Note that the following is educational material only. It is factual but it is not financial advice.
Prologue
I was earlier to Bitcoin than Saylor. Lets just get that out of the way. Moreover, I arrived at Bitcoin entirely on my own after a series of life experiences lead me here. There is nobody else for me to credit for my knowledge of Bitcoin or any personal benefit or otherwise of having been committed to living a bitcoin standard since 2017. This is not a flex. I’m merely making the point that these words and conviction are entirely my own. I have not been influenced or coerced by anyone else. It was not easy, nor obvious. I will not have “gotten lucky”. I have been through hell actually. And it’s taken a LOT of time to learn this from scratch and truly understand it. To this day, I am one of four “whole-coiners” that I know in real life as close personal friends and only one of those was a whole-coiner before we knew of one-another’s interest in and exposure to bitcoin. As time goes by, you’ll likely never meet another whole-coiner. That’s how scarce bitcoin is. I do not consider myself a “Maxi”. It’s more complicated than that but you should exercise extreme caution when investing in cryptocurrency in general. Risk management will likely not save you either. To quote Robert Kiyosaki, “The bulls go up the stairs, the bears go out the window”.
UPDATED FOR 2024
Since writing the educational content below (all still valid btw), I have identified the following two excellent videos. I recommend you take the time to listen to them.
BITCOIN? ISN’T IT REALLY VOLATILE?
Yes. So hold 10% – 25% of your long term savings in it. You’ll sleep better and not be checking your smartphone every five minutes.
When fiat money (£ and $) goes down in value, it’s forever.
When Bitcoin money goes down in value, it’s temporary.
This TradingView chart shows the price performance of bitcoin in dollar terms, since 2012. This is the “penny drop” moment where you likely become a bitcoiner….
As you can see, timing is KEY to increasing your wealth using bitcoin. Get in near the pi-cycle low indicator, and get out on the pi-cycle high. Get back in on the next pi-cycle low. You’ll accumulate bitcoin AND wealth in fiat currency terms this way. Few will ever tell you this. It’s a secret. But know you know. You have the advantage of less than 1%. You’re welcome.
When everyone is talking about it, it’s likely too late, this cycle. Wait until the bitcoin price is back on that floor/previous ATH price before starting to DCA in. Google ATH and DCA. Get used to doing your own work – do not rely on opinions or work of others to make you rich. Never gonna happen, or NGMI as the bitcoiners say. Google that too.
CHART TECHNICAL INDICATORS
As you approach your eighth year of being a bitcoiner, you’ll have honed and polished your “true north” chart. The chart that shows you exactly where things are in terms of the long term movement of bitcoins price through its lifetime and through the current and previous market cycles, seemingly initiated by the halvings. Mine currently looks like this – it’s not a hot mess and I’m not flexing or trying to impress. This is actually a very carefully honed set of indicators and they ALL perform a very important job.
So, lets list them and summarise them here. I’m not one to keep things to myself. Bitcoin is about sharing and revelling in one anothers success. Its not a competition. Its a global collaboration. Most of these are free, some are not and require a subscription of some sort, either in TradingView or external subscription. It’s amazing what you can get for free though.
Pi-Cycle High Low – “Famous” for marking the top and bottom prices in a market cycle and block reward halvings.
Whale Trading System – Green and Purple vertical lines indicating large buys/sells
Larsson Line – General Trend direction reassurance and trend reversal pre-indicator
BTC Power Law Corridor – A plot of the floor curve, ceiling and price levels in between
SuperTrend – Similar to a combination of Pi-Cycle and Larsson Line indicators with Buy and Sell indicators.
RMI Sniper – Similar/Alternative to the SuperTrend. I prefer SuperTrend.
Global Liquidity Index – Money Printer go BRRR. Are the central banks being hawkish or doveish with the M2 money supply?
RSI and MACD – Simple Over-bought/Over-sold indicators.
