I am starting to see people discussing the idea that the stock market has been so pumped up on debt steroids that it simply won’t be allowed to go down for an extended period again. Normally, this kind of talk would be a massive flashing sell signal, but it’s not an idea that is being broadly discussed. It’s just popping up in pockets here and there.
Of course, stock markets go up and down. In fact, the mighty US market took a hit in April due to the Liberation Day tariff malarkey. But did you notice how quickly it bounced back? Pretty much a V-shaped recovery. Same in March 2020.
I’ve said it before: the money has been funny since the 2008 global financial crisis. Many institutions that should have gone under were propped up at the expense of taxpayers and we’ve been getting screwed ever since. Economies and big business have become addicted to liquidity.
Sounds like tin foil hat stuff?
That’s the MSCI World Index. See what happens after the 2008 crash?
Here’s the gold chart for comparison.
So, are the assets going up, or is the unit of account going down? Check out the purchasing power of a dollar over time.
Ding ding ding ding ding! So, 2008 clearly wasn’t the start of the pattern. It just intensified after that.
The Federal Reserve of St. Louis puts together some pretty charts, doesn’t it?
Take a look at this one – currency in circulation:
Hello! So, if you keep creating more dollars, the purchasing power of a dollar goes down, and the value of assets and other stuff goes up against your inflated currency. I’m picking on USD here, but everywhere else looks the same. Probably worse.
Here’s a question I get asked a lot: “How do I convince my very conservative partner that we need to invest more?”
Answer: Just teach them that the market is going up forever!
If assets are going up forever, you’d better own some! You probably don’t need to fret too much about timing the market. Just make sure you keep a nice cash reserve so you don’t have to dip into your investments in a crisis, and yolo the rest into stocks, commodities, real estate, bitcoin and anything else that isn’t cash in the bank.
Of course, this is all somewhat tongue-in-cheek. But is it really much more complicated than that?
Please don’t misunderstand. Stocks can still go down 30-50% at any time. Bitcoin can still dump 50-80% and probably will next year. You should be prepared for these outcomes and never let yourself become a forced seller. But, over the long term, these assets go up and to the right because the denominator is cooked. Did you notice how long the whole DOGE ‘let’s reduce wasteful government spending’ drive lasted? It’s not even June, and Elon and Trump are melting down in public.
If you’re wondering why you have to become a money manager just to break even with inflation, here you go:
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.
Remember when everyone thought a Trump presidency would be business-friendly?
I admit to belonging to that camp initially. Stocks soared the first time he was elected, when most people expected them to tank. They also ripped between the election and the beginning of his second term, as people bet on a golden age of deregulation. Remember all the tech CEOs at the inauguration?
And then the madness began.
I’m not interested in getting into political commentary, but I will say this: it really couldn’t have been handled much worse. Anyone who has read Chris Voss’s book knows that you don’t start a negotiation with belligerence and threats and expect everyone to come meekly to the table. Anyway, my opinion doesn’t matter. The markets have spoken. So far, Trump 2.0 has been an unmitigated disaster.
Wall Street is openly disussing a “Sell America” trade. The great dealmaker must hate that one. It’s happening, though – look at treasury yields, look at the S&P 500, look at the dollar. And look at gold!
Gold isn’t just a safety trade here. It represents a stampede away from USD-denominated assets. European and emerging market stocks are also seeing inflows, but they come with their own risks as the haphazard tariff ‘negotiations’ blunder ahead.
So what happens now?
Is America really done? Does gold go up forever?
No and no are the short answers. However, the world is clearly changing before our eyes. Here’s an excellent thread summarising Howard Marks’ recent comments on what is happening. Like it or not, globalisation made a lot of things cheaper. As countries become more inward-looking and focus on domestic production, prices will rise. America is still expected to outperform in the long run, but it will need to work harder to attract capital. It is no longer the obvious go-to market, at least while all this chaos is raging.
Can gold still go higher? For sure, but it’s starting to look like Bitcoin does in blow-off top phases. Weekly cycles also suggest it is close to a top. If you’re a long-term diversified investor, continue to hold it. If you’re looking for the next trade, then digital gold is where it’s at.
Even the macro guys are starting to agree that Bitcoin looks good right now. This article from @fejau_inc puts it all together nicely and is a must read.
Here’s the conclusion from that piece for easy reference: “And so, for me, a risk-seeking macro trader, Bitcoin feels like the cleanest trade after the trade here. You can’t tariff bitcoin, it doesn’t care about what border it resides in, it provides high beta to a portfolio without the current tail risks associated with US tech, I don’t have to take a view on the European Union getting their shit together, and provides a clean exposure to global liquidity, not just american liquidity.
This market regime is what Bitcoin was built for. Once the degrossing dust settles, it will be the fastest horse out of the gate. Accelerate.”
Meanwhile, the Financial Times reported that Howard Lutnick’s son, Brandon is cooking up a $3 billion Bitcoin acquisition investment vehicle with Cantor Fitzgerald, Softbank Group, Tether and Bitfinex. Reuters summary here.
