The All-In Bitcoin Strategy

The All-In Bitcoin Strategy

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Being all-in in Bitcoin and Ethereum does  by no means equate to sitting on my hands.   It’s an elaborate strategy that requires full  focus and active re-positioning. All in the name   of extracting full value whilst reducing risks.  Here’s my 2021 all-in strategy revealed in full … In the previous 2021 Bitcoin Series episode  I revealed that I’m all-in in Bitcoin and   Ethereum. I also outlined, from a gaming  theory and a technical point of view,   why this isn’t necessarily too risky a move.  But why it is in fact a rather sensible one. It’s easy to fixate on the all-in thing. But make  no mistake, for this strategy no simple buy and  

hold. It is much more elaborate than that and I’ve  spent a lot of time and brainpower to set this up.   And that’s exactly what we’ll discuss  in detail in this episode: the strategy,   and its structure, advantages and risk balancing. Let’s now dig into the fun, but before that:   the mandatory legal stuff … NOTHING of what I  say is financial advice. I’m the local idiot,   born with a big mouth and too many chromosomes,  so take everything I say solely as entertainment.   Just like back in the village … And of course,  like and subscribe … or the idiot gets angry.

Although I expect Bitcoin and Ethereum to  vastly outperform most stocks in the upcoming   6-10 months, just buying and holding would  be a lazy waste of potentials. It would   be like getting yourself a Ferrari and then  driving it around in first gear and first gear   only. Which you’d of course do if it’s a rental  ... For being equipped with market knowledge,   technical knowledge and crypto knowledge, we  sure can extract more horsepowers than that.   In this sense, if Bitcoin alone  were to 5x throughout this year,   any additional super-charged value that  we can squeeze out of that run-up would   also be leveraged by a factor up to 5.  As lucrative as this may sound, not only  

do we do this to further increase profits.  It’s also designed to cut down on the risks. First of all, let’s begin by explaining  the overall concept of the strategy.   Apart from ideally gaining significant percentual  returns from this cycle’s mark-up alone,   the plan is to simultaneously play the strength  of Bitcoin and Ethereum against each other, to   exploit their internal technical price relations.  But not only that. We also look to utilize some,   practically speaking, leveraged spice to the mix.  This is done via a Bitcoin mining company that is  

listed on the US Nasdaq index. And its individual  position size will in turn alter as we go. Let’s get into the juicy details. The  meat and flesh of this fat ass kobe steak. When looking at the Ethereum/Bitcoin chart we  can detect how strong Ethereum is technically   in relation to Bitcoin. By closely  examining this chart we can tell   when to scale into Ethereum and decrease  our Bitcoin position, and vice versa.

Starting off on a cyclical level, what’s  particularly amazing and what truly caught   my attention in the first place is how volatile  yet transparent the strength relation between   Bitcoin and Ethereum really is. We’re not  talking normal 5-15 percent swings here   like any fiat currency pair. We’re talking  volatility that would make a dare devil   stuntman feel nauseous and resort  to a paper-turning desk job.

Throughout the first half of 2017 Ethereum  outperformed Bitcoin by 2 300 percent,   or 24x at most. This means that IF – again this  forbidden word – you were to have scaled entirely   into Ethereum at that point you would have had 24  times as much money than if you were to have just   stuck with your Bitcoin position. Of course, this  is highly theoretical. My point here is not the   missed out gain itself, but the immense mark-up  potentials. For reversely, from its peak to its  

very bottom, Ethereum in turn lost 90 percent of  its value. What I want to stress is how obvious   it is that Ethereum flourishes during mark-ups,  and how it got absolutely slaughtered during the   mark-down. And given that we’re now in yet another  technically confirmed market cycle mark-up we have   reason to expect another outperformance, hence  making a primarily Ethereum-based portfolio the   way to go. This thesis can be further confirmed  technically by the higher lows and higher highs.   For as it seems, this chart shows that Ethereum  may very well lag the movements of Bitcoin as   their internal relationship show that Ethereum in  relation to Bitcoin has literally just left its   accumulation phase. For look here, it’s literally  re-testing the two-year long accumulation  

phase as support from above. And on top of that,  this entire unfolding is also confirmed by the   significant trading volumes which are textbook  typical for any sustainable accumulational   breakout. And given that this accumulational  support holds up, Ethereum may very well be on its   way of forming a cup formation to further support  a strengthen position compared to that of Bitcoin.   This final leg of the cup would  amount to its technical mark-up.

