Hello again everyone. Sorry again for the long time in between posts. Quite a bit to get to so let's jump right in. I'm going to take a look at the crypto market a whole with the big ETF news among other things. Some stocks and macro market updates and some other stuff.
Quickly before we get into it though, remember I have a twitter account that you can follow for updates @poogsBLOG. You can also send me a message on there if you want to get in touch with me.
The NFL season has come and gone and it was just about break even for my own action. Actually down slightly, including props. I know we've been through this before and I've gone back and forth a little bit on throwing in the towel or not. I actually updated my NFL prop models for the playoffs and Superbowl and did OK so I might still put some action in next year. But my big betting days are largely behind me (he said for the 7th time). I am still somewhat involved with a group though so my offer on account sharing still stands if it's really good.
Let's jump into what we're all really here for though and that is a discussion about Bitcoin, crypto in general, where I stand personally, what the market looks like and where I think it's going. First, an update on all my positions: (Today March 29th 2024 current prices are: BTC: $70k, ETH: $3480, LINK: $19, LTC: $105, Matic: $1).
The only crypto's I'm invested in are the aforementioned: Bitcoin, Ethereum, Chainlink, Litecoin and Matic. Those are in order by my amount owned and how much I like them. My overall average BTC price is $25,500 which, not to flatter myself here, is fairly impressive. I've done a good job selling tops and scooping dips. My average buy price is $28750 and average sell price is $29050 with way too may buys and sells. I'm working on building up to a full coin and have been doing a lot less selling lately. My overall ROI on BTC is 177%.
For Ethereum, my overall average buy price is $1688. My average buy and average sell is almost exactly the same which is bad. I started out doing amazing with trading ETH but I made one big essential error. During the bear market, I thought ETH was for sure going at least sub $1k so I sold off a huge chunk at $1200 and missed the boat on getting back in under $1200. I did of course make a bunch of buys on the way up and having a $1688 average price is nothing to complain about right now, but I essentially sold at the bottom of the market, which, by the way, is not what you want to do. Overall ROI on ETH: 115%.
Next up we have Chainlink. LINK is my little alt-coin side piece. It's the only alt-coin that I truly believe in (as much as you can believe in an alt-coin) and I have done a really good job of holding steady with it and accumulating during the bear market. Thinking back, getting LINK at under $6 all the way up to September 2023 was a literal steal. You can read all about it elsewhere, but Chainlink provides a way to connect real world assets to the blockchain. Think smart contracts with real estate and buying/selling cars as well as live odds and scores. If you've ever bought or sold a piece of property, you know how BRUTAL the process is. So many forms, so many different people and entities involved all with their hand out. It's a big, slow, inefficient, dumb process that was put into place decades ago and seems oh-so ripe to be completely overhauled. Quite similar to taxi's and Ubers IMO. And blockchain technology is perfectly tailored for it. I'm about as close to a Bitcoin maxi as you can be without actually being one, but if there is one alt-coin I can get behind, (excluding ETH) it's Chainlink. Anyway, my overall average price for LINK is $6.55 and my LINK ROI is right about 200% with owning a decent amount.
Rounding out the list we have Litecoin and Matic. I own a tiny amount of LTC with an overall buy price of $44 and 110% ROI. For Matic, my overall buy price is $.812 and 30% ROI. I'm actually looking to mostly get out of my Matic position as I don't really care for the coin. However, I do like Litecoin and have always felt it was a little bit undervalued. Like I said before, LTC is basically a faster Bitcoin. It doesn't have the name value and might just be the single most unsexy alt-coin of all time, but it's a solid, reliable coin and I think it doesn't hurt to have a little bit of exposure to. Although, on the other hand, and I almost made a complete post about this, but when you put it up against BTC it trends mostly down. That's a very, very important piece of the crypto/alt-coin puzzle. Does it bleed against bitcoin? Almost all of them do. On Tradingview you can change the right hand up and down axis to anything. Its default is USD but if you change it to bitcoin, you can look at how anything has done against bitcoin. Tesla and Apple stock, gold, any alt-coin, put them up against bitcoin for pretty much any amount of time. I haven't found anything that beats it. So sometimes I wonder if it would be better to invest in literally nothing but bitcoin. Over the past 10ish years that would have been about as good as you can do. I like being a little bit spread out and I actually, very simply, enjoy the process of investing and trading and having different positions. But it's always in the back of my mind and I think it should be in every investors mind. If it bleeds against bitcoin, and your sole objective is to maximize wealth, what are you doing exactly?
