Define "Winning" in Crypto

Success is what you make of it (May monthly issue)

Listen to this post:

In last month’s issue, Steady Hands, Clear Mind, I looked at the importance of sticking to a plan, preparing for market fluctuations, and focusing on long-term wealth accumulation despite the uncertainty and unpredictability of the crypto market.

In this month’s issue, I delve into mindset and framing your viewpoint. It’s as important as any trading or investment plan, especially now.

If you want to hear an auto-narration instead of my voice, head over to the Medium version of this post.

On May 14, 2024, I told people to close out the trade from February 14, 2024.

If you took that trade, you made 7% and lost 15%.

How can that be?

You made a 7% gain when priced in your government's money. You made a 15% loss when priced in BTC.

Did you come out ahead or behind?

Think out of both sides of your head

If that seems confusing, you're not alone. Nobody thinks they lost money when Bitcoin’s price went up in February. Some people sold after doubling or tripling their investment.

Today, Bitcoin’s price is higher. They'll still tell you they made a profit. 

They did—in terms of their government’s money. You and I did better.

When money is a mirage and people can create it at will, you get to choose how to define it.

Most people think in terms of their government's money. It’s the same measure everybody else uses, a common frame of reference, and it makes doing business and communicating very easy. 

At the same time, it also makes us forget about how the price of our government’s money changes all the time.

Last month, I could sell 100 EUR for $94. Today, those same 100 EUR fetch only $92. 

Look at that! I’m down 2% in four weeks.

Mindset first

Last year, I consulted with someone who had a substantial amount of crypto. This person didn't think it was enough, but where I live, it was a lot. 

This person had a specific goal, which they’ve since met, assuming they kept their money in the market. 

I haven't checked in with them. Hopefully, they spent the money as planned. They know the value of their crypto will go higher than the value of whatever they bought, but what’s the point of having a source of wealth that can’t get you the things you want?

At some point, you need to trade your imaginary internet tokens for things that make your life better. I hear people do that with stocks and bonds, too.

When you reach your goal, you should be happy!

Too many aren’t. Especially with crypto, when the upside potential is so big, you feel compelled to stick around to see how much more juice you can squeeze out of the market.

Have you ever thought about crypto as a portfolio asset rather than a way to make more of your government’s money?

She’s thinking about it.

Bitcoin is a great savings vehicle. A sort of annuity when held for a long time.

With altcoins, you get a chance for moonshots and long-term growth opportunities. 

Better yet, you don't have to worry about prices. You can worry about the circumstances instead.

After all, a 3x return is a 3x return, no matter what price you buy at.

For example, when Bitcoin’s price went from $3k to $5k, you got the same result as when its price went from $30k to $50k.

As a result, if you missed a chance to buy Bitcoin at $3k, you got the same chance at $30k. Likewise whenever the market tanks, as priced in your government’s money.

In BTC terms, you get a quite different result. Is that really what you want? Do you account for your life in terms of BTC or your government’s money? 

Actions speak louder than . . .

I account for things in terms of my government’s money. It’s convenient. It’s the money I use to keep track of the prices of things I have and want.

The problem?

You can't build wealth with your government’s money. Your government’s financial leaders don’t want you to, anyway. They want you to spend or invest it.

When that investment includes crypto, you add several layers of risk and uncertainty. How do you navigate that risk and uncertainty?

Most crypto content aims to answer that question. That's probably why you're reading this post or following this newsletter.

My approach?

I stick to My Plan. Three lines on a chart tell me when to buy. Two metrics tell me when to sell. 

When market circumstances dictate, I buy or sell outside my plan. 

If you followed my plan, you're up as much as 3% at worst, up as much as 1,100% at best, and most likely up 175% with cash to spare.

Where you fall depends on when you started and whether you bought earlier this month with new money or money you recycled from selling in March.

This is what you’d have done since 2015:

(Note, I did not take the long or short trades, but I suggested them to those who missed opportunities to buy.)

Timing is everything (and the hardest thing)

Wow, Mark! That’s amazing! Phenomenal results!

For you, maybe. 

Think about the people who signed up in November, December, and January. They’re worse off, for now.

They didn’t know that we bought a ton of crypto in 2022 and 2023, so we didn’t need to buy more at higher prices just weeks or months later. We could wait for moments of maximum opportunity.

Long-time subscribers know not to chase the market as it goes up but to wait for the pullbacks. Get ahead of the market when it slows down so you don't have to catch up when it starts to run.

