Bitcoin - The Euphoria Of Decentralization - DeMythed!

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
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.
Comment: Interesting comment on "where are the institutional investors accumulating". Well right under your noses.
I love you big brother.
@goldbug1 Ha! Unfortunately, Trading View does NOT have a block feature. Therefore, seeing as you have diligently worked with us to develop the right trading psychology, our best practices begin with tuning out the noise and cutting the losers (unconscionable trolls/souless~spammers & parasites) while allowing our winners to run {that's your cue.. =)
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Good to see you finally caught on that BCH is a shitcoin and has been so since the beginning. I remember when you were shilling BCH as the real Bitcoin a year ago and I commented that Roger Ver was just a technically illiterate propagandist and that all the marketing in the world wouldn't prevent BCH from its demise. I said we would see sub $100 prices when BCH was trading above $2000 and everybody laughed at me... now my timing was off but a flawed coin with immature unprofessional thought leaders harboring silly conspiracy theories and spreading lies about Segwit and the Lightning Network and then trying to pass off BCH as the real Bitcoin will not be able to avoid their own reckoning. I would not be surprised to see both SV and ABC below $10 pretty soon. The market wants none of their shenanigans, and this is one bear market they will not be able to shrug off like some other coins will in the future.
It’s time for the market to decide which 1-3 coins will run the entire financial industry, it’s time to decide which 1-3 coins will run the entire healthcare system, it’s time to decide which 1-3 coins will serve the worlds real estate industry. This is what a vertical market will look like, and that’s where we are going. Vertical
@goldbug1 I’m fortunate enough to not live in a country that has ever collapsed. And when a country collapses it’s currency collapses with it. But when I step back and think about it, BTC worked as designed. Yeah the small crypto country was built mainly on bad actors and businesses that are not needed, but the currency worked just fine to fund those things. ETH and BTC both proved you can have an economy that runs with out the banking system and without other intermediary’s that control today’s economies. So what if the products and services were not needed or bad ideas to begin with. Those are not BTC and ETH’s fault. They are just experiencing the consequences of a collapsing economy right now. Both proved they offer new ways much easier and cheaper than our current system.
For me, I don’t think it matters how low BTC and ETH go. There’s currently no actual real world demand for their services. And even the demand that is there doesn’t have the infrastructure in place yet to be accepted on a mass scale. Not till Baakt, Fidelity, and others get on board. I think the important thing to see here is it did work, there was a digital money that powered and entire economy even if it wasn’t needed and only lasted for so long.
Now it’s time to transition into a vertical market. The horizontal market is over and the real world will choose who to accept into the global economy.
Only Wabi is growing in my portfolio... LTC and Neo look so tasty to buy... Hard to say no :0)
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BTC recovery and bottom searching could 3k zone hold or fail? check this out to learn more.

meanwhile @goldbug1 check out gold opening the fridge and reaching for a beer!
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Anyone taking note, and playing this game for the past 18 months will understand your tactics completely, well said. Risk management is ever so clear to me, and has a real meaning at the completion of 2018. What a year for learning how to trade markets!
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@goldbug1 always interesting charts, keep it up

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