Crypto is Easy Monthly Issue - February 2021

  
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I remember buying XRP at $.20 and watching it go to $3 in one month.

One. Month.

1,500% in ONE month.

(One month.)

I sold half at $3, the rest at $2.50, and thought I was a genius.

Only much later did I realize the real geniuses bought it at $.005 and sat on 4,000% gains before catching another 1,500% on top of that.

And you think LINK is expensive at $25 and $11 billion market cap?

Do you know what XRP’s market cap was when I bought it?

$11 billion.

That was in November 2017, when the overall crypto market and capital flows were much smaller. Now, the market is much bigger and money is far more abundant.

Do you still think we can’t see a $250 LINK token?

It’s altseason. It can definitely happen.

As long as bitcoin holds its end of the deal

Only bitcoin can kill this party. If it crashes, altseason will end.

That’s realistic—I’d give it a 50/50 chance. Frankly, that would do wonders for the long-term health of the crypto market and also give us amazing opportunities to get cheap crypto.

Will it happen? That’s the million satoshi question.

Nothing has changed since my most recent update.

Watch the Most Recent Update

In this issue, I look at this moment in the context of the bigger market cycle.

Just getting started?

I prefer to never sell any crypto and watch it go up in price and value forever.

No super-cycles, no Lambos, just organic, natural, healthy growth for years and years. Life-changing financial opportunity with no stress outside of a little volatility.

Unfortunately, crypto doesn’t work that way. Eventually, we get into these parabolic run-ups that take prices to seemingly impossible highs, then crash to the point that everybody thinks the market’s dead.

Perhaps we’re in that run-up?

At some point, the entire market will crash. It’s inevitable. Not a routine 30-40% drop, but a big one, probably 60-70% or more, with some altcoins going even lower.

Until then, altcoins will zoom.

ZOOM.

As a result, you now have massive opportunities to make fast money.

If you’re good and lucky, you can realistically pull off 300% swing trades at will, and possibly do even better. Then, once we see the signs of the market cycle peak, you can get out before the party ends.

After the crash, once the hype dies down and everybody has a chance to suss out the winners and losers, you will have massive opportunities to make slow money. If you’re patient and savvy, you can realistically pull off 3,000% gains at will, and possibly do even better.

Either way, you win.

The tortoise is done—time for the hare to run

I focus more on the long-term because you can get much bigger gains with a lot less work and risk. You buy cheap when the fees and prices are low, with time to learn how to move cryptos and money around, and no pressure to get in before the rocketship takes off.

I’m more tortoise, less hare.

In altseason, the hares dominate. They zoom along with the prices.

Now, everything’s expensive, complicated, and hard to get. On the flip side, it’s also a lot more fun than waiting two or three months for your favorite altcoin to move.

Once the market cycle peaks, everything will get cheap, simple (as crypto goes), and easy (for crypto) compared to how it was just a few months ago. The market will move more slowly, giving you more chances to learn new platforms, set up accounts with different exchanges, and figure out how to stake and use private wallets.

Does that mean you shouldn’t play the altcoin market now?

No, it just means you don’t have to. If you're having fun, keep having fun!

If you find it’s hard and stressful, take a break. If it’s complicated, take some time to learn how to do it. If it’s expensive, wait until the FOMO dies down. Everything will get easier.

Your mental health and happiness are worth something, too.

But prices might keep going up!

Of course, crypto prices may end up higher after altseason.

Meanwhile, you may feel bad because everything’s going up and a bunch of dipshits keep tweeting about how they just made 3x on this altcoin, better get in on this other one, it’s about to BOOM!

At this moment, crypto is fraught with risk. We could get a massive crash that leads to months of bleeding prices. We could just as likely keep going up until the market cycle peak brings prices so high you can’t even imagine.

In preparing this issue, I selected 10 random altcoins from DeFi summer and compared their prices on June 1, 2020 and October 1, 2020.

On average, they were 3x higher on October 1.

Keep in mind, I picked those random 10 from among the best performers of a localized mini-boom in one segment of the market. Many DeFi tokens died. I only pulled from the ones that survived. Also, I didn’t include any tokens from other sectors of the market. The results probably skew to the high side.

Going back to the great altseason of late 2017, you can find many altcoins that ended up at the same price or lower after the market crashed. Many also ended higher.

What goes up must come down, but not always down to where it started. The question is whether it’s worth stressing over.

Also, if you’re buying small amounts of crypto, how much of your investment do you lose from the fees? How many more tokens can you get once you wait for fees to go down—a virtual impossibility during the boom, a near certainty after the crash?

Opportunity and price tend to go in opposite directions, even if the traders tell you to wait for the price to go up before you buy.