Is the yen strengthening going to hold?
If you are looking for proof that capital is flowing out of America, it’s right there in the exchange rate, currently around ¥142 to the dollar. It’s quite possible the yen could strengthen further from here, but beware the orange man running his mouth. If Bessent can put the gag on him for a while and they get a few wins on the board in terms of trade deals, then the picture can change very quickly.
Yes, I’m aware that the typical trade deal takes around 18 months to complete. Most likely Trump extracts a few concessions from the major partners, including Japan, and declares some ‘tremendous trade deals’. Then he can move onto pumping the markets back up before the mid-terms.
Long term, I believe the yen is cooked. Nothing has changed there. Short term, we could be at ¥120 just as easily as ¥160 in a month or two. Who knows?
So, sell America or not?
Traders gotta trade, and right now the trade is sell America for anything else you can lay your hands on. For long-term investors, I would view cheaper US asset prices as an opportunity to accumulate. Don’t change your monthly investment allocation too hastily!
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.
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:
Do not leave Bitcoin sitting on an exchange
Learn how to self-custody securely
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.
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.
Welcome to another fun-packed week in crypto. This week, Metaplanet reached ¥6,880 per share and game company Gumi Inc (3903) announced plans to purchase $6.6 million worth of Bitcoin. As I edit this post, I note that GME is considering buying BTC and other crypto.
I am hearing more rumours that Japanese regulators are considering reclassifying crypto as security, paving the way for ETFs and sensible tax treatment. My guess is that it’s likely to take until 2026 but this is a reasonably high probability outcome.
As we approach the sharp end of the Bitcoin bull market, here are a few thoughts and observations:
It’s truly a Bitcoin-driven market
The last 12 months in crypto have clearly been all about Bitcoin. Meme coins had a hot moment in Q1 of 2024 but that market is now saturated and the attention span on new coins is down to a few hours. People are talking about being in “the trenches” when really they are just at the casino.
Similarly, altcoins have mostly struggled to live up to expectations. There are simply too many coins and not enough money to make them all go up at once. AI coins never really had any tech and utility coins never really did much.
Ethereum continues to disappoint. Among the other L1s, Solana has had its moments, mostly driven by the memecoin casino. Hyperliquid and SUI have also shown periods of strength. Binance seems to be toying with launching memes on BNB, which has driven up the price in the last week or so.
If you don’t follow crypto Twitter, I can tell you the mood has been downright depressed for weeks. Many of these people have been hyping the bull market for the last two years and don’t even own any Bitcoin. They are knee-deep in trash and crying for alt season or central bank quantitative easing. (QE)
Meanwhile, Bitcoin is at $96k. It’s up almost 350% from the same time two years ago.
Are you not entertained?
The debate about Bitcoin’s institutional appeal is over
It has been fun frontrunning mainstream adoption but now the suits are here. Blackrock is here, tradfi is here. The US has a crypto-friendly administration that is just picking up steam. 16 US states are debating creating strategic Bitcoin reserves and a federal SBR is under consideration.
Read that last part again.
Institutional money is pumping into Bitcoin. It is not flowing down into other crypto assets like in previous bull markets. It goes into the spot ETFs and stays there.
Serious money is not coming to buy your altcoin bags.
I sound like one of those sanctimonious Bitcoin maxis, don’t I? But identifying what is actually happening is the key, not being right about this coin or that coin.
The harsh truth
Most people looked at this chart for the last 10 years and failed to act because they couldn’t figure out what the use case was, or it just seemed silly to them. “If Bitcoin is money, why can’t I buy my coffee at Starbucks with it?” It must have taken an incredible amount of overthinking not to buy the asset going up and to the right faster than anything else, but people managed it somehow.
Bitcoin began as a solution looking for a problem. Much mental gymnastics have been performed in defining what it is actually useful for, but years of ZIRP (Zero Interest Rate Policy) and QE (Quantitive Easing) eventually provided the answer: Like gold, Bitcoin is the countertrade to the wanton destruction of Fiat currency by governments and central banks.
It’s the hardest of the hard assets. And now the big boys are buying it.
You may think the crypto people were either lucky or very clever, but the reality is so much funnier:
It’s only a 10x to $1 million per Bitcoin. Do you know how many times this thing has 10x’d? If I sound like the left-curve guy here, it’s because I am.
The volatility will continue to fall and Bitcoin will become another boring tradfi asset, albeit one you can’t afford not to own. Expect diminishing returns from here on.
It’s still going to a million, though. That outcome is right there if you can discipline yourself to accumulate and then sit on your hands for 5-10 years. How much do you need to own to change your financial life?
Study up on the state of global liquidity. This Raoul Pal interview with @crossbordercap is worth a watch. (particularly 27:22 Japan’s Role in US-China Financial Tensions)
FOMO
“Am I too late to on crypto?”
“What do you think about Metaplanet?”
I’ve been getting more of these messages recently. People who couldn’t bring themselves to buy before are now scared they are going to miss out. It’s the signal that we are down to the last couple of innings of this bull market.
Hell, we may already have topped, but I doubt it. For those looking to take profit, the next leg up will offer an opportunity to start moving towards the exit. And there’s only one door, remember.
Beware of unit bias. The big mistake that people make at this stage is deciding that Bitcoin is too expensive at $96k so they need to buy something cheaper to catch up.
The people who own those “cheap alts” have a name for you guys: Exit liquidity
It’s their last chance to offload their bags to a newbie with FOMO.
Be smart.
It’s not too late
This post is meant as a warning but here’s some encouragement:
There will still be opportunities to get on the train. When the dust settles, sometime in 2026, Bitcoin will once again lurk in the buy zone. Below $80k is cheap. Below $50k is deep value.
That’s the chance to get on the train. While it is stationary. Getting on now is like trying to jump on a moving Shinkansen. Just understand that next year everyone else will be getting off and puking on the platform as you try to board…
If you really want to get started now, it’s ok, but go slow. Average in and prepare for the next bear market to really deploy capital.
And stick to Bitcoin. Don’t become some gambler’s exit liquidity.
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.
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.
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.
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.
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.
The American people have spoken, and it’s about goddamn time! We may argue about politics but I think there’s one thing we can all agree on: there is no need for a presidential election campaign to take all year. Can’t you just get it over with in a month or so?
You have likely already had your fill of election hot takes, so I will spare you mine. I will, however, use this post to explore what the result could mean for our investments over the weeks and months to come.
Risk on, for now at least…
The initial market reaction to Trump’s win was well-expected. Stocks pumped, and Bitcoin surged to a record high. Add to that above-trend GDP growth and gold around all-time highs and you have an intriguing risk cocktail in the mix.
And then, last night, Jerome Powell delivered another rate cut. The Santa rally is well and truly in play.
Financial conditions in the US are easing considerably with a strong economy and inflation not fully defeated. What could go wrong? Many, myself included, think that the Fed is cutting too soon.
It’s one thing to disagree with the man’s strategy. However, don’t go asking him any stupid questions!
I’ll take that as a ‘no’.
On the subject of inflation, Powell also wasn’t afraid to say the quiet part out loud:
For those who think pre-pandemic price level is coming back Fed’s Powell notes “the price level doesn’t come back down…It takes some years of real wage gains for people to feel better.” Underscores disconnect from how public experiences inflation vs. economists view.
Take a moment on that one. Prices don’t come back down. Wages have to catch up. If you live and work in Japan, how are those wage hikes coming along? Data released on 7 November showed that Japan’s inflation-adjusted wages fell for the second month running in September. (you may remember that before that they fell every month for more than two years)
In case you missed it, I covered the four must-own assets for inflationary times in my previous post. All roads lead to inflation. Plan accordingly.
Stocks look likely to remain strong into year-end. If you are wondering what can go wrong after that, the bond market is the place to look. America just came out of the longest period of yield curve inversion in history. (short-term interest rates being higher than long-term rates) Without getting too deep into the weeds here, an inverted yield curve frequently precedes a recession. The consensus, however, seems to be that this time it’s different and the US economy is heading for a soft landing. Time will tell.
If you want to challenge yourself to understand the relationship between bond yields and the Fed, have a crack at this X thread. I’ve read it twice now and I think I still need another go…
How high is Bitcoin going?
Forgive me, I know I have been banging on about Bitcoin for a long time, even longer than the US election! My take is that the 4-year halving cycle is the best predictor of price movement – until it’s not. If that cycle breaks, I will change my view but as of now, it is playing out exactly as expected.
However, the Republican election sweep just added rocket fuel to the fire. In no particular order, here is the crypto bull case for the next 10-12 months and beyond:
The Democrats’ war on crypto is over
SEC head Gensler is on the way out – see ya buddy!
A significant number of incoming senators are pro-crypto/crypto-curious
Senator Cynthia Lummis has submitted a bill proposing a strategic bitcoin reserve. The proposal is for the US to buy 1 million BTC over the next 5 years. That’s 548 BTC a day. Currently, only 450 are mined every day.
Detroit, Michigan just became the largest American city to accept crypto as payment for taxes
Global easing cycle underway
Retail didn’t even get interested yet
Solana ETF possibly in the works
The parabolic phase of the bull cycle is upon us. I am not making any predictions as to how high it will go. Nobody knows. But the higher it goes, the harder it will fall at the end. That’s how the 4-year cycle runs. Here’s Mark Yusko with his take:
📺 The Bitcoin Bull Run Cycle Explained by Mark Yusko! 👀
Mark Yusko of Morgan Creek Capital Management breaks down what will happen next for Bitcoin as the bull market cycle continues into 2025.
— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) November 6, 2024
If you own Bitcoin, you need to decide if your strategy is to hodl for the long term or sell during the bull run so you can increase your holdings in the inevitable bear market that follows. Option two sounds great, but it’s harder than you think. Expect more on that in a later post. In my humble opinion, any other flavour of crypto needs to be sold in the bull market. Those Metaplanet shares too. It will all get crushed when the music stops. But for now, enjoy the ride!
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.
Smart Money Asia 