Bitcoin - The Euphoria Of Decentralization - DeMythed!
Updated
The crystal ball has been fixed, the seer is in her chair and there it is, the magical number of which we can mark the bottom. The number is........ crap where is the windex!
So with Bitcoin' trying to keep hold up around the 3700 area, well, nothing has changed in my analysis from last week. In the short term we see weakness and a likely retest of 3500 or a push towards 3k. Until we push through 6600 I will remain in the short term bear camp. Yes 4650 and 5650 are levels that will show improvement, but until I see it break through 6600 there is the potential for a retest or lower. Now this does not imply I am not looking to add. Quite the contrary I am. However not everyone is in the same position. I still have a considerable amount of cash in my portfolio. Yet just throwing it in is a recipe for disaster which is why we allocate very small positions and step in slowly. No different then taking my 1400 and sitting at the 5/10 table, that is too much risk for my stack size.
As teams like ETC' are going defunct, others are selling their stash of ETH' and BTC' in order to keep funding projects. This is the "quickening" of the space. Much different than the dotcom era of before. During the dotcom era money was used to purchase any company with a .com behind it and most of those went to zero, during the fruition period. In cryptos the way they were funded was ETH' and BTC'. As investor piled into anything with a .io' behind it, the price of BTC' and ETH' rose from demand. What we didn't see coming is, these companies, dumping their coin hoards in order to remain liquid. This is consistent with the 6 tenets of Dow Theory concerning Supply and Demand.
In addition the Roger Ver and Craig Wright debacle may have destroyed the euphoria of a decentralized world where everything will be decentralized. Do not think for a minute this is not affecting the alt coin space. What company is thinking, "let's spend 10million to develop a platform on EOS' or IOTA' now? Probably not many. Moving forward unless the coin has a working product and eco-system it is a no buy! Coins like XRP' and XLM' are likely to rise up through the ashes, from the city Ver and Wright burned to the ground.
Of course my personal belief is that Bitcoin' and a handful of others will weather the storm. We are going through the fruition period and which coins survive and which ones perish will depend on the coherency of the team. We mentioned in one of our articles before BCH' fell from graces. What merchant wants to accept a coin that may result in disruption to their payment processing? NONE! This doesn't imply BCH' is hellbound for zero, but it is starting down that runway for sure. Only time will tell if it recovers but this is not a coin that is on our radar, and though we only trimmed off 20% a month or so ago, at least we trimmed something. Same for ETH' we trimmed down 40% back in October and closed our OMG and NEO positions.
As I wrote about this yesterday, investing is not about timing the bottom, it is about risk management. No different then poker. It is not about having the nuts, it is about managing risks. If you wait for the nuts to make a move, you will never win in the long term. There are always hands you throw away, and what keeps you at the table is managing your risk. As a poker player I have about 1400 in my poker fund. Yes I allocate money for everything. I am not a professional player but I act like one when it comes to poker. I buy into a table with $120 at a time. At any one time there is never more than 120 of my money at risk. If I lose it Friday night, well, I still have another 10+ buy ins.
Investing is the same. I allocate an amount of money for Investing (the type without stop losses to be Troll Clear) and I add into pullbacks. I know I will never get the bottom, but as long as I keep my capital in perspective, I have money in the event it pulls back further. Just like poker, we all have our runs of losses, and investing is no different. You have to position yourself so you can take the temporary pain, and think of the long term gain.
In poker you do not win every time you sit at the table. There are times your stack is down 50-70% and you say, enough is enough I'm done. I used to be one of those guys that would say, ohhh $30 left, hell i'll play till its gone. My overall account was stagnant at best. However once I started thinking, this is not my night, I will conserve my $30 and live to play another day, my overall stack started to move up. If I came back the next night and won $150, my overall gains for the two nights were $80 in lieu of $50. This is a huge gain percentage wise.
Investing is no different, it is about risk and capital management. Back in 1997-2001 I got a first hand account. Everyone in our office was trading tech stocks. They all had systems and were killing it. At that time with 3 kids, one on the way, and a mortgage payment I really didn't have the money to trade, and the fees were not $4.95 they were like $50. All of them were trading geniusesm but none of them ever took money off the table either when winning or losing. Guess what happened next? Just like the 40-50 Trolls that will soon plaster this blog with none-sense claims of 90% winners and stupid charts. Trading 3-5 years in a bull market makes them experts. Yeah ok pass me another cup of Kool-Aid.
How many sites have 100% returns in a week? Or 500% returns in a year? If it were that easy they wouldn't have a website, they would have a party yacht. Those types of gains are only possible with high risk highly leveraged trades. Don't drink the Kool-Aid eventually "Big Italy" comes a collecting. Perfect example is my buddy who trades VIX' instruments. Up huge in June of 2017, only to give it all back in one trade!
Investing and trading is hard money! I know the guy trading 5-8 years in a bull market is like "ohhh I'm killing it". Go through a couple bear markets, that is what separates the men from the boys. I mentioned in an article a few weeks ago "Brag About Your Losses". Of course all the Trolls missed the point of the article. Not because they are trading geniuses, but because they are amateurs and didn't realize it was about risk and capital management. Since April our trading account is in the green up 8%, even with the streak of losses. Take out the one home-run and it is only down 1.7%. How many can say that truthfully?
In the end it is not the whales, the river, the market, or the flop that kills your capital, it is a lack of discipline and understanding risk management! This is why we have a position calculator and adjust dependent on the aggressive nature of the trade. No different then adjusting your bet in poker, depending on position and players. None of this "Buy in the zone, sell in the zone" I nailed it none sense. Trading and investing does not requires you to be right all the time, but manage your capital consistently.
