September 7th 2021, Crypto Chartbook: Bitcoin, the ultimate backup plan
A backup plan is nothing else than anticipatory thinking for various outcomes. It is a conservative tool not to be surprised by less likely events. Not many anticipated the Covid outbreak, the housing crisis in 2008, previous market crashes, etc.. We find anticipatory preparedness the only way to navigate the treachery waters of long-term market play. We find ourselves in a world of complexity that makes six sigma events due to the vulnerability of such a complexity much more likely than we would like to believe. Bitcoin, the ultimate backup plan.
Gold as a wealth preserver gets criticized, it being seized by governments in the past. Silver gets a bad rap for being too heavy and bulky to store. What is less thought of is that your fiat currency at the bank is, in fact, a loan to that bank. This means your money isn’t your money until you withdraw it. If you go to a bank in the US, you will not be handed more than two rolls of quarter coins if you need change. Banks are now over a year short on change. To give one example, besides Covid, of hard to anticipate events. If you want to withdraw large amounts of money, you need to request, schedule, and provide various proofs. Imagine a time of a bank run or worse. “Your” money might be gone!
BTC-USD, Daily Chart, a contrarian stand:
Last week, we posted the left side of the daily chart above, skeptical of an immediate retracement in bitcoin after its unusual trading behavior. As contrarians to common consensus, which suggested US$50,000 to be a turning point downwards, we added to our exposure (green arrow up). In addition, we held prior positions longer and took partial profits near US$52,000 while most bailed a few thousand points lower. We are still holding nineteen runners from lower levels down to US$4,600, based on our quad exit strategy. This is just another example of how anticipatory behavior in the market can provide risk reduction and profit maximization, not only in the macro, but also in the micro view of market exposure.
Our approach thrives on anticipated early low-risk entries with target exits, versus the more commonly confirmed (late) entry methodology with a trailed stop approach for exits.
BTC-USD, Bi-weekly Chart, stellar performance:
A view of the logarithmic bi-weekly chart allows for speculation of a continuation of the stellar performance of bitcoin, based on its past.
If you take a closer look, you will find that bitcoin´s typical behavior is to build relatively short bases compared to its expansions, followed by a stellar move percentage-wise.
Bitcoin was officially adopted to the Midas Touch portfolio nearly six ago at prices around and below US$ 370. At today’s price levels, this equals a return of over 13,000%. Speaking of numbers, to get a feel of comparison:
Investment vehicleGain over the last 10 yearsBitcoin+572,917%Tesla+15,158%NVIDIA+7,242%Netflix+1,666%Amazon+1,529%Microsoft+1,328%Apple+1,215%Google+975%S&P+356%Bonds+35%
BTC-USD, Daily Chart, sitting on our hands:
Bitcoin is taking out one distribution zone after another (green horizontal lines) and does so not with volatility and power but rather the much stronger “up creep,” which is much more sustainable. While this is no longer a low-risk entry zone for new trade entries, we find this creep-up, among other factors, reason enough to hold on to a substantial exposure after taking some chips off the table to lock-in profits.
Bitcoin, the ultimate backup plan:
In the world of wealth preservation, it is mandatory to anticipate the worst. It is the significant drawdown that ruins long-term equity curves most. After all, when you lose 50% of your wealth, you need to make 100% profits now to be back at breakeven.
Holding bitcoin allows for a variable of benefits. It fits on a USB stick in your possession. It provides for extremely fast payments worldwide. Most of all, bitcoin is readily available when crisis strikes and can be a lifesaver in situations like this.
Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.