The other thing I like to do with my five crypto's is trade them against each other. If you aren't into trading you can skip this paragraph as we're going to get into the weeds a tiny bit, but if you are then this might interest you. My average price for BUYING Bitcoin and SELLING Ethereum is .0737. My average price for buying ETH and selling BTC is .0662. Right now the current BTC:ETH price is about .0505. So what that means is it would cost you .0505 bitcoin to buy one ETH. Or, put another way, you can buy .0505 bitcoin with one ETH token. Whenever that number trends high, you want to be buying bitcoin and selling ETH. When it's low, you want to be doing the opposite. With my numbers being .0737 and .0662, that means that anytime the current price is between that, I make free money. And if I do it evenly, that is, buy and sell the same amount of BTC and ETH, I'm completely freerolling. I break even when the current number is anywhere outside of that range and I make money when it's in between them. So the goal there is to get as big of a spread as possible. This actually took me a little bit to really understand and I promise it isn't as complicated as it seems. You really need to have a good system of tracking everything to do this right. But if you're an active trader like me it's a no brainer strategy. Right now, at .0505, ETH is pretty "cheap" compared to Bitcoin. So I have been trading tiny amounts of bitcoin for ETH. I actually think it'll continue to drop as bitcoin dominance increases, but I like taking nibbles like this. When/if it bounces back the other way, which it typically does during the second halves of bull markets, I'll sell some ETH back to BTC. I do the same for BTC:LINK and ETH:LINK but it isn't really worth it to post my exact numbers. The system is the same though. Whenever the number is high you want to be buying the bigger asset and when it's low you want to be selling the bigger asset. Again, the goal is to get your spread as wide as possible.
Anyway, my overall ROI so far on all crypto right now is 146% which is obviously quite good. It's very volatile, and lots of people have a lot to say about it, but if you just stick around you are almost guaranteed to be rewarded. I have to say, I'm pretty proud of myself for not having weak hands and accumulating through the bear market. Maybe not as much as I should have but I at least never panic sold anything. Quite a few people bailed out completely during the bear market which is really the opposite of what you should be doing. Speaking of the bear market... so... that was it, huh? Clearly the bottom is in. And now that I've been solidly in this space for 3 plus full years, I feel like I have a bit of perspective. I came in right at the start of the last bull market, rode it all the way up to the top and right through the bottom. Now it looks like a real, full bull market is headed our way. But let's look back a little bit, shall we?
One thing that sticks out to me when I think about it is this: absolutely no one, and I mean NO ONE, called the bottom. If I'm wrong please show me, but I don't know of one single crypto or investing guy that called $15k as the bottom for BTC. Everyone and their mothers was calling for it to go lower. I think that is a terrific lesson to take away from the past couple years. NO ONE called $69k as the top last cycle, and even less than no one called $15k for the bottom. Even I fell for it a bit with my big ETH sell. And I think it's interesting, if you look back on my blog, you'll see the one and only time I showed even a hint of capitulation was when it was at that $15k bottom. And man, I gotta tell you, I will forever regret not absolutely backing up the truck and accumulating a bunch more at $15k in Nov/Dec 2022. It's all so much easier in hindsight but when you think about it, that really was the big opportunity, maybe the biggest one we'll see in our entire lives. That was only a little more than a year ago and it has essentially 5 x'd from there and feels like it's only going to continue. I didn't panic sell like a lot of people I know, but honestly for the rest of my life I think I will regret not getting to a full coin when it was well within reach and, even more crushing, was kind of all going to plan.
I think the big lesson to takeaway from what we saw in the crypto markets this past cycle was that, again, NO ONE called the bounce. The closest I can remember anyone coming was my favorite youtube guy, Ben Cowen. He didn't call $15k as the bottom, but he did say that in prior bear markets everyone called for it to go lower, it will bounce back and we'll all look back and wish we had bought more. And he was the most right of anyone I follow. So I think it's important to remember that 'momentum bias' is absolutely a real thing. People always think that whatever the current trend is will continue far longer than it does. I think it's important to have a strategy and stick to it. So many people online and in my little circle completely capitulated and threw in the towel when BTC went under $20k. I didn't really fully grasp this until about a year ago, but apparently the bias in the general noob-investor population is that people tend to pile into an asset when it's on the way up and then panic sell when it starts to fall. Which is the exact opposite of what you want to be doing. I think my sports betting background helped me avoid this, but it is a little perplexing when I see just how fickle people can be. I remember being at a wedding couple years and over hearing someone talking about their experience getting into Dogecoin. Now mind you, this was a complete capital N N00b, but literally all he did was FOMO buy high and panic sell low. Like, over and over, just locking in loss after loss. It was astounding hearing him. Sometimes it's good to remember that these people are in the market with you. Not every single trade is against an algo-hedge-fund and the market isn't anywhere near perfectly efficient.
