Transcription
Hello everyone. So on Tuesday, I was releasing a video. On Tuesday evening, we were around $113,700 just 2 days ago, and I was explaining my position a bit, my view on risk management, and the fact that, in my opinion, it was a good time to take profits. The market turned around some time later, and we came back to the $108,000 levels. So since then, we've had a consolidation, and it's important to revisit this point because it's a video that caused quite a reaction. Many of you commented on it, both positively and negatively. So I'm going to go back over it a bit because I get the impression that the basic notion of risk management is not very well understood by many.
Now, that doesn't necessarily surprise me that much because risk management is something quite complex to implement. Complex, not from a technical point of view, because very often you have the tools, and it's very easy to apply, but complicated from an emotional point of view because for many, investment boils down to convictions. So we're going to cover all of that in this video. I'm going to talk to you about my point of view on risk management, how to apply it to your different portfolios, how to apply it even if you don't have portfolios worth several hundred or several million dollars. How you can apply it daily in your strategy, and given the current market conditions, what is important to do? Is it important to protect ourselves? Do we not need to? And so on. So we're going to cover all of that in this video. I'll specify that this is my vision, my analysis. I've been in the markets for 8 years. I started during the 2017 bull run. So this is my 3rd bull run. Obviously, all the things I'm sharing here, I've acquired them over time, with experience. So it's normal that if you're just starting out, it might still be a bit blurry or a bit complex. That's also why we created our private investment circle, where we share all analyses as pedagogically as possible, just like we do on YouTube. But there, we will, of course, develop and put into practice the concepts we discuss in these YouTube videos more. So here, I'm talking about the big concepts, the big analyses, but in the investment circle, the goal is to derive a portfolio from this strategy, to see what altcoins we can put in our portfolio, when is the right time to sell them, is it the right time to buy, and so on. So we compare altcoins, we do overall reviews. So obviously, you have all the links in the description to join us. We are growing in number thanks to you, thanks to the fact that you value this channel, you leave good comments, you give likes, and so on. It's greatly appreciated. I really thank you. So, parenthesis closed, we can move on to all of that in this video.
So here we were at the time at $113,700. We had come to collect large chunks of liquidity, and obviously in short squeeze phases. The problem is that the market has an imbalance. You know that what drives a market up is the difference between supply and demand. I repeat it every time, but it's very important to understand. And when we have a short squeeze, we have a big imbalance. We have a lot of buyers because, in fact, it's short positions that are being liquidated. So we have a lot of buyers and, conversely, very few sellers. So the price explodes upwards, except that it rarely lasts long because when short positions eventually fade away due to liquidations, we return to an equilibrium level. And at that moment, when equilibrium is found, you have to be vigilant because we can have rapid reversals. Well, we had a typical one that occurred at the time during Donald Trump's trade tariffs. We had a big break here. Here, potential strategic reserve from Donald Trump. Boom, we strongly move upwards, we liquidate a maximum of longs, we go from $85,000 to $95,000 at the time in the space of 1 hour, 2 hours. You see that here, we consolidated, found our equilibrium between supply and demand, and at that moment, you have to be vigilant. And you see that it took only a few hours to return to the starting point, work on that starting point a bit, and then break to make a second bearish leg before making our real bottom a few days later. So, will it happen like that? I don't know. You know, my position in the markets is a quantitative position. That is to say, I have indicators that allow me to do active management. Active management as opposed to passive management. Passive management consists of buying, for example, Bitcoin through DCA without asking yourself what kind of investment you are making. Are you buying? Are you selling? Are you putting more DCA during this period or not? If you do that, it means you are doing active management. If you are watching this video, it's probably because you are doing active management. In any case, if you are doing passive management and watching this video, it's more for general knowledge because, in reality, you have no interest in looking at market conditions to invest. Someone who invested in the MSCI World, in the S&P 500 through DCA, doesn't care about market analyses. Are we on the verge of a crisis or not? It doesn't matter, they will invest the same amount every month.