This late 2019/early 2020 double bottom amounted  to a significant high return/low risk opportunity   to scale heavily into Ethereum. So too  did we get another grand opportunity in   late December 2020 as we not only made a  perfect close on the horizontal support line,   but also made a clear lower bullish  red touch on the weekly RSI.   And since then, Ethereum has gained roughly 40% in  value compared to Bitcoin. This means that if you   had 3 000 euros invested in Bitcoin and Bitcoin  went up by 100%, for a total of 6 000 euros,   then Ethereum would have generated 4 200 euros  for a total portfolio of 7 200 euros. And this is   EXACTLY what I’m looking to exploit. Not only  to maximize run-up profits, but to also soften  

any correctional blows as one may suffer more  severely than the other. The beautiful part   about this approach is that we’ll only need to  use the weekly chart for a birds eye perspective.   Any scaling in or scaling out from Bitcoin to  Ethereum will be infrequent, yet statistically   very effective. And as mentioned at the beginning,  any extra value that we can extract, especially   early on, will ultimately pay off exponentially as  both Bitcoin and Ethereum gain in mark-up values.

And if this is the case, that an Ethereum  versus Bitcoin mark-up is technically confirmed,   then primarily holding Ethereum is the superior  move for now. BUT! And here’s where things get   interesting. Despite being predominantly invested  in Ethereum at the moment, we also know that it’s   technically never a trouble-free ride from point  A to point B. Before eventually reaching the 0,080   resistance level, for example, we may expect  to face resistance at the 0,053 level first,   which we can swing in our favour by decreasing our  Ethereum position in favour for Bitcoin. And then   scale back to Ethereum again if or when Ethereum  were to find support at the 0,043 and 0,036 lines   respectively, for an added portfolio value of  20 and 30 percent. Now, for example, that we’re  

already precisely at this key support level which  constituted the accumulational resistance, would   be the ideal time to scale in some more Ethereum.  The only issue is that I’m grossly overweighted   in Ethereum already as the mid term technical  upside is much stronger than that of Bitcoin. There are several practical reasons why  Ethereum is more volatile than Bitcoin.  

Bitcoin having a 4,5 times  larger market cap is one of them.   For as we know, the bigger an underlying asset  or equity is, the more difficult it is to   scale and the slower its growth. This goes on to  prove why Bitcoin’s exponential growth gradually   decreases the bigger it gets, as discussed  in full in this Bitcoin Series episode. Ethereum is also said to be to Bitcoin what silver  is to gold. In this sense, and as we’ve already  

established, we do NOT want to own Ethereum  during the crypto distribution and mark-down   phases. For as we can see during the previous  such, Ethereum lost a whopping -94 percent   of its value at most whereas Bitcoin “only”  lost -84%. And do note that I use imaginary   quotation marks when saying "only". Equally,  from that of Ethereum’s early January 2018 peak   it went on to lose 90 percent of its value in  relation to Bitcoin. Looking at it this way,   shifting to Bitcoin at around this peak and  then shifting back to Ethereum again at this   technically beautiful accumulation phased  double bottom, you would have ten times as   many Ethereum today simply by swapping and  swapping back again at the right time. And  

this based on the weekly chart, which gives  you plenty of time to reach this conclusion. So, how then will we play this technically?  What exactly will we be looking at? Well,   first and foremost we’ll utilize naked price  action in combination with horizontal support and   resistance levels. These are the main event that  supply us with accurate information and probable   clues on where to expect strength reversals. As  we can see, there are three main lines at which   we have much historical price action at which the  price has greatly respected these very levels.  