I'd be remiss if I didn't mention the big BTC news and definitely the biggest catalyst for the latest bull run: the spot BTC ETF approval. It's been discussed to death at this point and I meant to make a post when it happened, but essentially what this means is that now people (and more likely institutions) can purchase Bitcoin through a broker without having to actually buy and store Bitcoin. It's a way to get exposure to BTC without having to deal with actually buying it. This is obviously HUGE for Bitcoin and the crypto market in general. It finally gives Bitcoin the seal of approval for big time investors and institutions and makes it way more feasible for them to purchase it. It puts on big time buy-side pressure and I think that lightning fast move from $40k to $70k was pretty clearly due to the ETF approval.
I think it's quite amazing how fast the narrative has changed on Bitcoin. It wasn't that long ago that BTC was considered a joke and some random, silly 'internet money' that people only used to buy drugs and hire hitmen with. Now you have literal countries buying up billions of dollars worth at a time. CNBC has BTC, ETH and Solana price updates on their screen right next to the S&P and the Dow Jones like it's been there the whole time. (By the way, I find it quite interesting how much of a weird institution-y backing Solana seems to have. I always see those three: BTC, ETH and Solana. Feels a bit fishy, honestly. None of what I say is financial advice, but I'd stay away from Solana. Something about it feels very weird and future-rug-pully to me).
Speaking of CNBC, I watch their morning show sometimes in the background when I'm getting ready and they had Gary Gensler on not that long ago talking about BTC and the ETF approval. Gensler is the head of the SEC and has always been anti-crypto (although he won't really come out and admit that). They were talking about Bitcoin and one of the hosts mentioned how it's a ledger that can be used for smart contracts and about the blockchain more broadly, and he said something to effect of "does anyone really want to invest in something just because of the way they set up their books?" Think about that for a second. It's a pretty revealing statement. He CLEARLY does not even remotely understand it, at all. And even more damming, like I say all the time, he doesn't even know that he doesn't understand it. It reminds me of a great little nugget I remember reading a few years ago. There was some kind of investing forum and Paul Krugman was talking. Paul Krugman is an establishment acadmic economist, the kind of guy that will smugly tell you that 'actually you can just print as much money as you want!' He's actually most known for this Nostradamus-esque quote: "The growth of the Internet will slow drastically, as the flaw in “Metcalfe’s law”—which states that the number of potential connections in a network is proportional to the square of the number of participants—becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s." He is, of course, an anti-bitcoin guy and at this forum when someone asked him about it, he said something like "well we already have internet money" and held up his credit card "so I don't know what bitcoin solves exactly". Like, can you imagine someone pretending to be some sort of expert saying that? I think it shows that we're still early. These dinosaurs are all over the financial space, fighting their hardest against crypto. Once they get out and some younger, more BTC friendly guys take their places, we might see even faster and faster adoption.
Oh and one last thing about the ETF approval. The actual way it was rolled out was hilarious and perfectly on brand for the SEC. Everyone knew it was coming and was just waiting for the official word. A couple days before the actual announcement, the official SEC twitter account tweeted out a statement that the ETF was approved. The BTC price immediately spiked up from $44k to $48k. Then, the SEC posted that they had been hacked and the ETF was NOT approved. THEN, a few days later, they posted that now, in fact, the ETF WAS approved. After they made a fuss about being "hacked" and wanting to go after who ever did it, Elon Musk commented that the SEC twitter account did not even have two factor authentication set up and it wasn't so much of a "hack" as someone in the SEC jumping the gun, most likely. So a complete clown show. Perfectly on brand for the SEC. A member of the SEC penned a really good op-ed that I can't seem to find now about how terrible of a job they did with rolling this out. She said that by dragging the process out and delaying and denying approval over and over, they ended up doing exactly what they tried not to do, which was draw undo focus onto it and make it a circus. The SEC shouldn't be in the business of telling Americans what they can and cannot do with their money. They're supposed to be referees, not commissioners. I thought it was a great showcase at how inept the traditional financial landscape is, how capricious and downright petty it all is.