So, if we are in active management, my postulate is that with active management, we are capable of beating the market. Not by trading, not by scalping, by trying to play short squeezes, reversals, and so on. Some succeed, it's not my specialty. My specialty is swing trading. So I position myself at the bottom of cycles, I play cycles in their entirety, and I adapt my position throughout the cycle with more or less exposure to play the upward phases by being maximally invested and protecting my capital during consolidation or medium-term or short-term downward phases. Okay? I leave the very short term to traders and scalpers. The very long term, I benefit from it globally, but obviously during phases of stagnation, I will protect my portfolio. This is precisely the subject of this video. Portfolio management and risk management. What is risk management? It's what consists of balancing your portfolio according to different market phases. Okay? When you have several scenarios in your head. So typically here, you will have two scenarios, let's say. Okay? So here, we are in a micro-range phase. Okay, let's switch to a shorter time scale. Let's go to 4 hours. So here, we are consolidating in a sort of micro-range between this lower bound at $103,700, this upper bound between, well, here $113,700 or even $116,000, and we are moving within this movement. So we could even talk about a compression triangle. Okay. If we talk here with a small deviation just here, we could have something like this, boom, here something like this. Uh, well, after, you can take the wicks, the candle bodies. In reality, it doesn't matter much. What's important to understand is above all the price dynamic. Here, in this case, we are making higher lows and lower highs. So here, we are simply on a compression trend. And this, well, you can have a resolution that can be bullish or bearish. So you have two probable scenarios. You have the bearish scenario where you will identify your different price targets. So, well, the next obvious support level is here on the last low, here around $98,000. You have here the accumulation zone that took place at the end of April, so between $92,000 and $95,000. These are your main support levels. Above, you have resistances. You have the famous one at $116,000. You then have here a support zone between $123,000 and $126,000, and above that, you have nothing. So you have two scenarios. The bearish scenario that brings you to your support levels and the bullish scenario that brings you to your resistance levels. Risk management consists of weighting your different scenarios. This is where things get complicated, because your job will be to know if the bearish scenario is more probable than the bullish scenario. When you have a bearish scenario with, let's say, a 60% probability of occurring and a 40% probability of the bullish scenario occurring, you will simply say, "I'm taking 60% in stablecoins because I think we have a 60% chance of going lower, and therefore I'm weighting my portfolio by selling 40% of my assets." This allows me to be calm if there's a drop, but still have some crypto in case the bullish scenario happens. This allows you to play both scenarios but limit your risk because by doing this with your portfolio, you will be able to take advantage of different movements. If there's a cascade of liquidations, you'll have liquidity to buy back. If it goes up, you'll have benefited from that rise.
Obviously, when we are at a level where, for example, at this moment or at this moment, we had negative funding rates, we were in fear, we were at a support level, and whales were buying. Well, the rebound scenario was around 90% to 95%. Okay? At that moment, you can say, "I'm staying 95% invested in crypto and only 5% of my portfolio in altcoins because the most probable scenario is the upward one." So I'm staying invested in crypto, full crypto. Now, it depends on your risk management. Some will say, "If I consider there's more than 80% chance of going up, I'll stay 100% invested in crypto." You shouldn't necessarily say, "The bullish scenario is 95%, so I'll stay at 95%." Some will have a more defensive risk profile. So if there's uncertainty of more than 30%, they will reduce their exposure by more than 60%. This depends a bit on your strategy, which is why I can't answer for you. But a good starting point can be to weight the scenarios and your market exposure based on your scenarios. So here, well, when we are at this point, the question that arises is, are we more in a scenario with a potential for a greater drop than a rise? Well, we're going to try to discuss that in this video.
So, you know that on BlackRock's portfolio, which I often look at, we're going to try to see if there's an imbalance between supply and demand. I remind you that upward and downward movements are only the result of supply being greater than demand or vice versa. If I have a lot of people looking to buy and a limited number of people selling, the price goes up. Conversely, if I have a lot of people selling and a limited number of buyers, my price will go down. So here, what I'm trying to find out is, do I have a lot of buyers at these levels? Do I have a lot of buyers, and what is the quality of these buyers? Because obviously, if my buyers are mostly small portfolios, it's going to bother me a bit because small portfolios tend to get taken advantage of, to be poorly positioned, and conversely, I always prefer to be positioned with large portfolios, with whales. So, this is what my strategy is essentially based on. Understanding whale movements, following them, analyzing them, tracing them. Thanks to the blockchain, we can precisely follow whale movements. Well, let's take advantage of that to position ourselves like them. I always prefer to be on the side of the one who has 100 billion in their portfolio because they have much more to lose than the one who has €1,500 in their portfolio.