On the flip side, when the market runs, let it run. It can go far higher, far faster than you would expect.

You don't need to make it any harder than that. You'll never catch every move, especially with the natural volatility that comes with this market.

Rather than obsess about prices, look at the situation, opportunities, and risks. For example, the things I talk about in my market updates, most recently on May 23, 2024.

Did you miss that market update?

Upgrade to the premium plan now so you get it, as well as:

  • 👀 Direct contact with me.

  • 📈 Video and written market analyses so you can make better investment choices.

  • 🧐 Exclusive altcoin reports and special content to stay ahead of the competition.

  • Everything else you get with Crypto is Easy. 

If you are ready for crypto, you should beat the challenge with plenty of time to spare. If not, read the information on that site for some approaches to dealing with uncertainty and variance.

The rest of crypto

What about altcoins?

My plan is not for altcoins. 

The altcoin market always follows Bitcoin up and down, but you can never know in advance which individual altcoins will do better or worse over any given timeframe.

They can pump or dump out of nowhere. Sometimes, they die along the way. You buy one after a 50% drop, thinking you got a great deal, then it spends the next year sideways and then drops another 50% lower. You buy another one after a 50% pump and it does another 10x.

Sometimes, I’ll pull up my portfolio and notice an altcoin went up 20% or 50% for no good reason. How can you plan around that?

As such, I'll buy an initial stake in a new altcoin under all market conditions, then raise my allocation to altcoins when market conditions permit. I did this in November 2020, July/August 2021, and June 2022 to April 2023.

I'll do it again if we reach the levels on this chart.

Premium subscribers, I’ll keep you posted as this chart changes, as well as my altcoin dominance chart (not included here).

Outside of those conditions, I will hold, stake, use, and continue to add new altcoins to my portfolio, including those in my Altcoin Reports.

This is purely strategic. You squeeze the most juice out of this market from small altcoins, bear markets, or big crashes during bull markets.  

SMT isn’t up 1,500% because I’m a great altcoin picker. It’s up because it’s a great project and we bought it at the bottom of the market when it was tiny.

It’s like that for all of my altcoin reports, whether they’re up or down since I posted them. Often, your portfolio’s performance depends on the circumstances when you bought the tokens, not the merits of the projects themselves.

Remember when ANT died last year? We sold it for a 500% gain. It’s up 60% since then.

Crazy market, this.

Data models or people models?

It's so crazy that you can understand why we have so many data models and cycle theories. Somebody needs to make sense of everything.

You can do well following those models and theories. Or, you could take a very simple trading strategy: 

  • Buy 100% of your Bitcoin when its price goes above its 21-week moving average.

  • Sell 100% of your Bitcoin when its price goes below its 21-week moving average.

Dollar-cost averaging does well, too. Buy a fixed amount on a fixed schedule, regardless of market conditions.

Even if you followed the influencers who told you to buy Bitcoin above $60k in 2021, sell below $40k in 2022, and buy above $32k in 2023, you did well.

Frankly, you'll do well with any approach that involves putting any money into Bitcoin at any time.

I follow my plan because it gets better results than trading and dollar-cost averaging (obviously, not every moment of every day for all timeframes you could ever measure).

I've shared my thoughts about data models and cycle theories at length. To summarize, they’re all great, but they contradict each other and don’t predict anything.

Only my U2R model works 100% of the time, and it’s useless. At least the other models have some value.

If you're into models, make sure your list includes the anatomy of a bubble chart. It has nothing to do with price or timing, just psychology and human behavior.

With my approach, you buy during the times that are shaded below on that chart:

Yes, even the top box, which suggests an elevated price. At any time, it’s impossible to tell whether the market is at a peak or bottom, “first sell-off” or “bull trap.”

Fortunately, you don't need to get your timing right.

Bitcoin has a 15-year uptrend with massive tailwinds and every reason to expect it will grow more in the coming years than any other asset you can buy today. Close enough is good enough. Time will bail you out.

No altcoin is worth its price today, but some will get so valuable in the future that you have to buy them now and hope they grow beyond their present valuations.

Beyond that, you don't have to get too precise.

Known unknowns

The best market analysis can’t predict external events that change the structural dynamics of the crypto market.

For example, Trump’s endorsement of crypto and Biden’s shift in crypto posture.

Trump supporters don’t seem like a natural fit for crypto, but Trump’s endorsement may encourage them to buy a little.

