Trading Bitcoin 004
It's been one helluva week folks.
Since the last update bitcoin’s price has oscillated between $34,000 and $40,000 which is a trader’s dream (if you hit it right) and also a perfect way to stack even more satoshis via spot buying / selling.
The math is quite simple: Instead of buying corn at $40k where $100 dollars would give you 250,000 sats you wisely and prudently buy your corn at a local bottom. All that was required was a little analysis and a bit of patience.
This week presented us with a price tag of $34k which would approximately give you 294,000 sats with the same amount of fiat, an increase of 44,000+ satoshis — more than a double-digit percent gain!
Dollar Cost Averaging is great but it’s not nearly as smart as learning a little bit about how (money) markets work and how the prices of assets oscillate and “vibrate” around sentiment and sequence. The result? More sats, full-stop.
Now… why aren’t you doing it this way again?
The week was crazy for me with a very big win during the FOMC event clearing more than $13,000 in net profit (in addition to spot trading)! This puts me way ahead of schedule in regards to my larger monthly earnings goal and I’m feeling grateful that we have access to tools and technology that can give us everything we need to capitalize — literally — on what we know about bitcoin.
But, I was also reminded that as-much as we might know about bitcoin and the markets and however spot-on our technical and fundamental analysis might be, the market makers and institutions are the ones moving “the money” and our goal is not to trade against them but to trade with them.
A friend of mine sent me a screenshot of a new algorithmic bot that automatically makes his spread / arbitrage for him based on pre-determined price ranges — it blew me away! The bot has already arbitraged 12 times between the price ranges of 10 to 18 and his investment starting size was $10,000USDT and he’s already up a few hundred dollars.
This thing runs, in the background, 24/7/365 — printing money. And this is just for retail! Imagine what the big boys are playing with…
In addition, take a look at this “price action” that happened on Saturday afternoon:
Weekends are usually low volatility because there just isn’t that much action usually but here we see a near-perfect point move down with an eerily similarly-sized wick on both ends of the fade and rip. I’ve seen this time and time again in the the most unlikely of times. Algo-bots much?
The point is this: As traders we need to understand retail sentiment, institutional money flow, and the fact that algorithmic and bot-based trading is happening for the vast majority of price action, especially bitcoin.
And it is widely understood that bitcoin may very well be the most heavily manipulated blockchain-based asset that there is! One doesn’t have to go too far to see this for oneself — just look how many trading pairs there are with BTC! Yikes!
But we can still trade her effectively and for profit as we seek to stack satoshis through our gains. Yes, the risk is greater than spot trading but true upside awaits those who have the courage to be more than just classic hodlers.
I have a few fun posts below as alpha and signal and have a great rest of your weekend! Oh: This made me laugh a bit too hard.
To infinity & bitcoin,
Resources, Alpha, & More:
Every week I’ll share a few links to things that I find interesting, useful, or simply entertaining. There’s very little method to this madness.
If you understand how the paparazzi were created then you’d better understand how the “modern” day mechanics of marketing crypto / defi projects these days — there are few things that are truly new and novel and getting “paid for attention” has taken many, many forms over the years.
One of the things you’ll hear me talk about all the time is how price lies while volume never does. In other words, watch volume and take price as a flexible value that is rotating or oscillating around volume and you’ll start seeing things a bit more intelligently. I like Ben and his thoughts on capitulation here are good insofar as it’s a reminder about the importance of watching volume in your trades — in fact, you’ll oftentimes see me check my volume and volatility indicators just as much as I do price.
Price will lie to us all the time but the amount of orders being submitted and matched in the orderbook isn’t something you can easily fake. Having the right perspective is really important as well.
The more money that gets deposited into bitcoin (and crypto) the more opportunities we have — I don’t mind the VCs as much as others because they are just another form of fiat arbitrage, a money flow that is more gambling than trading could ever be! But sometimes it works and the fact that folks are pouring money into the larger defi space is a good thing.
Until the government shows up, of course. Or whoever owns the services you run because you and I certainly don’t. And oh-my-fucking-gawwwwd are bonds dead. The government’s favorite financial instrument (or one of them) is going to need a bit of reworking, natch.
Recession? It’s coming:
This will naturally move money out of these assets (which we’ve already seen and growing at a tight clip) and some of that money is headed into things like bitcoin and other digital assets. Watch for bumps in coming price action as the levers get pulled by JPOW and Co. You’ll want to stay alert and healthy for that price action.
Margin call from hell. Tell me you don’t know anything about institutional money flow without telling me you don’t know anything about how real money operates. Go CA go! I do miss San Francisco something fierce but I also love my life where I’m at too:
Firefox broke 100. Can you feel the fear? How does it feel to be the chad? Remember the miners. Liq-ui-di-ty problems. Once the first domino falls the next one isn’t too far behind. The speed at which bitcoin gets adopted might blow us all away. BTCPayServer hits 1.5.1. Get a job in bitcoin and math is important (especially if you like Terra). Correlation or causation? Both? When will it decouple? Retail. Do dates matter? Maybe. Learn to write gud.
This is why you don’t trade via CT:
He tweeted that just before it took a nose-dive 1,300 points — in the wrong direction. Seriously folks, if you want to get recked then you should trade via Crypto Twitter.
Arthur goes doom loop about sovereign reserve currencies and this study on El Salvador shares more details on the impact bitcoin is having there. This is frightening but is coming to a country near you (but this doesn’t mean bitcoin is an “inflation hedge”).
And bye bye retail:
The amount of transfer volume dominated by transactions below $10K has also seen a perpetual decline; indicating transaction batching by exchanges paired with primarily a decrease in bull market retail participants.
Finally, we are all becoming cyborgs: