Tag: blockchain

Not your keys, not your coins!

I’ve been getting asked about Bitcoin storage lately, so I thought I’d write a post on the topic. People rightly point out that one of the major obstacles to mainstream adoption of BTC is how difficult it is for the average person to store it safely. It’s actually one of the reasons I believe we are still relatively early in the adoption cycle, as it’s simply a problem waiting to be solved. Or at least made easier.

People have perhaps become all too accustomed to handing their assets over to ‘trusted third parties’ for safekeeping. Looking after your own Bitcoin keys is a degree of responsibility that most people are simply not used to taking on. It’s actually one of the things that fascinates me about the asset class – you have the choice of how much you want to actually be in control of your money. Custodial services are going to become more sophisticated going forward, but there will always be purists who want to manage their own keys.

What keys?

Non-Bitcoin people are probably already confused by the term ‘keys’. Put simply, you do not actually store Bitcoin itself. You store the private cryptographic keys that give you permission to access that Bitcoin. If you do not have access to your own keys, the coins can be taken from you – hence the mantra that forms the title of this post.

This doesn’t necessarily have to be done online. You can simply write your keys down on a piece of paper. If you are lucky enough to have a photographic memory, you can even store them in your head! Most people are going to want to use some kind of wallet, though.

Exchange risk

People generally purchase Bitcoin on an exchange. It’s very tempting to just leave it sitting right there. After all, it’s password protected, and you have set up 2FA. What could go wrong?

Exchanges get hacked. It’s happened many times before, with some of the biggest hacks occurring in Japan. Non-Bitcoin people may even have heard of Mt Gox, which went down back in 2014. It was by no means the last exchange to get hacked, with Coincheck suffering an attack in 2018 and DMM getting hacked more recently. Exchanges may also fail due to fraud and mismanagement, as FTX did in 2022.

Japan is interesting, as the FSA is incredibly strict and requires exchanges to keep enough reserves to cover customers in case of a hack. It’s actually one of the few countries in the world where you stand a reasonable chance of getting your money back in the event of a breach. But do you really want to take the chance?

What about small amounts?

If you only have a small exposure to Bitcoin, buying a cold storage wallet, setting it up and managing it seems like a lot of hassle. I get why people sometimes just leave coins on the exchange. However, everyone has a point where the amount of money becomes too big to stomach a loss, especially from a well-documented risk that you should have known better about taking. It’s really up to you to decide when you have reached that point.

Here’s the thing, though: people tend to think in terms of today’s value. They look at the amount of BTC they have and today’s price and say, “ok, I’m not going to go to the trouble of moving my coins off the exchange for this trivial amount”. What I would encourage people to do is think in terms of potential future value – if you lose your Bitcoin today, it’s gone. If the BTC price rises to $1 million per coin in ten years, how mad are you going to be that you didn’t protect it???

If it’s on the exchange, not your keys, not your cheese. North Korean hackers will never stop trying to get it!

Here are a few things to consider if you have decided it’s time to start looking after your holdings:

Online/offline

The first tradeoff comes with online vs. offline wallets, sometimes also referred to as hot and cold wallets.

It’s pretty simple: if your wallet is on a device that is connected to the internet (hot), it’s very convenient to use, but more susceptible to an attack. That’s why you hear Bitcoiners talk about putting their coins in cold storage. Take the keys offline, and it is much more difficult for a bad actor to get to them.

Custodial/Non-custodial

Once you have decided you want to get your keys offline, your next choice is whether to get a third party to handle it for you or do it yourself.

Of course, custodial services mean trusting someone else to manage your keys. The good ones will do this very well, perhaps better than you can yourself, but they won’t do it for free. You have to be very careful choosing a custodian and making sure that they really have your coins in cold storage and are not, in fact, lending them out to other parties and putting them at risk. Do your homework! If something doesn’t add up, there will be a reason. If a custodian is offering you a high rate of interest on your BTC, for instance, you are going to want to know where that yield is coming from and whether your coins are being put at risk to generate it.

Maybe custodial isn’t the easy route after all – it does require significant due diligence. Even after that, you have to trust the custodian to do what they say they will do.

Non-custodial cold storage

What most Bitcoiners have already figured out is that if you want a job done properly, you should do it yourself! Assuming we are not just writing our keys on paper or memorising them, this means purchasing a hardware wallet.

There are many hardware wallets available. The two best-known are made by Trezor and Ledger. I have used both and prefer Trezor, but it’s just my personal preference.

In terms of how to use these devices, I will try to keep it simple for now: buy one and follow the instructions to set it up! Tech-savvy people will find it easy. If you live in the world and have set up new computers, phones and other devices, it’s not going to be too difficult. Getting your ageing parents to use one might be a stretch…

When you set up your device, you will be guided through the process of generating a seed phrase. Here’s a definition from the Leger website:

You will want to handle your seed phrase properly. It essentially functions as a master key to access your private keys. And, if you lose or damage your hardware wallet, you can use the seed phrase to recover your keys on a new device.

Some basic rules:

  • Do not share your seed phrase with anyone
  • Do not store it online – this is not an email password that you put in a Google document or in a made-up contact in your address book! If anyone gets access to your seed phrase, they can steal your funds!
  • Do not type your seed phrase into anything other than your device, no matter who asks you to do so! If you keep everything safe, you will rarely need to use it at all.
  • Beware of emails from Trezor or Ledger saying there is a problem with your device and you need to follow a link, plug it in and enter your seed phrase to protect your funds! These emails are scams and will result in your wallet getting drained – no matter how real they may look, do not click anything!

I know this sounds a little scary, but welcome to taking responsibility for your own money! You also need to be careful accessing hardware provider websites, too – bookmark the link and access from there. These days, people tend to just Google ‘Trezor’ and click the top result – scammers work hard to get fake websites to the top of the rankings to catch people who do this. (This goes for any website, but especially where there is money or your private data at risk)

You should write your seed phrase down and store it somewhere safe. There are numerous devices available that are more sturdy than a piece of paper. I have had my wife walk in on me as I am punching a seed phrase into a metal plate – that wasn’t a simple conversation, but it was easier than explaining that the keys to my crypto ended up in the bin by accident…

Consult the experts

I am probably relatively crypto security savvy. But I am by no means an expert. I highly recommend that you consult the experts if you are going to self-custody your coins. Fortunately, I have just the guy for you!

Jameson Lopp has put together a trove of useful Bitcoin information on his website. He has tested and written up most of the Bitcoin wallets there are and published the information here: Recommended Bitcoin Wallets

He has also tested most of the seed backup devices – to destruction in some cases! His basic conclusion is that the more bells and whistles a backup device has, the more chances you have to mess it up. It’s hard to beat the simplicity of punching the phrase into a piece of metal!

Lopp is Co-founder & Chief Security Officer of Casa Hodl, which offers a range of solutions to help people store their Bitcoin more effectively. I’m not going to try to explain multisig here, but in a nutshell, it is a level of security which requires more than one user to approve a transaction using private keys. As the numbers get bigger, paying for better security begins to make sense.

Anyway, I’m not here to sell Casa’s services; I’m saying that Jameson Lopp has already done most of the research for you and generously published it on his website so you can learn. Check out his site and follow him on X @lopp

My two cents

As you have probably realised, some people possess far greater knowledge on storing Bitcoin and crypto than I do. However, if you want to know how I organise it, I can tell you.

Like with investments, I take a diversified approach. I think it’s important to learn how to take responsibility and self-custody, so I do that. However, I also live in a wooden house in an earthquake-prone country, and I am not entirely confident in looking after all of my Bitcoin. So, I also use Xapo Bank for third-party custody. I have written about them here: Banking your Bitcoin

If you ever decide to open an account with Xapo Bank, please use my referral code (SMM-XAT-EJG) or the referral link in that post. I have an ‘influencer’ deal with them, and I am surely the worst influencer they have ever had!!! It would be nice to actually help them get a customer now and then, and it won’t cost you any more than it would if you went directly to them. I am very comfortable recommending them.

Enjoy the all-time highs and stack safely!

Top image from Freepik

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Dry powder

Greetings, fellow bulls!

BlackRock’s IBIT Bitcoin ETF recently hit $70 billion in assets under management. Do you know how long it took to get there? 341 days. That’s 5 times faster than it took their gold ETF (GLD) to reach that milestone. Bitcoin moves at a different speed.

Remember when the Bitcoin ETF launch was supposed to be a sell-the-news event? The midcurvers did it again.

On 6 June, Metaplanet announced an accelerated 2025-2027 Bitcoin acquisition plan, targeting 210,000 BTC by 2027. The company started this new phase with a 555 million share issue, with expected proceeds of $55.4 billion, to buy more Bitcoin. You can find the whole plan outlined here. You have to hand it to these guys for having mega conviction. Go, go, go!

If the ETFs were the catalyst for the 2024/25 bull market, Bitcoin treasury companies have been the other major force driving ongoing demand. Michael Saylor’s Strategy (formerly Microstrategy) hoovered up another 1,045 BTC on 9 June and now holds 582,000 Bitcoin acquired at an average price of just over $70k. Strategy has a nice overview of the company metrics here.

All this makes you wonder how the BTC price isn’t higher…

Not that $108k BTC is cheap, but institutional demand for the orange coin is surging, with copycat treasury companies springing up almost daily.

So why isn’t BTC at $150k? Probably the number one reason is that retail fever has yet to show up in this cycle. Maybe people got too badly burned by FOMO in previous bull markets. Or maybe Bitcoin at $100k+ just feels too expensive.

There’s also a lot of selling going on. OG whales, who accumulated coins at far lower prices, are cashing out. It turns out that $100k really is a magic number in that respect.

At some point, those guys will be satisfied and look to hold the rest of their stack for even higher prices. It feels like we might be getting close. Whether retail shows up or not remains to be seen. Part of me hopes they don’t – this is the herd that buys at the highs and ends up getting burned. Part of me is resigned to the fact that there is always a level of buzz where they can’t resist jumping in. It is what it is.

Where do we go from here?

If you managed to ignore the haters and the naysayers and accumulate the best-performing asset in the world and then sit on it this cycle, congratulations. That’s no mean feat!

Now don’t screw it up!

What do you think this is going to look like in another 4 years? How about 8 years? Hey, maybe governments will rein in their rampant spending and start behaving responsibly. Perhaps they’ll pay down some of that debt instead of creating more.

If you haven’t already, I suggest you check my previous post: It’s going up forever, Laura.

I’ve been writing about this stuff since 2017, imploring people to educate themselves on Bitcoin. I’m still shocked how few people have made the effort.

“I only invest in things I understand.”

Oh really? Explain to me how that bond fund you own works. What’s the sector breakdown in that stock index ETF you’ve got there?

Hey, if you’ve actually spent the time on Bitcoin and decided it’s not for you, that’s cool.

Or maybe your hobby is hunting Japanese deep value stocks, and you’re not interested in doing anything else – this one I can respect. If you’re happy and you don’t care, it’s all good.

But most people are just a combination of lazy and slaves to their own biases.

If this is you, you have until about the end of 2026 to change it or get left behind.

Times are changing

This summary thread on GMI’s ‘Everything Code” is worth 5 minutes of your time. That’s the reading time. It might take a little longer to digest.

The Tldr: Human productivity is heading down, to be replaced by robots and AI. More debt is coming. Debt to GDP is going up only. Spending power gets vaporised. Tech stocks and Bitcoin are the two things that can still outperform the debasement, and one is way more efficient than the other.

Things are going to get weird and very difficult for a while. It’s not a good scenario to sleepwalk into.

Death and taxes

“But, what about the tax on crypto?” This concern is understandable. Japan’s taxation on crypto is indeed heinous. Personally, I think it will change and be taxed like stocks sooner or later. But I might be wrong.

What is occurring is the financialization of Bitcoin. It’s crossed over to tradfi already. Don’t miss this. Pretty soon, you won’t have to sell your Bitcoin. You’ll be able to borrow against it.

No capital gains if you don’t sell. It’s how the rich spend their money.

It’s already here with various institutions, including Xapo Bank – I wrote about it in Banking your Bitcoin. This stuff is only going to get easier and more accessible. Just sit tight a little while.

What’s the game plan?

Bitcoin still has room to run this year, but next year is likely to be brutal. It will be ok to laugh at it again. You will feel smart for not owning it.

Metaplanet and other copycat BTC treasury companies might even turn out to be the FTX/Luna of this cycle. One or more of them could blow up spectacularly. This is not the time for FOMO. If you missed it, you missed it. Metaplanet is currently trading at a massive premium to its Bitcoin holdings. In the bear market, I would expect it to trade at a big discount.

However it works out, my thanks go out to this company for providing me with a larger-than-anticipated pile of dry powder to allocate this summer.

If you still have zero bitcoin exposure, 2026 is your best opportunity. You have until then to get your head around it and set aside some cash. Put the work in. Jameson Lopp has an excellent list of reputable Bitcoin news sites and newsletters here.

I talked to a young guy the other day, and every time I said Bitcoin, he came back with ‘crypto’. If you think these two are the same thing, you have some catching up to do. I cover this in The investment case for Bitcoin.

This cycle has been a real eye-opener in this respect. Every time Bitcoin pulls back 5%, crypto (meaning alts) gets destroyed. The bleed has been insane. You will go broke very quickly trying to outperform BTC – and why do you need to anyway?

Screenshot

The name of the game is to accumulate as much Bitcoin as you can, without putting yourself in the position where you could become a forced seller. You don’t have to go crazy, just average in when nobody wants it. ETFs are fine – you don’t have to go crypto native.

If you want to get excited about crypto, stablecoins are where it’s at. USDC founder Circle Internet Group’s (CRCL) IPO just blew away expectations. This could be the start of a gold rush in crypto IPOs. (I would be keeping an eye on Tether here) Societe Generale just announced that it will launch a USD-pegged stablecoin on Ethereum and Solana. I don’t think the average person on the street has any idea how easy it is to transact in stablecoins. Money is going to start moving so much faster.

The 2024/25 bull cycle may well accelerate from here. Things could get crazy. Maybe we’ll even get the alt season traders have been waiting for. Do what you have to to accumulate more BTC, and don’t be scared to set aside some dry powder for next year.

Good luck!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Banking your Bitcoin

This post contains affiliate links.

One of the major obstacles to wider Bitcoin adoption has always been the issue of storing and spending coins. Fortunately, it is getting easier to do both.

I bought my first Bitcoin on Xapo in 2017 and have been storing part of my holdings there ever since. Back then, Xapo served as both a super safe custodian wallet and a trusted platform to buy, sell and store Bitcoin. In the last few years, it has become much more than that. 

There are many ways to manage Bitcoin storage, but here is my strategy:

  1. Do not leave Bitcoin sitting on an exchange
  2. Learn how to self-custody securely
  3. Diversify risk by storing some BTC with a trusted custodian

Bitcoin purists will likely agree wholeheartedly with points 1 and 2 while vociferously objecting to point 3. That’s fine; I get it. However, I live in a wooden house in an earthquake-prone country, and I’m not entirely comfortable having all of my BTC in one place. 

Also, I like to have the option to spend some of my Bitcoin or borrow against it if I want to. That’s not so easy to do with the keys sitting on a hardware device.

Furthermore, I value having a functional USD account. I have plenty of experience with offshore banks, and none have been as easy to use as Xapo Bank.

That’s why I’m still using Xapo Bank today.

Xapo Bank’s history

Xapo was first founded in 2013 and provided a secure cold-storage product using a distributed network of physical bunkers. Yes, you read that correctly! Xapo combined cutting-edge key technology and good old underground physical vaults to protect its clients’ coins. In 2021, Xapo expanded its services, founding Xapo Bank. Headquartered in Gibraltar, the company is licensed as a bank and Virtual Asset Service Provider (VASP) by the Gibraltar Financial Services Commission.

Xapo Bank’s services

Xapo Bank’s account is entirely app-based and enables Bitcoin customers to hodl, transact, earn, grow and borrow. It also now offers stock and ETF trading.

Users control a main BTC and USD account, which can be used for day-to-day transactions. Then there is the savings account, which pays interest on USD and Bitcoin holdings. And finally, there is the BTC vault for secure cold storage.

The USD savings account currently pays 3.5% annual interest, and the BTC savings account pays 0.5% per year. (rates are subject to change)

Xapo Bank has also just launched a new BTC Credit Fund, offering a simple way for people to grow their Bitcoin by earning up to 4% APY on their holdings.

The Bitcoin trading fees are very competitive, and both Bitcoin and USD can be transferred easily and inexpensively from the app. 