Okay, so here, we're going to try to look at the different financial inflows that are possible in these market phases. Here, we have a potential financial inflow coming from traditional finance, which represents Bitcoin ETFs. So ETFs, which have existed for about a year and a half, almost two years, have accustomed us to phases of stagnation, rises, stagnation, rises. Currently, we are in a stagnation phase, meaning that here, we had a big rise phase at the beginning of October, but you see that it has slowed down. This is exactly why, in my videos, you've sensed a slight shift from euphoria, let's say, even though I'm never really euphoric, but at least from the moment when we could think the price would go higher, that we would reach $150,000, $180,000, $200,000, well, little by little, the indicators have turned, so it's completely normal to adjust your strategy. Okay? Those who remain stuck, regardless of the indicators, are those who close their eyes just before a precipice. Okay? You shouldn't be blind; you must be able to change direction according to the indicators.
Now, indeed, for many, it's very frustrating, and I understand that, when you are fully invested and you've lost a bit on movements here where some have lost 30% to 40% of their portfolio. Well, obviously, when you've lost 30% to 40% of your portfolio, you're a bit frustrated, and you just want the bullish scenario to happen with a bull run, to take profits, and so on. But wanting that doesn't mean you should bury your head in the sand and flip a coin on whether it's 50/50 between my bullish and bearish scenario, but I'll stay 100% invested. You understand that this is completely illogical, okay? If you have the slightest doubt, you must adjust your portfolio according to that doubt. This is the basis of risk management, as we just discussed.
Here, you see that the inflows from traditional finance have just dried up. Now, what's happening on-chain, meaning people who are not in traditional trading, okay? Coinbase wallets, Ledgers, and so on. Well, what are they doing? Here, I've displayed the famous chart that caused quite a stir in my video on Tuesday. Here, you have the movements of three cohorts, three significant cohorts. Here is the cohort of portfolios between 100 and 1,000 Bitcoins. Here, whales between 1,000 and 10,000 Bitcoins. And here, mega whales above 10,000 Bitcoins. Here, between 100 and 1,000 Bitcoins, you see that you have a lot of buying, a lot of buying in the current zones. You see that here in red, there's still a lot of buying. Now, it's starting to decrease. If I show you here, boom, let's zoom out a bit. You see that here, since around October 11th, which was the crash period, well, it has calmed down. Okay, it has calmed down. That is to say, there are no more massive purchases, but the positions are being held. Okay, there are no sales either, or at least few sales. We're talking about, we had 213,000 Bitcoins, and we're going to 186,000. Well, you'll tell me 30,000 Bitcoins is still a lot, but it's not enormous either. The problem is that whales and mega whales are still selling. And this is a big problem because here we have a downward pressure that is amplified by the large portfolios, by the very large portfolios in the crypto sphere. And you see that unfortunately, the WH portfolios, those I watch the most because their behavior is the most revealing of real market movements. When they sell, it's when we have local tops. That was the case here. Well, for now, it's a bit the case. That was the case here. That was the case precisely during the big distribution phase during the 2021 period. That was the case just here during the stagnation phase. In short, at these times, you have to remain measured because it's a major indicator of weakness. Again, supply and demand. Here, well, I have a lot of supply, and I have a limited amount of demand because I don't have new buyers on the ETFs. I don't have new buyers on the other cohorts except this one. Now, indeed, I have buyers on the 100 to 1,000 Bitcoin side, but these are more retail-type buyers.
Now, for many, it's a bit strange to say this because these are portfolios between 100 and 1,000 Bitcoins, which own between $100 million and $100 million. Well, for many, it's true that it's quite disorienting to see portfolios between $100 million and $100 million doing such nonsense. Indeed, but in any case, experience proves that they are rather poorly positioned, so we don't really want to position ourselves with them, especially since currently, this source is drying up. That is to say, even this source, which for the moment had driven the fact that we had equilibrium because we haven't really dropped much in Bitcoin price, and this is simply because we had an equilibrium between these portfolios here in red that were buying strongly and the orange and yellow portfolios that were selling strongly. But so we had an equilibrium. The problem is that if now I have no more ETF purchases, no more whale purchases between, well, sharks between 100 and 1,000 Bitcoins, then it's starting to become a problem. It's starting to become a problem because I risk having an imbalance between supply and demand again, but this time not in the right direction, meaning more supply than demand, and therefore the price drops.