If you wait, you might end up getting into the same project at a higher price. On the other hand, you won’t have to rush, pay ridiculous fees, or worry about exchanges screwing you over.

That’s tough to remember when you get bombarded with price projections and everybody on Telegram’s talking about their latest 2x on some micro-cap pump-and-dump. They forget about the imputed costs and don’t care about your personal welfare.

Bulls get fed. Bears get fed. Pigs get slaughtered.

You can do very, very well in the crypto casino. Don’t feel like you have to.

Opportunity has nothing to do with price

Over the long run, the biggest opportunities come from big shifts in momentum and sentiment around an asset, not a two-week swing trade. Price has nothing to do with it.

As we approach the end of this market cycle—assuming we do not have a major crash before we get there—you will have fewer and fewer good investment opportunities with each passing day. The risks will keep going up and the potential rewards will keep going down.

When an altcoin’s price doubles, it means you lose 50% of the upside. A 10x opportunity becomes a 5x opportunity.

Meanwhile, fees go up. Overloaded centralized exchanges delay your withdrawal (and sometimes crash). Network congestion and buggy protocols on decentralized exchanges lead to failed transactions. The price dumps before you can sell. You end up spending half your capital on fees. You spend precious time fussing with crypto instead of doing other things that can make you money, too.

If you only care about making as much money as you can as quickly as you can, you need to act now. Every time the price goes up, another opportunity closes.

If you’re willing to wait, you need to not act now. Eventually, new opportunities will emerge.

While it may seem like you will never again have a chance to make 10x on your money in crypto, I doubt it.

Bitcoin’s price will almost certainly go to $400,000 at some point in the next few years.

Let’s say bitcoin’s price goes up to $100,000 and then crashes to $40,000 at the end of this market cycle peak. Those are higher prices than I expect, but they’re realistic.

Once that happens, you will have a 10x opportunity again—with plenty of time to take advantage of it. Months, at least.

What if the price falls to $20,000 after the market cycle peak?

Now you have a 20x opportunity—with very little risk.

Look at it this way:

  • If you bought bitcoin at $100 and sold it at $1,000, you made 10x on your investment.

  • If you bought bitcoin at $1,000 and sold it at $10,000, you made 10x on your investment.

  • If you bought bitcoin at $10,000 and sell it at $100,000, you will make 10x on your investment.

You get the same result regardless of price.

Make sure you don’t squander your money chasing after parabolic moves. You’ll need it after the bull market ends.

Value does not come from speculation alone

As altseason continues, you will learn about a lot of amazing projects doing amazing things. Often, because their tokens pumped or somebody talked them up.

In my research for this newsletter and my research service, Altcoin Insights, I’ve looked into a lot of really great projects. Along the way, I’ve had a chance to learn a little more about DeFi, tokenomics, and some of the concepts around token design.

Fascinating stuff and I’ve only scratched the surface.

For every altcoin I research, I look for a virtuous cycle—tokens that capture value, recycle that value to token holders, and bring that value back to the token itself.

Many altcoins serve an important purpose but don’t have a virtuous cycle. They’re simply a way to get a result. Their value comes from speculation, convenience, or community affection.

DOGE is a great example of this.

Consider Mirror.Finance, a very strong project I looked into for Altcoin Insights.

To oversimplify a very interesting and valuable project, Mirror aims to create a Robinhood experience using synthetic assets to simulate investments. This will allow people everywhere to trade any financial asset from the comfort of their mobile device, regardless of where they live, without permission or restraint.

What makes it different than Synthetix or any app people can build on the Synthetix Network?

With Mirror, you can create synthetic assets with a lot less capital than SNX and use stablecoins as collateral. This makes Mirror a less volatile, more efficient alternative to Synthetix.

The concept is superb and the Mirror team has the backing of the well-financed Terra Foundation. The project has a bright future and its governance token, MIR, could go way up in price.

BUT.

All of the value goes to the UST stablecoin, which has nothing to do with the MIR token. If anything, it benefits LUNA, the token of the Terra Foundation’s smart contract platform.

To create synthetic assets on Mirror, you need UST. When somebody draws UST, they must burn LUNA tokens. As a result, demand for Mirror’s synthetic assets will force people to buy UST, for which users must burn LUNA, increasing demand and reducing supply of LUNA, not MIR.

MIR tokens reward people for participating in governance. They have incredible speculative value and many people may view them as great assets. I’m not doubting MIR tokens as an investment.

I prefer to own tokens that capture value from the growth and usage of their related platform, not the whims of the masses.

Contrast MIR with EVED, the token for Evedo, a tiny project aiming to create global platforms for event planning, ticketing, and financing.

