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Bitcoin and Alt Coins Soaring (Again)

By Dr. Chris Kacher of Hanse Digital Access, KJA Digital Asset Investments and Virtue of Selfish Investing on The Capital

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The World’s First Risk-On Safe-Haven Asset

In reality, bitcoin is the world’s first risk-on safe-haven asset. It goes up during traditional boom cycles (due to its S-curve) but it also goes up when investors flock to safe-havens (due to its underlying mathematics). That’s not to say it won’t have its share of bull market corrections where it typically loses around one-third of its value if prior history is any guide. While this sounds sharp, a log plot shows such corrections are small when compared to bitcoin’s overall uptrend during bull markets.

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For those who may wish to own bitcoin outright instead of through the Grayscale ETNs GBTC and ETHE since they trade at varying premiums, you can now buy bitcoin and other coins with Paypal where they are safely held on Paypal. The counterparty risk is that PayPal goes bankrupt, but these are diminishingly small odds. It’s far more likely that your bitcoin is lost to a centralized crypto exchange getting hacked or the exchange being compromised from a government freeze due to regulatory issues as has happened recently to centralized exchanges Bitmex, Huobi, and OKex. For those who wish to store their bitcoin in an online or cold storage wallet, you have to make sure you don’t get fooled by the many clever phishing scams that can compromise both. You also have to keep track of your wallet’s key phrase which some have been known to misplace. So for some, the Grayscale ETNs have been an easy solution, and now, Paypal provides an alternate solution to those who wish to have direct exposure to the price of bitcoin itself.

The Stunning S-Curve

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How To Trade Alt Coins

As a basic example, most top performing coins will have 10-fold or better gains. You could cut your losses at -50% on 3 alt coins, but the one that went 10-fold would still net you an overall profit of 500% [$1 to $11 = $10 gain; $1 to 0.50 x 3 = -$1.5 loss. Net P/L = $8.5 from $4, or +112.5%.] In practice, I tend to focus capital into the best performers while cutting back on losers, thus the returns far exceed 112.5% in any given bull run so far. In the latest bull market which I entered in March 2019, as one example, I bought LINK several times starting in early 2019 but this is nothing unusual. My gains in earlier bull markets are equivalent based on audits and legal documents such as:

XRP 1st buy 0.0035, avg 0.0047

DRK (became DASH) 1st buy 0.86, avg 1.87

ETH avg 0.68

My bogey is to 10x bitcoin. So if bitcoin runs 10x, I aim to profit 100x. My metrics have helped greatly in terms of taking profits, staying out of bear markets, and jumping into new bull markets earlier than the majority when most of the mainstream media is still saying blockchain and cryptocurrencies are over.

Bitcoin Up, Up, and Away

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But timing a correction in a bull market is tricky at best as bitcoin often jackknifes higher straight off lows leaving those who sold, often near the lows, in the dust. And just because bitcoin reached old highs in early 2017, after which it staged a correction, does not mean it has to do it again as it can move well beyond its old high of $19700 before such occurs. As one example, in Nov-2013, it blew past old highs of 257, so those who sold were left behind as bitcoin reached 1171 in weeks.

Unless my metrics give a major sell signal marking the end of a long bull market, it is best to use such pullbacks as add points. In 2016–2017, as bitcoin continued to move higher, it had corrections typically around 30–40% off-peak, all of which were good entry or add points.

(͡:B ͜ʖ ͡:B)

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