Crypto is Easy Special Issue: My Plan for Making the Most of Bitcoin's Bull Market
Sorry, it took a little while to get this out...
On March 30, 2020, I published this plan. At the time, I had been working on it for a while and finally felt confident sharing it. I called it my plan to make the most of bitcoin’s bull market.
I keep this name because that’s what I called it when I posted it, and now it’s embedded in a bunch of posts with backlinks. In any event, experts say we go into bull and bear markets every few months nowadays, so I might as well keep the name. Less maintenance!
My plan uses three lines to identify buying opportunities and two indicators to signal when we’re getting near a market cycle peak.
It took a while to create this plan because I tried to put too many indicators into my analysis of the market cycle peak. After fooling around for a bit, I realized I really only need to look at two indicators.
Subscribers, I’ll let you know when we start to see those signals. Until then, the goal is to build wealth with crypto without a lot of effort, stress, or trying to time the market. It beats dollar-cost averaging in all scenarios I tested.
Take a look at the plan, broken into “When to Buy” and “When to Sell” sections. You can see for yourself what to expect.
If you had followed my plan in 2017, you would have sold half of your Bitcoin at about $16,000 and the rest over several weeks, catching the market cycle peak of $20,000.
If you had followed my plan in 2013, you would have sold twice.
In March, you would have sold half of your Bitcoin at about $133 and the rest over several weeks, catching the market cycle peak of $260.
In December, you would have sold half of your Bitcoin at about $760 and the rest over several weeks, catching the market cycle peak of $1,150.
In other words, you would have sold only when the price was in the ovals:
Meanwhile, you would have bought each crash along the way, including the lull between the 2013 peaks.
Why not dollar-cost average?
You can do that. It’s a great approach!
My plan gets better results with less risk. It squeezes a little more juice out of the market. If you’re a competent trader or lucky, you can do better than my plan. Probably far better. I’m neither of those things, so I have to settle for good enough.
For example, if you had bought $250 worth of bitcoin every two weeks (payday) since January 1, 2017, you would have 2.36 bitcoins as of August 26, 2021.
If instead, you’d have saved that money and put it into the market on each of the first days bitcoin’s price went into the buying zone of my plan, you would have bought 3.03 bitcoins in 2017 alone, with $1,500 left for future bitcoin purchases.
You could have stopped following my plan at the end of 2017, never sold, never put another dime into the market, and you’d still be ahead of somebody who DCA’d for the four years through August 26, 2021.
On top of that, you would have only bought bitcoin three times, total.
Yes, you’d have spent 362 days sitting on your hands while the market zoomed. That’s not easy. But following the plan is—three lines on a chart tell you when to buy, two signals tell you when to sell, and the rest of the time you HODL or use your bitcoin.
What about if you DCA’d $250 every two weeks from the bottom of the bear market, December 18, 2018?
You’d have .97 BTC as of August 26, 2021.
If instead, you had saved that money and put it into the market on each of the first days bitcoin’s price went into the buying zone of my plan, you would have 1.39 bitcoins today—even though you would’ve bought only $250 at the bottom and then waited nine more months before you stacked your next sats.
What if you’d sold the 2017 peak according to my plan, then bought back in when my plan said to do so? You’d have 8.2 bitcoins today.
Selling the peak and dollar-cost averaging the rest of the time, you’d have only 4.28 bitcoins.
And if we benchmark from March 30, 2020, when I published my plan, DCA gets you .32 BTC as of August 26, 2021. My plan gets you .49 BTC.
In all circumstances, my plan does better than DCA.
Enough to buy a lambo? Maybe, maybe not. I’m content with getting better results for the same amount of effort.
Also, I wrote down my investment thesis. Check it out:
Please comment and offer your input on the plan and the thesis! I tried to make them easy. I’m not sure I did that very well . . .
Keep in mind, I’m happy to HODL and use my bitcoin forever. In fact, I hope to do so! Unfortunately, history and data suggest bitcoin will boom and bust, with a lot of volatility along the way.
My plan makes sure we take advantage of the dips and get out before greedy and fearful people crash the markets. It’s more about making the best decisions given the risks and opportunities that bitcoin offers.
To steal a phrase from poker players, investing in bitcoin is a lot of boredom punctuated by moments of terror and ecstasy.
Relax and enjoy the ride.