So with Bitcoin' trying to keep hold up around the 3700 area, well, nothing has changed in my analysis from last week. In the short term we see weakness and a likely retest of 3500 or a push towards 3k. Until we push through 6600 I will remain in the short term bear camp. Yes 4650 and 5650 are levels that will show improvement, but until I see it break through 6600 there is the potential for a retest or lower. Now this does not imply I am not looking to add. Quite the contrary I am. However not everyone is in the same position. I still have a considerable amount of cash in my portfolio. Yet just throwing it in is a recipe for disaster which is why we allocate very small positions and step in slowly. No different then taking my 1400 and sitting at the 5/10 table, that is too much risk for my stack size.
As teams like ETC' are going defunct, others are selling their stash of ETH' and BTC' in order to keep funding projects. This is the "quickening" of the space. Much different than the dotcom era of before. During the dotcom era money was used to purchase any company with a .com behind it and most of those went to zero, during the fruition period. In cryptos the way they were funded was ETH' and BTC'. As investor piled into anything with a .io' behind it, the price of BTC' and ETH' rose from demand. What we didn't see coming is, these companies, dumping their coin hoards in order to remain liquid. This is consistent with the 6 tenets of Dow Theory concerning Supply and Demand.
In addition the Roger Ver and Craig Wright debacle may have destroyed the euphoria of a decentralized world where everything will be decentralized. Do not think for a minute this is not affecting the alt coin space. What company is thinking, "let's spend 10million to develop a platform on EOS' or IOTA' now? Probably not many. Moving forward unless the coin has a working product and eco-system it is a no buy! Coins like XRP' and XLM' are likely to rise up through the ashes, from the city Ver and Wright burned to the ground.
Of course my personal belief is that Bitcoin' and a handful of others will weather the storm. We are going through the fruition period and which coins survive and which ones perish will depend on the coherency of the team. We mentioned in one of our articles before BCH' fell from graces. What merchant wants to accept a coin that may result in disruption to their payment processing? NONE! This doesn't imply BCH' is hellbound for zero, but it is starting down that runway for sure. Only time will tell if it recovers but this is not a coin that is on our radar, and though we only trimmed off 20% a month or so ago, at least we trimmed something. Same for ETH' we trimmed down 40% back in October and closed our OMG and NEO positions.
As I wrote about this yesterday, investing is not about timing the bottom, it is about risk management. No different then poker. It is not about having the nuts, it is about managing risks. If you wait for the nuts to make a move, you will never win in the long term. There are always hands you throw away, and what keeps you at the table is managing your risk. As a poker player I have about 1400 in my poker fund. Yes I allocate money for everything. I am not a professional player but I act like one when it comes to poker. I buy into a table with $120 at a time. At any one time there is never more than 120 of my money at risk. If I lose it Friday night, well, I still have another 10+ buy ins.
Investing is the same. I allocate an amount of money for Investing (the type without stop losses to be Troll Clear) and I add into pullbacks. I know I will never get the bottom, but as long as I keep my capital in perspective, I have money in the event it pulls back further. Just like poker, we all have our runs of losses, and investing is no different. You have to position yourself so you can take the temporary pain, and think of the long term gain.
In poker you do not win every time you sit at the table. There are times your stack is down 50-70% and you say, enough is enough I'm done. I used to be one of those guys that would say, ohhh $30 left, hell i'll play till its gone. My overall account was stagnant at best. However once I started thinking, this is not my night, I will conserve my $30 and live to play another day, my overall stack started to move up. If I came back the next night and won $150, my overall gains for the two nights were $80 in lieu of $50. This is a huge gain percentage wise.
Investing is no different, it is about risk and capital management. Back in 1997-2001 I got a first hand account. Everyone in our office was trading tech stocks. They all had systems and were killing it. At that time with 3 kids, one on the way, and a mortgage payment I really didn't have the money to trade, and the fees were not $4.95 they were like $50. All of them were trading geniusesm but none of them ever took money off the table either when winning or losing. Guess what happened next? Just like the 40-50 Trolls that will soon plaster this blog with none-sense claims of 90% winners and stupid charts. Trading 3-5 years in a bull market makes them experts. Yeah ok pass me another cup of Kool-Aid.
How many sites have 100% returns in a week? Or 500% returns in a year? If it were that easy they wouldn't have a website, they would have a party yacht. Those types of gains are only possible with high risk highly leveraged trades. Don't drink the Kool-Aid eventually "Big Italy" comes a collecting. Perfect example is my buddy who trades VIX' instruments. Up huge in June of 2017, only to give it all back in one trade!
Investing and trading is hard money! I know the guy trading 5-8 years in a bull market is like "ohhh I'm killing it". Go through a couple bear markets, that is what separates the men from the boys. I mentioned in an article a few weeks ago "Brag About Your Losses". Of course all the Trolls missed the point of the article. Not because they are trading geniuses, but because they are amateurs and didn't realize it was about risk and capital management. Since April our trading account is in the green up 8%, even with the streak of losses. Take out the one home-run and it is only down 1.7%. How many can say that truthfully?
In the end it is not the whales, the river, the market, or the flop that kills your capital, it is a lack of discipline and understanding risk management! This is why we have a position calculator and adjust dependent on the aggressive nature of the trade. No different then adjusting your bet in poker, depending on position and players. None of this "Buy in the zone, sell in the zone" I nailed it none sense. Trading and investing does not requires you to be right all the time, but manage your capital consistently.
Note
Interesting comment on "where are the institutional investors accumulating". Well right under your noses.cryptonewsreview.com/one-investment-fund-now-hodls-over-1-of-all-the-bitcoin/
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