MVRV – Market Value to Realized Value. >1 Overpriced <1 Underpriced as most traders are sat in a loss (buy when there’s blood in the streets)
Z-Score – Number of Standard Deviations from the Moving Average. BTC never drops below 2 (Z-Score of -2). Massive buy indicator.
SOPR – Spent Output Profit Ratio. >1 Indicates bullish market. <1 indicates bearish market
BTC Spiral – Power Law Oscillations by Giovanni Santostasi
Adaptive Power Law Fitting – Comprehensive Power Law Indicators by Giovanni.
VPVR – Volume Profile Visible Range – Shows buy and sell orders at different price levels.
Traders Reality Main and Vector Candle Zones – Very useful for day trading DYOR and make sure you know what you’re doing!
NUPL – Net Unrealised Profit and Loss. Over 75 is time to ladder out. Over 79 is an extrememly toppy market! Don’t be everyone else’s exit liquidity.
NOW EDUCATE YOURSELF
Read the following four articles at Bitcoin Magazine…
What Bitcoin does that changes the World
The Fundamentals of How Bitcoin Works
The Monetary properties of Bitcoin
Read Satoshi Nakamoto’s Bitcoin Whitepaper here and more bitcoin educational material here at hope.com.
Follow my regular bitcoin price chart technical analysis on twitter here. My twitter feed is ruthlessly based on purpose. There is no place for emotions, self righteousness or imaginary virtue gained from following the flock or being obedient to the latest narrative here. If you’re easily offended, well that’s on you. Park your fragile ego and engage your intellect. Learn about the left and right side of your brain and understand how your reactive emotional responses hurt you, empower me and how propaganda overcomes your sense by targeting them. I digress.
“TRADING IS A MISTAKE”
If you decide to trade Bitcoin in the hope of making money, you will be competing against AI so good luck with that. At the very least, you should know these candlestick patterns.
If you make money don’t fool yourself. You got lucky. That was gambling. Trade with 10% of your overall bag. HODL the rest on a Ledger hardware wallet. Dont stake or earn on it in custodial platforms. 2022 was a disaster in this respect as the bear market bit hard sending what were ultimately fractional reserve crypto banks into chapter 11 bankruptcy. You will loose less bitcoin hodling it. You will loose none.
“BETTER GAINS IN THE ALTCOINS”
Propaganda is everywhere, and now it’s backed by convincing evidence in the short timeframe. One only needs a short timeframe to hijack your attention. There is a war for your attention. Do not take your world view from the man on the television or the faceless journo who wrote the newspaper article you just read. They use trigger phrases and neural linguistic programming techniques to hijack your emotional response since it’s that part of you that will re-share their propaganda and spread it. Use your analytical brain. Not your emotional brain.
This chart shows you how 2400+ altcoins ultimately collapsed by 2020 while bitcoin soars overhead. Facts not Propaganda.
“NOT FINANCIAL ADVICE”
My advice, if I were to give it, would be to study the links above until you’re confident you have an unbreakable belief in the value of storing a sensible proportion of your long term savings in a deflationary monetary network for at least 4 years, irrespective of perceptible volatility.
“THE RULES ARE SIMPLE“
Volatility is the price we pay for performance.
Nobody ever lost money in Bitcoin over four years, who didn’t sell.
Bitcoin accrues value at an average rate of 170% per annum since it’s inception.
Buy, HODL, Buy dips in price, HODL. Never sell if the NUPL is under 75% or the Pi-Cycle High indicator hasn’t flashed on the weekly chart.
Go look up what NUPL means. 😉
ACCUMULATION OF BITCOIN DURING BEAR MARKETS
You’ll be competing against AI when trading. You won’t win. Just like Lee Sedol lost his games of Go when playing Googles AlphaGo, you’ll lose money. Understand what AI is. In summary, you can be better than somebody else but you can’t be better than everybody else.
