You know why it is so gosh dang hard to trade Bitcoin?
Bitcoin is difficult to trade because the gains come in bunches
What do I mean by that?
Well, bitcoin makes all its gains for the year during the 10 biggest up-days of the year.
In fact, if you exclude those 10 best days, bitcoin actually has negative returns each year.
It loses roughly 25% of value each year excluding its 10 best days:
(Source: https://twitter.com/fundstrat/status/1178077108729454592)
That actually makes a lot of sense!
People like to talk about bitcoin like it is deflationary currency, but it is not.
The supply of bitcoin is growing every single day.
It's just the rate of new emissions that is shrinking over time.
Eventually the supply gets capped at 21 million coins, but for now bitcoin is an inflationary currency just like all the rest.
And when supply is increasing, the only way prices can go up is if the demand coming in exceeds the rate of new emissions.
When things are slow for bitcoin, IE not the 10 best days, there is not enough demand coming in to offset the new supply created every single day.
Best to just HODL
It may sound like a catchy crypo-bro saying, but HODLing truly is the best play overall.
It makes sure you don't miss one or more of those 10 best up-days.
So, the next time you freak out about bitcoin being down more than it is up, keep in mind that is just normal price action for bitcoin.
Remember, it makes all of its gains in only 10 days out of the year, which is why trading bitcoin is so gosh dang difficult.
If you miss one or two of those days during the year, your returns get crushed.
Stay informed my friends.
-Doc
not easy trades at all!
On the other hand, we can just use this information to make really smart trades with the knowledge that volatility up increases the velocity of volatility downward. Also a lot of these pumps are straight up speculation on fundamentals and can be timed even easier if that's the case (because we know when the fundamental thing is being released).
It also tells us that if we buy on the biggest down days, we are likely to see a positive return if we just... HODL. :)
Or lately sell the news or official release. Eg Bakkt but I see your point. We can expect to see a good upswing on a capitulation to the downside and vice versa in Bitcoin, more so than other assets.
Yes the dump on Bakkt was unfortunate, perhaps not entirely unexpected, but most likely had nothing to do with Bakkt itself. The market dynamics were such that just a little bit of selling was enough to trigger stop losses and margin calls which really exacerbated the move down.
Good point. The news is often just the catalyst that started the move off. Jeff Cooper says the news breaks with the cycles NOT the other way around...
Yep. Charts give possibilities, they still need a catalyst one way or the other.
Exactly. It is people’s perception and emotions that are really at play, the charts and lines make it more technical looking.
Although I do like that actually, I’m fascinated by the technicals and that so many exist.
We should have a perception vs emotion indicator? 🤔
I’ve heard of similar phenomenon in stocks as well sometimes it’s even lower like 7 days of the year. So the question is...which 7 days?
Or in your case which 10? So it’s a great article I’m glad to see it’s true of bitcoin because now I know it’s just a product of ANY market, not just in Stocks.
Buy those dips and ride those rips, it is then! 💯👍🏻
Yep, exactly. You never know when those moves are going to happen. If you miss em, you don't make money for the year.
Shame they are SO rapid that you really have to hodl as even getting filled would be crazy at the bottom. Then who have the nerve to stay in all the way to the top?
Not many.
Good analytic of Bitcoin fluctuations between the years. I would have never guessed the negative results after bull runs.
Yes, it is interesting that returns are negative if you take out the biggest days. However, it makes sense considering the supply is increasing every day.
Short term seem difficult indeed to trade. We ll hodl and see.
Yep, sounds like a good plan. Hopefully past trends play out again for us.
Yep, sounds like a good
Plan. Hopefully past trends play
Out again for us.
- jrcornel
I'm a bot. I detect haiku.
Today me buy 0.05btc. waiting up.
vaey dfficult
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