It was December 10th 2017, the day the first Bitcoin futures was to launch (CBOE) and I like many others had high hopes and was expecting this to affect the price of Bitcoin positively. After all Bitcoin already had an amazing run, most of my positions were bought at $2300-$2500 so I was already in great shape and would often slip away in a daydream planning how I was going to spend my millions!
Many of us back then had price predictions of $40,000+ for Bitcoin and it was well on its way, but as we all soon found out that wasn’t the case…
I will never forget what happened next, instead of the price continuing up, it started to reverse, and $20,000 was in fact the top. The next week there was the most violent swing I have ever seen in my life, price went from just over $19k to $10,900 and over that next month was the most volatility Bitcoin has ever seen!
During this same time ALL of the investments I had my money in started to collapse and what seemed like overnight I had lost $220,000 in my portfolio. I had built my authority in the crypto space by that time as a “Youtuber”, I still remember the live stream I did the morning my biggest investment collapsed in on itself and the development team ran. I probably sounded like such an idiot, trying to appear confident while deep down inside I was trembling with fear.
The knots in my stomach that morning and just about every morning after that for a month were measurable as I felt my future slip away! I lost over 10lbs during that time and was constantly sick…
It turned out that “they” had other plans for Bitcoin and when I say they, it turns out that was the US government and the big stock market operators worked together to stop the bull run.
CME Groups Leo Melamed stated on November 7th, 2017 “we’ll tame bitcoin”, seems a bit funny now to look back on a statement like that and realize he literally meant a month later they were gonna suck the life out of the bull run.
Recently ex-CFTC chair Christopher Giancarlo stated that the Trump administration acted to deflate the Bitcoin bubble of 2017 by fast tracking the introduction of futures products.
I only know of two people who called that top correctly, one of them I question on if it was a call or not, and the other was a blatant “sell now” call and it turns out that he has 50 years experience in markets.
Months later, after I shook off the depression, I made a plan! See I never wanted to feel like that ever again and I wanted to help others from making that same mistake!
I decided that I needed to understand how markets and economics actually worked, no more pretending and lying to myself by thinking I knew, it was in fact time to go off the deep end and apply my usual aggressive research approach.
And boy did I go off the deep end, see because deep down I felt like I was about to learn something that most of the world has no clue about and you know what? I was right! Most people have no clue how markets ACTUALLY work and the driving force to price action. This excitement drove me to long nights falling asleep with books in my hand or passed out drooling on my keyboard.
Long ago I learned you have to work your way down to the very core of a topic, the roots. So I started at the surface with learning the basics of TA and the different economic models (Austrian, Keynesian), then got lost in what I call “magical indicator land” where I spent some time thinking the problem was I just needed that perfect indicator. Thank God I didn’t get stuck in that for very long.
Then I devoured hundreds of hours of interviews and books from all the documented greatest traders to ever live! I even dove into hedge fund managers and studied the greats there for awhile looking for the patterns, the common traits or practices that led to the greatness.
I found something interesting during that time, these people barely used indicators outside of simple moving averages, they weren’t looking for a “magic trade system”, they were basing much of their trades off of understanding all the possible outcomes (up or down) and what would need to happen to cause that. From there they formulated their plan, decided how much they were willing to risk on the trade and when they would cut loose on a position. Then they executed!
I really liked this simple approach!
See they understood the structure to a market, the cycles these assets would go through and the big factors that drove price action.
I look around today and I see very few investors behave this way, I mean we are talking about less than 0.5% of them take this approach. The bulk of investors out there are losing and losing big every quarter!
Right now we have been seeing consistent S&P 500 all time highs (ATHs) yet the underlying fundamentals of the US economy are showing a clear sign of slowing down and in fact right now many are forecasting a 2020 recession, the pundits peg us at about a 34% chance currently...