Let's continue a bit on funding rates. Funding rates allow us to look at the market sentiment on derivative contracts. Currently, market sentiment is returning to positivity. You see here, we are in the green, and funding rates are increasing day by day. That is to say, here on this bottom, okay, on this consolidation zone, and on the levels between $107,500 and $109,500, here funding rates are rising, and overall sentiment is becoming increasingly positive. This is a big obstacle. This is a very big obstacle because, well, let's not fool ourselves. The crowd is always wrong. It's the small portfolios that are always left behind. And when small portfolios tend to be too euphoric, you see, it was the case here. Too euphoric, too euphoric, too euphoric here. Well, they get punished every time. And it's precisely when we have reversals in market sentiment that we manage to set bottoms. Here, you see, we accumulate days in the negative, boom, we set a bottom. Here, that was the case. Here, that was the case. That was the case precisely here. It made us set a small bottom. We stagnated. And then you see that, for example, here, the market sentiment during this consolidation, funding rates increased, and well, that sent us much lower. Okay? So I'm not saying that's what will happen, I'm just saying it's another element of caution. Okay? You have to understand that this should be a balance for you. Okay? You should say, this is rather negative, this is rather negative, this is rather negative. You have other things that are positive. For example, here, interest rate cuts. We have an interest rate cut scheduled for next week. Now, I don't think the rate cut will have incredible effects on the market because it's priced in. You have a 96.7% probability of a rate cut, so we will have a rate cut. So, market participants are already prepared for this rate cut, which means nothing will happen. But it's positive in the medium term to have such a sustained pace of rate cuts. What I said a week ago, what I said a month ago regarding the long term, hasn't changed. Okay? For now, there are no macroeconomic news that causes a shift in what is planned for the medium term. The medium term remains good, even very good. We have a potential influx of liquidity thanks to this rate cut. We have fragilities on the side of regional banks, which means the Fed will probably have to end its QT and even launch a phase of quantitative easing, guaranteed loans by the Federal Reserve, and so on. So this is very positive. A lot of liquidity means a rise in the prices of risky assets, and therefore crypto, and therefore altcoins. Okay? And this is even what will determine the rise of altcoins in general, because well, all low-cap assets are the ones that benefit the most from an influx of liquidity and suffer the most from a withdrawal of this liquidity. That's why altcoins have underperformed the market for so long because we've had a massive withdrawal of liquidity. Well, this remains positive in the medium term. Inflation remains stable. You see that we have a slight trend to go up again. It remains quite low, quite measured. Well, for now, there's no real alert on this front. We'll keep an eye on it, but for now, there's no alert. And this, well, this will play into your balance. And precisely, this balance will allow you to weight the famous two scenarios. Is it more bearish? Is it more bullish? If you have too many indicators suggesting it's bearish, well, at that point, you will adjust your portfolio accordingly. Okay? This is precisely what I do in the investment circle. This is what I do. I weight the scenarios, I explain how I weighted these scenarios, and I invite our members to understand this analysis to explain what I do personally. Okay? I am totally transparent. If you win, I win. If you lose, I lose. If you decide to follow me, which is not mandatory at all, you will get a more technical and quantitative analysis. Quantitative in the sense that you have numerical indicators every time.
Here, you look at the whale SOP, which is whale profit-taking. So here, you see that at this moment, when we have peaks, it's generally a bad sign. These are moments when whales take profits. And well, when they take profits, the problem is that it's generally to exit the market, and that's not a very good sign. Okay? Here, you see that this chart is rising. Okay? This chart is rising, and historically, when this chart rises and we have small spikes, it's not a good sign. It's more a time conducive to reversals. If I show you CryptoQuant here, you look on Binance at how much whales are bringing their crypto from Ledgers to Binance. And you see here that when this blue line rises sharply, these are phases where whales are sending their Bitcoin to Binance. And you can imagine that when Bitcoin leaves a Ledger to go to Binance, it's not to be stored, okay? It's to be sold. It's for a transaction. That's why we follow exchange flows, okay? Whether it's Bitcoin or USDT. Typically, when someone brings a billion USDT to Binance, it's not to store it, it's to buy things with it. That's why USDT or USDC inflows are rather positive for the market, and BTC inflows are rather negative. You see that you don't necessarily need a multitude of degrees to understand this. You see that here, at this moment, when we had massive inflows, it marked phases of local tops here, here, here, here. And here, you see that we are in a big phase where we have massive inflows. Again, this should lead you to be cautious.