When people do business with each other on Evedo’s platforms, they lock up payments into smart contracts. No more security deposits, haggling over refunds, or “half now, half later” deals. Neither party can touch their money until both sides make good on their agreements.

EVED tokens represent the value of those agreements.

Users can leverage EVED tokens for EVED-backed stablecoins that can integrate with any DeFi protocol. They can also use those stablecoins to hedge against swings in EVED’s price. They never have to withdraw their EVED tokens.

Meanwhile, the terms of the smart contracts remain in effect, locking EVED tokens for a certain duration.

As more people use Evedo’s platforms, more money gets locked up as EVED tokens. With EVED serving as collateral for stablecoins and DeFi services, that value can stay captured as EVED tokens.

As Evedo’s platforms grow, demand for EVED tokens must go up, leading to higher prices. Those gains circulate to EVED holders as higher prices and more purchasing power on the network. That drives more people to buy, hold, and use EVED tokens.

Value stays on the network.

Over the short run, both tokens can do great. People may end up liking MIR tokens a lot more than EVED tokens. Also, a lot can go wrong for both projects.

Which one would you rather hold?

Tap this button to read my report on Evedo:

Read the Report on Evedo

Prepare to sell

Unless we get a very big drop in bitcoin’s price or a long sideways move, we will soon reach the market cycle peak. At that point, the market will force us to sell to protect our investments from greedy people who will crash the market.

Premium subscribers, you will know in advance when we get near that peak. The data is incredibly clear and compelling. It forms a key part of my plan for bitcoin’s bull market.

Read My Plan

Once we hit the peak, it’s all downhill from there—possibly for months until we start the next market cycle. You want to make sure you’re ready now, just in case we have to sell.

Do you know how you’ll cash out? Did you do all your KYC?

What about taxes? In high-tax countries, you may end up paying so much to the government that it makes more sense to HODL through the crash. For example, if you will pay 50% tax on your gains to avoid a 50% crash in the paper value of your crypto, is it worth selling?

If, like me, you live in a low-tax country with ample legal ways to shelter your gains from the government, did you factor in deductions, basis, loss harvesting, paperwork, and other considerations that have nothing to do with crypto?

What will you do with your gains? Put them back into your bank account? Keep them as stablecoins? Put them in somebody else’s custody or take them into your own?

What about gas fees for DEX exchanges? Withdrawal fees for traditional exchanges? Transfer fees to move the crypto around?

Are you prepared for exchanges to crash and transactions to get blocked? Withdrawal limits? Whitelisting rules that prevent you from moving your crypto for 1-7 days?

While I can’t advise you on these questions, I will publish a special issue with some ideas, along with links and services that can help you figure out what to do.

Over before it began?

Does that mean I think we’re at the market cycle peak? The bull market’s finished?

History, data, patterns, facts, and evidence all point to one conclusion: without a significant crash, we will reach the peak of the market soon.

“Soon.”

How soon?

Weeks, maybe months.

If we can get a nice drop or even go sideways for a while, we can form a really solid, strong foundation for an even more massive boom—the kind of bull run that will send bitcoin’s price way above $288,000 and altcoins into the stratosphere. We’ll shake out all the people who just want to sell crypto for more of their government’s money. We can get that crypto back into the hands of people who have real conviction and fortitude, who will commit to this market for the long-term, who won’t sell after a 500% pump.

That’s a big “if.”

So yes, you may have come into crypto at the worst time, at the tail end of a two-year bull market, in the middle of a parabolic run to a blow-off top.

But let’s not get ahead of ourselves.

It’s possible institutions and long-term investors will serve as a floor for prices. If that happens, we may not get a +80% crash as we have in every previous market cycle peak. Maybe 60% or something?

Nobody knows.

Once we see the signals of a market cycle peak, bitcoin’s price will keep going up—possibly for weeks.

In fact, it has always gone up after my plan says to sell. In 2013, both market cycles ran 50% higher and in 2017, bitcoin pumped an extra 25% after the signals triggered.

If that pattern plays out with this next market cycle peak, we could see the “sell” signs when bitcoin’s price hits $70,000 and then watch the price go up to $105,000 or more.

For that reason, my plan takes a specific approach to make sure we capture the bulk of our gains before the peak and also get whatever extra “juice” the market gives us after we start to exit.

Some may think we’re selling early, but we’re going to make sure we have time and liquidity to get out before the crash. We will have plenty of time to reaccumulate after the crash.

No need to get into that now. I’ll post about our exit strategy when the time’s right. We are still far away from the market cycle peak.

Still, it’s crypto, so things move fast. You may want to bump up to the premium subscription so you’ll get the news when other paid subscribers do.

Hype dies, markets don’t

Today’s opportunities will exist tomorrow.

