Seeing an uptick in FUD thanks to a ~20% drawdown that was previously covered this weekend by Weston already. Thought a little pep talk about the real risks and rewards was in order as well as an affirmation that everyone needs to be their own risk manager before they get deep into the trade.
Folks, you need to realize that the same reasons you are in this asset for on April 14th haven't changed over the weekend because of any event, much less Japanese retail getting cold feet suddenly. Stop looking for reasons for things to occur and start realizing that a 20% flash crash is par for the course when looking at an asset that appreciates over 100% in a quarter. You can do all the prep work, and something completely unrelated takes you out at the knees. That's life.
Humans are trading this, and have real gains on the line. Someone is going to decide to take profits and run eventually. You need to understand where you are and what your risk is.
You need to understand your risk before you go into a trade, or else people are GOING to scare your ass out of the trade. You need to take ownership of why you are in a trade, properly size it so that you can sleep at night, and do your own risk management. If you are uncomfortable with being in an asset that Mike Green says is going to zero, then you shouldn't be listening to Raoul to be irresponsibly long until you decide for yourself who is right and who is wrong.
Take around this time 2017 for example:
In 2017, we lost both the 50-day and 100-day moving averages around March of that year. Everyone was bullish in Feb, and crying in March, and by the end of April, it wasn't clear which direction we were going. But they recovered the 50-Day and the 100-Day, the dip was bought, and on we went.
That was then, and this is now. One market in the past on the same asset has nothing to do with the other. You need to understand that this is exactly what the asset does and be prepared for it. No one hands you a potential 10x upside with no risk. They are going to try to take it from you. You need to understand why YOU are in the trade and live with the potential downside.
2021 by comparison:
So far, they are threatening the 50-day, but the story isn't finished yet. See where the 200-day moving average is? Back at 33K. You need to understand that your risk is that wide, and plan accordingly. This thing has been bought faster than in 2017 when you look at the disparity in upward slope and moving averages.
Past performance is not indicative of future results. But you need to understand what you are getting into and not freak out with random FUD articles every time a bump in the road is hit. I slept like a baby last night with my ~15-20% correction. I'd love to wake up to $80k, but I knew I could wake up any day and see $30-45k and realize that I left money on the table and that I have to consider that the top might be in. Wake me up when we go below $30k and I'll have some real regret, but I know that going in and my eyes are open. Yours need to be as well. Don't do the risk management AFTER the risk is realized.
THIS is what a drawdown looks like in Bitcoin:
If someone figures out how to do a double spend, we will wake up tomorrow and owe Mike Green an apology for ever doubting him. At some point in the next 24 months, our current chart will look like the above chart in 2018 no matter what happens in Bitcoin and the crypto space. At some point, it will overheat and need to come back in line with the trend. All things I believe wholeheartedly.
Not all of us will get out at the right time, and we need to understand that. That is investing, there are no guarantees. Some of you reading this are going to lose money, maybe even me. At a minimum, you aren't getting out at the top. Forget it. You probably aren't that good and won't time it perfectly. Manage the risk to your own tolerance on an ongoing basis.
Remember though that some power outages in China, Japanese retail getting skittish, or a series of nation-states you can't even find on a map banning Bitcoin are not going to change the dynamics of how an entire asset class performs overnight. Bitcoin market cap represents the growth of new technologies right now.
Relax with the FUD, and do your homework before you get in too deep. FOMO is how 99% of people lose money. They jump before they look because someone else told them what to think about something and they themselves didn't do the work. There is no room for regret here, the market will sense that weakness and take it from you in a heartbeat.
Know the risks so that you can sleep at night, and live with the consequences. This is the most competitive intellectual game in the world, and everyone is playing against everyone else.
Pep talk over. Now you know, and knowing is half the battle according to 1980's GI Joe cartoons.