The internal proportions between those lines  are 50% from the first to the second, +40% from   the second to the third, and just south of 50%  between the third support and resistance line   and the fourth. Practically speaking, this means  that anyone who owned Bitcoin in December 2019,   and who sold them for Ethereum would, by today,  have gained more than twice as much in actual   profits than if they were to have held their  Bitcoins. In this case we’re talking 14 times   your money instead of 7 times your money.  Of course, I’m not looking for a perfect   set-up here. But by reallocating chunks of  my holdings at any of these technical levels,   it should pay off well in the long run. We’re  talking the power of compounded gains here. The next technicals we’ll be looking at are  the good old RSI lines as they’re bloody   magical. And for those of you who haven’t  watched them already, do yourself a solid.  

For if you’re serious about your trading,  then this trilogy is absolutely mandatory!   So far alone they have generated two significant  signals. One upper bearish blue signal at which   swapping from Ethereum to Bitcoin would  have saved you no less than 80 percent!   And the second one is the recent one, the lower  bullish red line in late December last year,   which, as just stated, would have generated an  extra 50% in returns. However, to be critical,   neither of the lines are confirmed due to lack  of data. Especially not the upper bearish blue   line, although it is exactly in the  expected range for the weekly set-up.   The lower bullish red, on the other hand,  is another story as it is much more statical   at its 40 level. What this means is that the  upper bearish blue line in general is much more  

discretionary and prone to uniquely set levels,  whereas the lower bullish red rarely deviates from   its default 40 level. I rarely change that  line, neither on the daily nor the weekly. Thirdly we’ll be looking at the EMA ribbons on  the daily chart as they have plenty of significant   precedence, especially throughout mark-ups and  mark-downs. These are basically a compilation   of various moving averages, but we will only be  using them once or if there is a notable spread,   as in them being wide apart. For whenever they  contract they provide less support or resistance,  

and hence lose in significance. In this case,  we’re well into this ribbon spread and a bounce   up from this support level is key. If not, I will  be looking to scale heavily into Bitcoin instead. And finally, we’ll use the weekly Ichimoku as   it too has clear tendencies of  providing us with good reliability. These are the main Bitcoin and Ethereum  technicals we’ll be looking at this year.   For my intention is to NOT sell-off  anything at all during this mark-up.   I’ve done that mistake before, as mentioned  in the previous Bitcoin Series Episode. And I  

won’t do it again. There’s enough value to  be extracted from moving money internally   and that is precisely why this strategy  is dynamite. That brings us to our final   element: the leveraged sprint that will make  us look forward to mark-up corrections ...

Rather than “cashing in” and  “securing profits” on the way up,   unless we’re closing in on the technical  targets I will do nothing else but to   re-arrange my all-in position in accordance  to Bitcoin and Ethereum’s internal strength.   But, my strategy also has one more leg to rest  upon. And that is a leveraged position that in   turn will alter in size depending on when  and where in the mark-up phase it appears. Marathon Patent Group is an American Bitcoin  mining company that moves exponentially to   that of Bitcoin’s spot price. This has  to do with Bitcoin’s price affecting   the mining profit margins. Once Bitcoin  takes off, the profit margins run amok.  

The same applies in reverse whenever Bitcoin  enters a mark-down, as the profit margins   for mining are significantly decreased, or even  ruined altogether. That part comes down to various   factors such as electricity prices and so on,  and we won’t get any further into it than that.   The important thing is that, as it moves  exponentially to that of the Bitcoin spot price,   a mark-up can provide unparalleled  money making opportunities. Since early/mid April 2020 Bitcoin has  gone up by roughly 625 percent. Not bad.  

BUT! Over the same period of time Marathon  Patent Group has gone up by a staggering 10   000 percent! A hundred times your investment.  Hence in less than a year alone Marathon has   done a sprint and outperformed the Bitcoin  spot price by 16x. And given that the Bitcoin   mark-up has technically just begun, we may  safely expect Marathon to keep on sprinting.

