January 25, 2022
Bitcoin is the only real fundamental long-term (generational) investment I’ve ever made.
I was trained in portfolio math – probabilities, all weather-fund type stuff, and classical charting/TA. Prior to Bitcoin, as a professional trader, the average duration for a given trade for me was between 2-60 days.
I’ve been packing my BTC bags now for +500 days. If I loved it at x,y, and z…, and if I loved it at $64k, then I love it at $33k, and I’ll love it at $18k. I’ve never held onto a position beyond a 10-20% drawdown from peak equity, so this is new territory for me.
The reality is that I could be wrong about Bitcoin, and it may never recover. In the words of my wise friend Peter, “I’ll either be crazy rich, or crazy coffee company employee”.
Peter is correct, and while his point is to prioritize risk management, I’m not changing my thesis or my position until our existential Fed dillema that BTC so obviously solves is resolved some other way. My risk (downside) is capped at $0 Bitcoin price, and I’ve never employed leverage in my position.
A quick read of the chart. New high in Q4 ’22 above $65k, so for the bull trend to remain technically intact, price needs to hold the July 2021 low of $31k, a -58% move down from the high made in Q1 ’21.
My “back to the drawing board” levels are below $28k, and nothing above $18k would surprise me in a given year based on historical volatility.
If the bitcoin bull market is over (+11 years running), then based on current correlations between bitcoin and equities, the stock market’s bull run may be over too. That’s a whole different story and means a lot more pain for a lot more people.
The chart below shows how many people are holding for a profit vs. holding for a loss, and historically well-timed buys occured when most holders were in the red. That setup is no “in play”. This is not financial advice, but is a look at history.
BTC Price is shown in Orange and net realized profits/loss is shown in Black.
When I ask myself, “is bitcoin dead?”, the first place I visit is 99bitcoins.com, where they’ve made a list of Bitcoin Obituaries – over 400 news articles from major media outlets that called for Bitcon’s demise, as price rose from $100 to $65,000 throughout the years. Context is key.