It's Just A Trade: Letters & Math

JC Parets
December 30, 2020

I took a few days off over the holidays. I couldn't tell you the last time I went that long without a chart or a tweet. It felt good.

But you know what felt even better? Getting back to those charts and digging in on what's been going on around the world. It's not work for me. I mean it is, technically. But as you probably already figured out, this is something I really enjoy doing.

So what stood out the most upon my return?

I think it's got to be the victory laps from the bitcoiners on tilt. They're acting like they've never gotten a trade right in their lives. And that's dangerous.

Sure, we're happy bitcoin is doing well. It's already up 35-40% since our latest entry point a few weeks ago. That's great. And remember, this is after it doubled immediately after our last buy point this summer.

So no complaints here. But we don't have to make a big deal about it. This is just a trade. It's not a religion.

The people who are long bitcoin at all times are just as dangerous as stock market permabears. Also See: Are You A Permabear? 12 Questions To Ask Yourself

You can't have a real conversation with these people. For them, the bitcoin "lifestyle" is more important than making money. They'd rather ride this all the way down to zero than admit that they're wrong. It's become theology for them.

These people cannot be trusted. I'm sure they're nice people. I'm sure they have good intentions. BUT for every day investors like us who don't care whether we're making money in Bitcoin, PTON, AMZN Treasury Bonds or Gold Futures, it's dangerous to listen to anything they have to say.

They can't think clearly. They're too busy updating their twitter followers on the price of bitcoin, almost like if they think the rest of us don't have quotes.

It's bad. Really bad.

They act like it's the first time they've ever been right about anything.

Be careful.

Stay objective.

Whether we're talking about Bitcoin, Tesla, Gold or any of these other cult-like assets.

It's just letters and math. It's just a trade. Don't let them convince you that it's anything more than that.

From the outside looking in, especially after taking a few days off, the immaturity, the obsession, and the lack of objectivity is a very dangerous recipe.

I've seen this before.

Be careful.

You do you, but at the very least, consider what I have to say. It comes from a good place. I promise you.

And one last thing, there are no global macro implications here. So you can throw that out the window too. Avoid the conspiracy theories. We can buy bitcoin and make money using the same basic arithmetic we do for all our other trades. This doesn't have to be some life changing phenomenon and end of fiat currency as we know it.

Bitcoin is only a $500B market cap, and that's after the recent run. This is about half of 1% of the value of the stock market. It's about 0.3% of the size of the Bond market. And if you want to do the math in the currency markets, you'll first have to figure out how many zeroes are in a quadrillion, and then work down from there. Let's just agree that it's not relevant.

My point here, is that there are no global macro implications here. All of these bitcoins can go to zero tomorrow and it won't matter to anyone. It means nothing.

It's an irrelevant little asset, no different than a single stock or ETF. It's just a lot more volatile and the exchanges they trade on are much less trustworthy. And these kinds of things need to factor into position sizing right?

Ok, those are my thoughts on Crytpo. I still think we see $30,000 soon and that's really my biggest focus.

Hope that helps.

JC

 

 

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