The more the White House yields on key elements of crypto policy, its balanced messaging may rub off on skeptics or embolden people already in the market.

Plus, we have the impact of the halving, good news from China, and less tightening from central banks. 

He knows what’s up

People think the Fed will cut interest rates, fueling a massive boom in risk assets.

I’m not sure that’s necessarily helpful. The US economy has seen robust growth under high interest rates. Stocks and crypto went bonkers as rates went up.

Economists may need to rethink using interest rates to manage economies. 

Is $1 trillion less stimulative when delivered to bondholders rather than banks? It's not like the money is real anyway. The US creates it without any reduction in government spending or any new taxes on private savings and consumption. Doesn’t that matter? 

Also, money from the bank usually comes with strings attached and you have to pay it back. Nobody has to repay interest on their bonds—and they can spend that money free and clear. Does that make a difference in the outcome?

I don't know the answers to those questions, but I know the Fed is a faith-based organization. As such, we have to take a leap of faith in everything they do.

Emotional tug-of-war

Little comfort for those struggling to manage the ups and downs of the crypto market.

In March, you couldn't imagine prices could ever go lower.

In April, you wondered whether the cycle models were dead and the peak was already in. 

In May, you wondered why prices aren't going up despite all the good news. 

June will bring other questions to bolster your beliefs or raise your anxiety.

Par for the course during Act 3, with its twists, turns, thrills, and letdowns. Did the story already reach its climax? Is this the denouement, or is it a pause to give the audience a chance to catch its breath before the next action sequence?

Like all good writers, Bitcoin keeps us on the edge of our seats.

It’s not where you start, it’s where you finish

You can plan for this!

When the market drops a lot, buy more. When the market goes up a lot, you have the option to sell.

Keep a healthy allocation to cash or cash equivalents and a healthy allocation to crypto. That way, you win no matter what direction the market goes.

When crypto prices are zooming, set aside cash for the next drop. You may buy higher than you’d like, but you'll do it in a much better situation. You'll risk less downside for an upside that is potentially infinite.

When bear markets come, push yourself to buy as much as you can. 

Obsess over prices, but remember: “belief” and “anxiety” come at the same place on the Wall Street Cheat Sheet. 

50/50 for the win

So Mark, you’re saying the market could go up or down?

No. I’m saying it WILL go up and down. Hopefully, this newsletter helps you navigate those ups and downs and prepare your response to each outcome.

The question I would ask you:

What will make your life better? More of your government’s money?

Then why not invest in your business, career training, or a side gig? Why don’t you work harder at your job? 

When you put your effort into that, you don’t have to worry about what happens with crypto. You will have a source of cash flow and stability that you can convert into cryptocurrency anytime you want (preferably when my plan says to do so).

Is it about the money, or is there something else you’re looking for? Some need you're trying to fill with crypto? The thrill of turning $10k into $1 million? The promise of financial freedom? An escape from your government’s money monopoly?

A lot of people talk about riches, moonshots, Lambos, etc. Fast money.

Fast money is hard money. Hard to find, hard to get, hard to keep. 

Slow money is easy money. Buy low and grow. Stake and stack. Wait for blood in the street, then let the natural flow of markets deliver the returns you seek.

Alright alright alright

I follow some amazing content creators and analysts. They all do well with different approaches.

Sometimes, your satisfaction depends more on your mindset, goals, values, and viewpoint. Often, these things matter more than whatever secret strategy or trading plan you paid for. 

Once you find that, you will feel better about your decisions. They will reflect your authentic needs in a way that is true to your values and comfortable for your personality.

When you calculate your return on investment, add a column for your emotional well-being. That has value, too.

You can always return to Bitcoin in the bear market, when it’s less risky with less downside and more upside.

Are you in a position where you need to speculate on experimental financial protocols or gamble on meme coins? If you have enough money to buy that house you’ve always wanted, what's stopping you from cashing out? Why do you put so much faith in crypto that you can't take advantage of other investment opportunities?

I'm happy to consult anytime. I can review your holdings, share my observations, discuss trends and opportunities, or whatever else you’d like.

Often, those things matter more than trading setups, buy/sell alerts, and picking “the next 100x altcoin.” 

No matter which way the market goes, you're winning and losing at the same time. Make sure when you win, you're getting what you want and when you lose, it's something you don't mind losing.

After all, what good is any of this if you're not happy?

Relax and enjoy the ride!

A note before you go

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