If you want to take the edge of the emotions of the bearish cycles, then stabilise your bitcoin to USDC during the red weeks on this chart I made for you.
https://www.tradingview.com/chart/BTCUSDT/YGk6NyuP-The-Only-Bitcoin-Chart-You-Need/
Listen to Robert Breedlove. He knows.
https://www.youtube.com/watch?v=92bV4KxtIBM
Money in the bank is melting in terms of its buying power. 2020 has been no joke and things are only going to get worse from here. Negative interest rates in the banks incoming. How can you protect the buying power of your liquid wealth over time? Bitcoin.
Be sceptical. Do your own research. But buy some. Some. Less than 10% of your liquid savings. Once you have skin in the game, you’ll be panicked into doing your own due diligence. Don’t be wrong about not getting into bitcoin. It could be the biggest mistake you ever make.
The first things you need to know before investing in bitcoin or the wider cryptocurrency market. I recommend using crypto.com to buy and custody your bitcoin for you, until you are expert enough to custody it yourself using a hardware wallet. Both are apps on the Apple/Play Store. Never respond to bitcoin investment related emails.
What have I learned in 4 years? A hell of a lot. Luckily for you I can summarise it in one single sentence. “Buy Bitcoin, hold onto it, never sell it, no matter what.”. Had I done JUST that, I’d have more bitcoin today that I currently have. A lot more actually. Learn from my mistakes. It’s simple. Buy it. HODL it. Don’t over trade. Don’t chase price pumps. Don’t buy what you haven’t researched. Coinbureau is a good source of info on many alternative cryptocurrencies. You can use Coinbase and CoinGecko to analyse their price performance over time and LunarCrush to gauge project activity and social media sentiment. Be aware that altcoins price movement is based almost entirely on ideology and sentiment. Bitcoin is the only proven cryptocurrency and blockchain.
Some numbers for you….
Bitcoin has on average gone up 70% per year for 13 years.
Bitcoin Stock to Flow ratio over 10 years on a logarithmic price scale:
https://www.lookintobitcoin.com/charts/stock-to-flow-model/
Bitcoin Rainbow Chart (same as above but useful for timing entry and exit into bitcoin)
https://www.blockchaincenter.net/bitcoin-rainbow-chart/
Bitcoin Stock to Flow Cross Asset Spiral
https://twitter.com/therationalroot/status/1464595608417628168/photo/1
Cryptocurrency is extremely volatile in short time frames. You should be extremely careful outside of holding 80% BTC, in your portfolio.
By holding bitcoin, you are changing from a 100% allocation in a stable inflationary asset controlled by banks and governments to a part allocation in a volatile, deflationary asset controlled by nobody but the open market as a means of protecting your money from inflation. Michael Saylor and Elon Musk famously did this in 2020 and 2021 to protect their business balance sheets from losing buying power faster than their businesses could generate revenues, each buying 400 million dollars and one and a half billion dollars in bitcoin respectively.
There will only ever be 21 million bitcoins, 18.6 of which are already in circulation, so less than 2 million left to be minted by the network. There are over 40 million millionaires on the planet whose money is melting due to unprecedented quantitative easing and the centuries-old-solution to inflation (Gold) has not performed it’s role, probably due to provable price manipulation. The supply and demand forecast for bitcoin is insane.
Despite it’s volatility, Bitcoins higher and higher “lows” have proven it to have asymmetric upside potential and a fine store of value if held for a long time frame of at least 4 or 5 years. That said, buying a market top because you heard about it in the mainstream media will likely see nothing but 3 years of downside price movement thereafter.
Hopefully this educational page about Bitcoin has short-cut 4 years of work for you but you still need to DYOR. Trust no one! This is not financial advice, just educational, factual material that shows you what is possible.
You can follow me @cyberfellabtc on twitter for regular technical analysis of bitcoin and other fun, contrarian-thinking content. To quote Michael Saylor: “It’s not conviction, it’s thinking for YOURSELF.”