Users can opt for both physical and virtual debit cards, issued by Mastercard and VISA (depending on their country of residence). The cards pay 1.00% cashback, and the really neat thing is you can choose whether to spend your USD balance or your BTC balance. People often complain that you can’t pay for stuff in Bitcoin – well, now you can!

ATM withdrawals are also free up to some thresholds.

Along with BTC, users can also access S&P 500 and NASDAQ stocks and ETFs to grow their balance.

Customers who need cash but don’t want to sell their Bitcoin can borrow against their BTC holdings at an initial loan-to-value of 20%. The cash arrives in under a minute, ready to use through debit cards, bank or crypto transfers. 

Borrowing against Bitcoin may also be a clever way to avoid triggering a taxable event. I have been trying to find confirmation of this for Japan tax residents and have not been able to find anything so far. Selling or spending crypto creates a taxable event. However, it seems likely that borrowing against crypto does not – please note, this is not tax advice, and readers should do their own research before taking action.

One thing is for sure: borrowing against Bitcoin is a smart way to avoid selling at inopportune times, when the market is down, and still benefit from future asset appreciation.

Ok, it sounds amazing, but what does it cost?

Of course, all of these services come at a cost. Membership is USD 1,000 per year.

Some people struggle to come to terms with paying the annual fee. My take on it is that it’s worth it for an easy-to-set-up and use overseas USD account alone. I have used several offshore banks previously, and the transaction fees were significant. Many have a minimum balance requirement with higher costs if you fall below the threshold. 

With debit cards, savings accounts and the BTC vault, Xapo Bank is offering a premium banking service at a manageable cost. I can tell you that the app is very smooth and easy to use, and for a hodler like me, the appreciation of BTC over time easily covers the fees. If BTC trades at over USD 100,000, then 1 BTC in the savings account earning 0.5% annual interest already pays half the cost!

The customer service is top-notch, too. Customers have a dedicated Account Manager, whom they can contact by email or chat on the app. If there is a security issue and a bad actor tries to take control of your account, the account manager will get on a call with you to verify your identity and take action to protect your account.

How to open an account

Opening an account is simple: Click here, and all you need is an ID or passport and a quick selfie. Personal information is verified using your mobile phone.

Referral program: Use this link or referral code XRP-HFF-MR and receive US$42 per month in BTC for 12 months. (To qualify each month, you must have an active paid membership and maintain a minimum of USD 5000 or its BTC equivalent balance in an eligible Xapo Bank account during the cycle)

Any questions?

I am a satisfied customer and have been using Xapo since 2017. Feel free to ask me anything in the replies or via the contact form.

If you have questions for Xapo Bank, check out the FAQs on the website and get in touch with them directly!

If you use the referral link/code to sign up as a member with Xapo Bank, I may receive a small commission, at no additional cost to you.

Top image by Be Ba from Pixabay

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Pump my bags!

I know I shouldn’t be posting about the guy everyone is sick of hearing about this week, but he’s proving hard to ignore.

I always argue that political changes have far less impact on asset markets than people expect, and I still believe that is true, but you have to hand it to the new Prez – he is pumping everything!

I write this following a highly enjoyable meet-up in Tokyo last night. We finished at a very responsible hour but I can’t say I am firing on all cylinders today – that’s the price of getting old. So, I will try to make this update as quick and painless as possible.

We all know about the flood of executive orders issued in the past few days. Trump sure loves a good fanfare. However, it was his online address to the World Economic Forum that caught my bleary eye this morning:

Trump said he would ask OPEC to lower the oil price and “with oil prices going down, I’ll demand that interest rates drop immediately,” adding that “likewise they should be dropping all over the world.”

Fed chair Jerome Powell will have something to say about that, of course, but it’s clear that Trump’s intention is for the US to lead global interest rates on a downward path. The S&P 500 reacted by notching its first all-time high close of 2025, rising +0.53% to $6,118.71.

Powell is not the type to be bullied and the Fed is actually signaling a slowdown in rate cuts this year as it awaits further economic data. However, the central bank is going to come under a lot of pressure to pave the way for higher asset prices.

Trump wants a booming stock market to brag about.

He wants higher crypto prices, too.