But we can also see from the chart that this  company is no long-term buy-and-hold, but rather a   dangerous asset for laymen as the price is highly  cyclical. If we take a closer look at Marathon we   see that it correlates well to the Bitcoin spot  price, especially dating back from the 2017   peak after which it has pretty much mirrored  every move. And whilst Bitcoin itself went down   by roughly 84 percent at most, Marathon responded  by losing 99% of its value, which mathematically   means it lost roughly another 95% of its value  on top of those -84 spot percent. Put simply,   this is equivalent to losing 84% of your Bitcoin  dollar net worth – and then losing another 95%   of whatever you were left with. This makes this  company incredibly high risk and dangerous to   anyone who doesn’t fully understand what they’re  doing. This further highlights the importance  

of knowledge that we discussed at length in the  previous Bitcoin Series episode. If you haven’t   watched it yet, I highly recommend you to do so.  For make no mistake: once this mark-up is over,   Marathon Patent Group will probably lose  99% of its company valuation all over again.   Or to appeal to a more senior audience, “You  gotta know when to hold’em, know when to   fold’em.” For any market-related knowledge gaps  within this stock will soon have you crushed. How then do we best approach such an asset? Well,   first of all it’s important to NOT hold  this one any longer than the mark-up lasts.   But even throughout its ride from the bottom  last year it tends to correct quite intensely.  

From early August to mid September last year  Bitcoin corrected by 20% before proceeding   higher. During this power amassing move,  which is perfectly healthy and normal,   Marathon in turn corrected by -72% at most. Don’t  forget that this here is a log scale, so any move,   even a significant one, may not come across  as fully as frightening as on a numeric scale. But on the contrary, assuming technically that  this mark-up were to continue that means we’re   likely in for a few spot corrections of -15 to  -40 percent, just like in any historical Bitcoin   related mark-up. In this sense, I will always  hold some Marathon stocks, a minimum of 5% or so.   But as they rise in price I will gradually sell  it off in increments. These sell-offs will mainly  

be based on Bitcoin’s statistically expected moves  between its corrections. And once Bitcoin corrects   and Marathon dumps disproportionately much, I  will buy them back again at hefty rebates. In this   sense, my plan is to always hold somewhere between  5% and 15% depending on where in the mark-up cycle   we are. As in how recent a correction has been.  The more recent, the higher my Marathon allotment. This in turn will be based on statistical  estimates. During most of the 2017 mark-up,   for example, Bitcoin rallied by 240, 180 and  165 percent respectively just to finish it all   off with a 250 percent blow-off top. And as we  can see, each time Bitcoin in turn corrected by   -40, -40 and -30 percent. I won’t count that -70  percent price decline that followed the parabolic  

wave 5 as it wasn’t a correction but a confirmed  distribution that preceded the mark-down. My plan here is quite straight-forward. Once  we have somewhat distinguished this mark-up’s   percentual moves between its corrections – as in  roughly in the ball park – I will sell it off in   increments and replace the freed money into either  Ethereum or Bitcoin, whichever is the technically   strongest at the time. Once Bitcoin corrects, and  Marathon corrects with the use of a megaphone,   I’ll release the some Bitcoin or Ethereum,  again depending on whichever is the weakest,   and shuffle into some nicely garage  sale Marathon correction prices. When it comes to Marathon and my positioning  and re-positioning, it will have little or   nothing at all to do about Marathon’s individual  technicals, but rather about buying whenever   Bitcoin corrects, and selling whenever Bitcoin  statistically closes in on the next correction.   The thing I like the most about this strategy  is that it makes me look forward to temporary   mark-up corrections as I will then be able  to re-enter this heavily leveraged baby at a   decreased risk after having already sold most of  it off and secured profits between corrections.

As you can tell, being all-in is not at  all about sitting on my hands. For I will   sure be active in moving my money around  in 2021. Having said that I will look into   other leveraged Bitcoin options and may  eventually decide to spread those 5-15%   risks into more Bitcoin-related  equities than just Marathon alone. And if you have any suggestions, please  let me know in the comment section below.  

All advice is greatly appreciated. That was all for now. Thank you and goodbye.

2021-02-22 05:37

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