Episode Details

Good morning to you,

I am going to be sending out two pieces in fairly quick succession: first, today’s, some commentary on the latest bitcoin price action, and then another, tomorrow hopefully, about gold mining.

It looks like bitcoin (currently $67,000, down from highs of $73,500) is now “enjoying” a correction. 

Microstrategy (NDX:MSTR) has 5xd, since we covered it in the summer, and some profit-taking is inevitable. 

My own strategy though is to HODL. I don’t think this is the end of the cycle. Longer term I think bitcoin goes higher, even if it is short-term overbought and over-heated. I know of no strategy that has consistently beaten HODL, so that is what I am going to continue to do

There is an expression you will have heard me use from time to time: “from false moves come fast moves in the opposite direction”. Sometimes you will see a move above an old high, a “false breakout”, before a market reverses. At the moment the breakout above the old high to $73,500 then the reversal looks like it could be one of those. It may do that. It may not. You never know. But the risk with bitcoin is not having a position.

My preferred interpretation is: “ongoing correction in a bull market”.

But these are the kind of doubts that haunt you when climbing the wall of worry. There is nothing a bull market likes to do more than throw you off. Hence HODL.

It has been said before, but I say it again: were you to sell your bitcoins for pounds dollars or euros, you would effectively be swapping a technologically superior form of money for one that is technologically inferior. When looked at in these terms, selling bitcoin for fiat makes little sense. When bull markets come along you always kick yourself for not owning enough bitcoin, so, again, HODL.

I met a city friend of mine at a drinks party last night and he was telling me how many institutions are buying $200,000 btc September call options: that means some traders in institutions are, in effect, making leveraged bets that bitcoin will be $200,000 in 6 months time. 

Buying such high risk, out-of-the-money calls could be seen as symptomatic of excess bullish sentiment. It signals irrational exuberance. It signals catch-up trade - trying to make up the money you missed out by not being positioned sooner. But that institutional money, with all the information it has about order-flows and all the rest of it, is making such bets is also a bullish sign. 

I, for one, hope those call options come good.

Altcoin Season is Upon Us - or It Was

Finally, another anecdote from earlier in the week, which shows just how hot things were getting, this one about altcoin season. Fortunes, sometimes life-changing fortunes, get made and lost, though mostly lost, in altcoin season. It was upon us. 

My son’s mate from uni, age 23, is now a trader. On Tuesday he was bragging on their Snapchat about a win he just had. LocalAI - I have no idea what that is - began trading on Monday. On Tuesday it was up over 17,000%. You read that right. On a Tuesday.

I took a look at it on Wednesday. It had just fallen over 60%.

The following day it nearly tripled, before falling 50% again. 

Nuts!

How to navigate it all? It’s a ful