Last night he signed an executive order establishing the Presidential Working Group on Digital Asset Markets. Here are the main points:

  • Secure America’s position as the world’s leader in the digital asset economy
  • Create a federal regulatory framework for digital assets
  • Prohibit the creation of a central bank digital currency
  • Evaluate the potential of a strategic national digital asset stockpile

Hot on the heels of the executive order, the SEC rescinded the controversial SAB 121 accounting guidance, opening the door for banks to custody crypto assets. This one is bigger than many people realise, although it brings new risks as tradfi will surely make the same mistakes crypto lenders made last cycle – you shouldn’t dabble in under-collateralised fractional reserve lending on an asset you can’t print. But no doubt they will try!

The Bitcoin price whipsawed overnight, rising initially and then dumping in disappointment that the order did not explicitly mention Bitcoin or plans to acquire more Bitcoin. The most likely outcome seems to be that the government will hold onto existing crypto assets seized in legal proceedings.

My two cents: traders and Bitcoin maxis have become too fixated on the idea of the Strategic Bitcoin Reserve and are probably going to end up disappointed. However, the new administration’s appetite for clear regulation and openness is a huge positive for the industry. It is probably also going to provide a healthy level of support for the ongoing bull market. Too much good news all at once could easily have led to a Q1 blow-off top.

Let’s hope the shenanigans I wrote about earlier this week in Are you tired of winning yet? were a blip and the new admin will focus on the long-term health of the industry rather than pumping dumb stuff. I can’t say I’m convinced on that one…

Meanwhile in Japan

It’s BOJ day! Japan didn’t get the memo about cutting rates. No shocks this time as the Nikkei Shinbun was ahead of the decision to raise rates to 0.5%, the highest in 17 years. The BOJ expects wages to rise this year with inflation at around 2.5%. Real interest rates are expected to remain negative and policy is still largely accommodative.

The Japanese stock market is calm this afternoon but let’s give it a day or so before we judge the reaction. Part of me hopes for chaos next week and a chance to allocate the rest of my NISA with blood in the streets but I think I would prefer peace and quiet.

All roads lead to inflation?

In the US, the Fed is cutting rates without first scoring a decisive victory over inflation. Trump’s tariffs, if enacted, are likely to be inflationary. The resurgence of inflation appears to pose the biggest risk to markets this year.

With debt to GDP at 263% and little chance of growing out of the hole, Japan seems destined for higher inflation. It’s going to be tough for the BOJ to raise rates high enough to prevent this outcome and the weak yen will only accelerate price rises. JPY cash remains a bad place to hang around for too long.

I covered the four assets to own to face inflation back in late October and I don’t see any change there. Bitcoin, commodities, gold and tech stocks remain the best plays. If you don’t own Bitcoin already, I would caution jumping in at this point in the bull market. I don’t know what innings we are in but it’s certainly not early. If you own it and are planning to exit this year, we are approaching the time to begin averaging out. I sold around a third of my Metaplanet holding just before the inauguration as expectations of something special from Trump drove it close to ¥5,000. Euphoria and hopium should be sold more and more aggressively in my opinion.

The last word on Trump: he loves to brag about stock market performance as proof he’s doing a great job and has even started taking credit for the Bitcoin price. I wouldn’t bet against US stocks and BTC this year while he is in the driver’s seat.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Are you tired of winning yet?

Yes, on 20 January, Donald J. Trump will be sworn in as the 47th President of the United States of America. The orange man is expected to unleash a flurry of executive orders on day one. We’re talking about deportations, tariffs, and maybe, just maybe, some crypto-related announcements.

If you were holding out for an executive order to create a strategic Bitcoin reserve, I don’t quite know what to tell you. In classic Trump style, the first crypto president has spectacularly missed the point and befuddled the market with a ‘winning’ combination of grift and incompetence.

Where to begin? Over the weekend, whilst holding a black tie pre-inauguration crypto ball, the Trump team decided to launch a $TRUMP meme coin. Traders and degens scrambled to verify if it was official and when they did, the new coin went from zero to around $14 billion market cap in 7 hours.

People got rich. One of those people being the man himself, whose team owns 80%+ of the supply. The potential for a rug pull did not deter traders and the coin looked poised to continue its rise. And then, a truly crazy thing happened.

They released another meme coin.

Early this morning, news began circling of the launch of $MELANIA. Before long, Trump himself reposted the announcement. I bet you can’t guess what happened?