By the way, I'm hard pressed to think of a worse way to buy BTC than through an ETF. It quite literally defeats the entire purpose of bitcoin. I'm not opposed to the existence of the ETF per se and the brokers are of course actually buying and storing bitcoin "for you", but the whole point of bitcoin is that it is peer to peer, no bank or institution needed. And that's to say nothing about the premium you're going to pay in order to have someone else purchase, store and manage your bitcoin when you could pretty easily do it yourself. But I suppose I'd rather own ETF bitcoin as opposed to no bitcoin at all. But if you're sharp enough to be here, you're certainly sharp enough to buy a cold storage wallet and buy and store it yourself. Also quite interesting: when the official ETF news hit the price actually went down first for a few days. Seemed like a buy the rumor sell the news event until people saw the inflows and the amount of BTC actually being scooped up. And then the price went from 45k to 70k rather quickly.
I know I'm a little bit all over the place here but let's shift focus a tiny bit and look at the macro environment and where I think the price of BTC is headed. Jay Powell at the Fed recently had a press conference where they announced that they were staying put on the federal funds rate at about 5.25%, which was what everyone pretty much expected. As insidious as the Federal Reserve is, I have to say, Jay Powell has done a decent job. He's been pretty clear about what they're doing and has resisted pressure to cut rates. That means they still have rate cuts in their pocket which is a good thing for markets in general, but especially for more 'risk-on' assets like BTC. I recently starting paying for some premium access tools from Ben Cowen called "Into The Cryptoverse Premium" and there's a lot of interesting stuff in there. Namely, right now we're barely above 'fair valuation' for the overall crypto market cap which correlates almost perfectly with bitcoin. In other words, we aren't even remotely overheated right now. In other other words, it looks to me like there is still plenty of room to run for this bull market. Personally, it feels like 100k will be the next big number to claim and I could see this current 60-70k level being the next floor. The next halving is coming up in about 20 days. If you pull up a bitcoin chart and look at the price action for the couple years after a halving it's always basically straight up. And the reason for that is simple and makes perfect sense. The halving refers to the event that happens roughly every four years (or more accurately every 210k blocks mined). The amount of bitcoin that miners receive for mining gets cut in two. So the rate of new supply coming into the market gets halved which makes bitcoin more scarce which drives up the price. Add in a rate cut or two on top of it and it all looks very, very bullish to me.
People always talk about the 'risk' of investing in Bitcoin but I like to flip that around. What's the risk of NOT investing in Bitcoin? In less than a day, you could open a Robinhood account, schedule weekly deposits and weekly purchases of Bitcoin. Every month or so, transfer to your cold wallet. You barely need to do anything. With rampant inflation, trillions in federal debt, I think it's more risky to not do that than it is to do it. I think there is a hole in the beanie bag chair that is the US dollar. We're printing more money than ever, faster than ever. The federal debt right now is $34.6 TRILLION and just going straight up. In 2008 it was $15 Trillion. So that's over 100% increase in about 15 years. Our debt is 123% of our GDP! It's almost an admission that the dollar is worthless. If there is one simple thing to remember about economics, it is that you cannot violate the basic laws of reality, no matter how many charts you make or how many acronyms you invent. You cannot get more out of something than you put in. You can't take more than you produce and that is exactly what we're doing. Printing money will work for a while but it will not work forever. ALL fiat currencies eventually end up worthless. Literally all of them. It's just a matter of time. Now, is that time horizon 10 years? 50? 100? I really don't know and I don't think anyone else does either. But it will happen someday. And I think Bitcoin is the perfect replacement. So what is the risk of NOT investing at least a small amount in it? Michael Saylor has a fantastic quote you've probably heard before but it's worth repeating. "Everyone will buy Bitcoin at the price they deserve." Worth thinking about.
Wrapping things up here, I heard a great interview the other day that I'd like to share. It was an interview with this guy Aswath Damodaran, a "Professor of Finance at the Stern School of Business at New York University and is known in the finance industry as the “Dean of Valuation”". He isn't a lifelong professor though obviously and had a bunch of real world experience. He's a real trader. Here is the link to the full interview.
They were talking about active investing/trading VS just parking your money into an index fund and barely checking. He said something like "assume you're an active trader who reads earnings reports, doing your own valuations, doing the work of active investing. And on your deathbed, someone shows you your portfolio versus someone who just bought an index fund and left it alone. If the returns were similar, how would you feel? If it would bother you, don't be an active investor. Just buy the index fund and leave it alone." I found that quite interesting. Because for me, I actually enjoy it. Investing doesn't feel like work to me and it really wouldn't bother me if someone with an index fund beat me in 50 years. Just something to think about.
I suppose I'll wrap it up here. I still have a book review I want to do as I've been reading a lot of good ones recently. Next post will for sure be sooner than this one was. Until then, stack Bitcoin, store it yourself and have a good day!
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