryptocurrency is because it starts to help engage adoption. This is something I am setting up within my platform right now.
Staking coins - Interest Bearing Assets
Those who are HODLing, and anybody can stake their coins to earn interest. This can be quite lucrative over a few years. So, you could decide to put $10000 into US Dollar Token and stake this on Coinbase. This does carry risk in terms of what happens when the dollar implodes but let's dispense with this scenario. Staking coins is a way to accumulate coins without trading.
I am launching a new platform, which will be a clone of my findigl property platform to provide metrics and insights on the cryptocurrency space. I have been working frantically to complete some major data analytic and processing components. The idea is to provide metrics not commonly found on the Technical Analysis proponents. The plan is to try and see if I can evolve this platform to answer my earlier question to identify "Tops and Bottoms".
I plan to have a new YouTube channel which will have regular updates on what my application is highlighting in the markets.
The platform will have paid premium access, but freemium access to provide insights. My ultimate aim is to see if I can make this trading strategy of mine far more successful
A new way of looking at the cryptocurrency market?
I see the cryptocurrency space as being something which will prove vital to different groups of people. If we dispense with; whether governments will ban it, UBI, whether their own CBDCs will overtake cryptocurrencies, the big reset, there are massive reasons why cryptocurrencies are so vital and it is the least discussed.
Having worked inside financial institutions, most people would say that the technology is less innovative and less modern than other industries. Whilst possibly true - financial technology has so much more data to deal with, and far more use-cases/endpoints for that data, it becomes more about reliability. Inevitably, banks have very esoteric methods of achieving similar goals making it hard for consistency and reliability across the market to be managed technically. This isn't to denigrate the financial sector - something too easily done by those outside of it, but to recognise that blockchain technology and smart contracts offers many new advantages over the existing financial sector.
Another key consideration with cryptocurrency is that it is going to make sense in many different systems we can barely contemplate right now. My honest prediction is that this whole "Big Reset" has made a massive oversight, that the producing/exporting currency are going to see less benefit in accepting Western fiat money. It becomes a zero sum game to try and force developing countries to accept IMF loans, the East is rising, whilst the West is in hyperbubbles and stagflation where true productivity has diminished.
Me on holiday in Italy a few years ago, will this ever return?