Yes, the minute the market realised the Melania coin was real, they dumped the Trump coin in droves to hop on the next train, sending $TRUMP crashing from around $72 back to $40. They also managed to overload the Solana blockchain to the point where it could no longer cope and chaos ensued as people struggled to get their money out of one ridiculous shitcoin and into the other.

I learned a new term today: grift dilution. That’s where you release a second grift, right on the heels of the first one, and it diminishes the impact of the first grift without creating any more profit via the new one.

Talk about snatching ‘it’s so over’ from the jaws of ‘we’re so back’…

The initial Trump coin had already sucked the liquidity out of all altcoins except Solana. The Melania coin managed to knock over Solana and even caused Bitcoin to dump about 6% in one candle.

Magnificent! And tomorrow the real chaos begins!

To add insult to injury, Trump’s World Liberty Financial purchased around $48 million of Ethereum (for whatever stunt they are planning to pull next, no doubt) and the price of ETH, wait for it…, did not move at all!

Cursed that coin is.

I know what you’re thinking: isn’t releasing meme coins with massive rug potential right before taking the highest office in the land kind of, well you know…criminal? But never fear, because the new administration is replacing all the top dogs at the SEC with their own people.

Not that anyone in crypto is sad to see Gary Gensler head out of the door. But somehow I can’t imagine that David Sacks, the new crypto czar, would have been prepared for this level of insanity. Who knows, though?

I write this with full knowledge that people outside crypto probably don’t even know any of this happened and are just going about their Monday. Metaplanet (3350) just made another all-time high today as investors pile in hoping that Trump will announce something monumental related to Bitcoin overnight. While he may do so, he could of course just launch a $BARRON meme coin instead.

It’s going to be a weird four years…

As I edit this hasty missive, I see that $TRUMP is back at around $58 a coin, which is approximately $11.6 billion market cap. $MELANIA is at $1.7 billion. So maybe it is a successful grift after all? The mind boggles.

Before we all get too down on crypto, OG Eric Voorhees actually explained things rather well in this post:

Amen to that. Take care out there, folks!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Bitcoin – when do I sell?

As I sit here on a calm November afternoon, Bitcoin is trading right around the $90,000 mark. In yen, we are getting close to ¥14 million per BTC. Quite a number, huh? The Bitcoin market cap just overtook silver. Yes, silver. And the total crypto market cap briefly touched an all-time high of $3.01 trillion today.

The mainstream media have picked up on the feverish price action since the US election. Being mainstream media, they are making the mistake of reporting on it as a ‘Trump trade’. I have seen this on the BBC, the evening Nikkei news and elsewhere.

Here’s the first thing to note: the bull market was already in motion and primed to enter the parabolic phase. Trump was just a catalyst. It was going to happen anyway. Something else would have kicked it off if it hadn’t been Trump’s victory. If you think this is about Trump, you have missed the point.

That said, the incoming US administration is going to be far more crypto-friendly than the current one, which is something I covered in my previous post, Full Send.

I discussed bull market catalysts back in my October 2023 post: Bitcoin, Pump up the Volume! I was wrong about the US entering recession (so far), but that wouldn’t have stopped the bull market either.

Here is an excellent explanation of how the halving, which took place in April this year, squeezes miners and eventually leads to a surge in price:

The key takeaway: the bull market mania phase was going to happen regardless. Trump was a catalyst. Central banks entering a rate-cutting cycle was a catalyst. They lit the fuse, and now we get to watch the fireworks.

So, when do I sell?

Take it easy now. The decisive break of the 2021 cycle top was only a week ago!

We need to be careful who we listen to when things go parabolic. One week in and crypto ‘analysts’ are already calling the top.

It’s been interesting to note that over the past week, during Asia daytime, price has tended to dip. People are taking profit at these levels. Some of these people probably bought the 2021 top, of course. Then overnight, when Blackrock and the other ETFs start buying, price moves up again. ETF inflows for the first 3 days of this week totalled $2.4 billion. Retail FOMO is only just getting started.

Some have lamented how people are now going to pile in and end up buying high and getting stuck holding the bag. Yes, that’s what is going to happen. It happens everywhere when the price of an asset shoots up. It’s not limited to crypto. Your job is not to join the legions of people who make this mistake.