“But every business is buying bitcoin! Grayscale can’t keep up with the demand! PayPal buys more bitcoin than miners can produce! Tesla and Amazon are creating their own crypto! Stock-to-Flow says we’re going to $288,000!”

Those statements seem reasonable but we don’t have any way to know if they’re true.

How much bitcoin did businesses buy? We’ll have to wait for their 10-Ks and quarterly reports.

How much of Grayscale’s new business came from institutions and not individual investors? We’ll find out in April.

How much bitcoin did PayPal users sell after they bought it? We may never know.

Are you sitting in on Tesla and Amazon board meetings?

Who can prove that stock-to-flow predicts bitcoin’s price any better than drawing a line that goes up and to the right on a price chart? If you have evidence, send it to me. I published my own prediction model, take it with a grain of salt.

How High Will Bitcoin's Price Go?

Today’s action comes from retail investors like you and me.

We know this because the altcoin Telegram groups have exploded, exchanges are overloaded, on-chain transactions and fees are spiking like crazy, celebrity endorsements are moving markets, and financial advisors are getting flooded with questions from clients looking to put some crypto in their investment accounts.

Only retail does business that way. Institutional investors use private brokers, custodians, and OTC desks. Often, they have investment committees, portfolio strategies, or trustees that limit how much bitcoin they can buy.

We don’t know what’s going on behind closed doors and retail money can drive prices far higher, far longer than you think. Hype can go a long way. Crypto will persist long after the hype dies down.

What happens next?

If I knew, I’d tell you. For now, I’m sticking to my plan.

I haven’t bought bitcoin since September.

As far as altcoins go, I padded my stash in November. Since then, the only altcoins I’ve bought are the select altcoins I recommended to Altcoin Insights subscribers.

As with all the Altcoin Insights recommendations, these are great projects with massive upsides that I intend to accumulate for long-term wealth-building. I selected them based on extensive research, analysis, and conversations with their project teams and in some cases, their founders.

Cumulatively, those recommendations have outperformed the overall market a lot—85% as of this post, as high as 130% sometimes. They all have plenty more room to run.

After you read my altcoin reports, check out Altcoin Insights.

Check out Altcoin Insights

If you like what you see, subscribe now. I will close the service to new members after 11:59 PM EST on February 21, 2021. This is your last chance to sign up.

Why haven’t I bought any bitcoin since September? Why don’t I ape into altcoins now?

Because I eat what I cook. The best opportunities come when the market is boring and scary, not when everything’s hyped and prices are zooming.

Does that mean I’m missing out on juicy gains? Am I lame for not getting into the latest DeFi coin?

Probably. In fact, I can guarantee I’m missing some short-term money-making opportunities.

My goal is to make the most of this bull market. I did that. I don’t need to add more risk and spend more time and money chasing altcoins. I spent three years building a portfolio. I already found some moonshots. If you subscribed to Crypto is Easy for long enough, you did, too.

If you’re stressed, worried, frustrated, or anxious right now, I totally understand. The fees, the technical glitches, the hard-to-use blockchain apps and interfaces . . . it’s hard. It’s hard on me, too.

These are the growing pains of early-stage technology—the price we pay for this amazing financial opportunity.

At the same time, it sucks. Fees eat into small purchases and it’s a hassle to transact with crypto and deal with exchanges (centralized and decentralized).

We’ve transitioned from an investor’s paradise to a gambler’s market. The crypto casino is open again.

You can do well in this environment. You may even get the best price on some of these altcoins, because it’s entirely possible their prices zoom to the market cycle peak, crash afterward, and end up higher after the crash than they are today.

Just remember, you can make money in a casino, but over the long run, the house always wins.

Be the house

If you’ve followed my plan, you’re the house. You accumulated when prices were low, after the crashes and before the pumps. You’re way up on your investment.

Could we see bitcoin and altcoins grow in value and price, with big swings up and down, over many years, never too far in either direction, without a parabolic melt-up to a blow-off top that marks the end of this bull market?

Probably not.

As a result, we need to sell before the gamblers price us out and the OGs, institutional investors, and businesses exit and crash everything.

After the dust settles, we will have time and money to rebuild our portfolios. Today’s projects will trade at massive discounts. Ethereum gas fees will drop. Scam coins and ponzis will get flushed away. Everything will be cheap and accessible again.

Who knows? Maybe we will cool off now, build the foundation we lost after bitcoin’s price went above $16,000, and extend this bull market a few years longer.

Either way, prepare now. Premium subscribers, I’ll let you know when we see any warning signs. Also, look for my special issue within the next few weeks, sooner if the market starts to look bad.

Relax and enjoy the ride!

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