Study this tweet. Ponder it. There’s a whole chapter of George Soros’ best-selling book in those 6 words. (look up reflexivity from ‘The Alchemy of Finance’)

An asset may start to rise due to fundamentals, an economic or political event, a drag on supply, or whatever. Once it starts going up, people notice and react to the price, pushing it higher. This can get extreme during bull markets and bubbles.

Things are about to get silly. Focus.

Professional traders and investors are generally very good at buying low. Research shows that they are mostly pretty average when it comes to selling high. It’s actually really difficult. Sell too early and you regret leaving money on the table. Wait too long and you get fixated on the all-time high and start willing it back up there when you should be hitting the exit.

It’s hard. Don’t let anyone tell you otherwise.

You are not going to sell the top

Accept this. It’s not going to happen.

So, what to do?

Have a plan

Are you even going to sell? Bitcoin is going way higher over the next 10 years. It’s perfectly acceptable to hodl and ignore all the noise. You don’t have to complicate matters. If that’s your plan, it’s a good one. Please enjoy doing something else!

Many intend to sell during the bull run so they can accumulate more in the inevitable bear market that follows. That requires a plan of action. I can’t tell you exactly what that plan should look like. It’s an individual thing. But have a plan.

Some people need to build a spreadsheet. Some just need a few calendar reminders. Here are some general pointers:

Avoid round numbers – everyone wants to sell $100k. Yep, they did in 2021 too. The market does not owe you a particular number. Your favourite analyst says we are going to $125k – giddyup!!! This is how people screw up. Waiting for a number that never comes. Your favourite influencer says the bull market will run until February 2026 – red flag!!! Don’t get sucked into this kind of thinking. Nobody knows anything.

I would be much more willing to bet that BTC reaches $1 million sometime in the future than I would to bet on it reaching any particular number in the next 10 months.

Average out – the chances are you didn’t buy all of your Bitcoin at the stone-cold bottom of $16k. More likely, you bought little by little during the bear market and the early bull market. Dollar-cost averaging is a great way to buy a volatile asset. It’s also a great way to sell a volatile asset. Exiting a little at a time over the coming months means you will get out at an average price, which is a lot better than round-tripping the whole bag back to the bottom. You might even sell the top on one of those orders!

Alts go first – I stressed this in my previous post: Bitcoin and crypto are not the same thing. Any non-Bitcoin crypto asset needs to be aggressively sold when things get crazy. That means ETH, SOL, SUI, dogs, cats, squirrels. Whatever crazy coin you got yourself into that is destined for the moon. It’s going to crash 90%. And then it’s going to get cut in half again. Most meme coins are going to zero. (don’t worry, Doge will survive!)

Sell catalysts

The 2021 bull market peaked at $69k in November of that year. At that time, crypto influencers were loudly calling for a push to $100k by around February 2022. Euphoria reigned. Meanwhile, Jerome Powell and his pals at the Fed were just getting to grips with the fact that inflation was not going to be transitory like they thought. Bitcoin rolled over as it became apparent we were about to enter a rate hike cycle. Maybe we would have got $100k without it, maybe we wouldn’t. I wish I could say I correctly identified this glaring top signal, but I didn’t. I know one or two traders who did, but we are talking about a very small minority.

Just like there are catalysts that ignite a bull market, there are events and conditions that usher in the bear. Whilst averaging out, look for the signs. Averaging out may well require selling on both sides of the cycle top.

The number one thing to look out for is euphoria. When everyone thinks we are going up forever, take cover.

Don’t forget the tax man – assuming you did a great job and averaged out, you should end up with some handsome profits. But don’t rush out and buy the lambo just yet. Remember, you are going to have to declare your winnings and pay the man. Many a successful trader has fallen into this trap and ended up in debt.

Reinvest – make sure you reinvest profits for the future. You don’t have to lump it all back into crypto. Splitting part of the gains into a well-diversified portfolio is a smart move. Past bear markets have seen Bitcoin drop by around 80% from its peak. Start getting greedy again when we get to those levels.

Enjoy the ride – bull markets are fun! Laugh at the memes, smile at the gains, take profits and just beware of euphoria.

Or simply never sell.

Top Image by starline on Freepik

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.