Anyone who tells me they have no doubt, frankly, I can't believe it. Or they are truly in denial. Someone who can tell me, "I am 100% invested in crypto in my portfolio because I think everything I've just said about ETFs, whales, whale profit-taking here, well, just here, yes, that's something else. I'll show you some interesting things right after. And here, whales, and tells me despite all that, I think the bearish scenario has a 0% probability of occurring. I don't understand that. Okay. So my strategy is to win. And you know that Warren Buffett said something: to win, you must above all not lose. So you shouldn't bury your head in the sand and lose capital foolishly on bearish phases that could have been anticipated. Things that couldn't be anticipated, like Friday's crash, well, we suffer it and deal with it. Things that can be anticipated, frankly, not doing so is really a shame.
So, we'll continue with the Fear and Greed Index. This is rather positive. Having a Fear and Greed Index around 25, okay, 25% well, this is positive because we are in fear, and well, we have a somewhat peculiar sentiment, meaning we are in fear, but funding rates are increasing. And this is something quite peculiar, we have it here. Funding rates are increasing while funding rates on derivative contracts are increasing, while the Fear and Greed Index is still at 25. Now, this is yesterday's update. I think today it's at 27 or 29. They haven't updated it yet. You can go look, but it's at 27 or 29. In any case, we are still very low in terms of overall fear sentiment, but we have a sort of revenge trading where people who have lost a lot are trying to reposition themselves and make that famous trade that will make them a lot of money. And this is what we find quite regularly just before capitulation phases, unfortunately, because in fact, we have people who are in fear, certainly, but on derivative contracts and in their actions, they are rather waiting on spot and on derivative contracts, rather trying to get revenge and catch the bottom. This is generally a bad sign. So, on the other hand, being in a state of fear is globally a good sign. You see, I don't need to draw you a picture. When we were in fear, it always translated into bottoms. Well, except in phases where we are precisely in sorts of market reversals like here in a bear market, or here it wasn't a bear market, just here you see we stayed in fear at 11, 23, 12, and so on, and we went, we were in fear at 27% at $43,000, and we still went to find $29,700. Okay? So there was a long phase of fear which was actually linked to a long phase of distribution, and then we had to set a bottom to move forward. So saying that fear is systematically a sign of rebound is systematically a sign of rebound when we have retail fear mixed with financial inflow from whales. This is what I explained here. This is what I explained here. So you see here, unfortunately, this is positive, but on its own, it cannot be the only thing you take into account.
On the social level, we still have nothing. The Bitcoin Wikipedia page is still not viewed. The main influencers on YouTube are not getting views or subscribers. So there are no new financial inflows. Still in the logic of supply versus demand. Here, I'm trying to see if I'm going to have a lot of demand, and unfortunately, from retail, there isn't much demand. So, it's not from there that the salvation of Bitcoin will come.
Regarding liquidity, well, you see that Bitcoin is having fun coming to gorge itself on liquidity. It came to collect here, here, here, here, a large influx of liquidity. We left some above the price, but unfortunately, you see that this translates into what you see here on funding rates, and well, you see here liquidations. Well, here we have a lot of liquidations just below the price. And so, this is not a good sign. It's not a good sign because it means there is liquidity to be collected down to $101,000. The probability of going there, well, you see that it's starting to increase because there are quite a few things weighing on the balance to go to that level. Here, well, we see it again in another form, so I won't dwell on it, but you see here the funding rates that are only increasing. Okay? Here, during this period, boom, during this period right here, a price that drops, funding rates that rise. Okay? Well, this is not a good sign. This is not a good sign. Okay. A stagnation of open interest. Well, a stagnation, a stagnation, but still a certain rise. So here, we are on Bybit, we have a stagnation. But if I show you here on the Binance contract, well, you see that funding rates continue to increase, and here we have had a significant increase in open interest. So this means that here we have people becoming euphoric and positioning themselves in the market. This means, are there many people positioning themselves? This means, are people more euphoric when it goes up or in fear when it goes down? Well, you see that it's increasing, and it's increasing, so it's not a very good sign.
Here we are at $109,500. I was talking here about a potential profit-taking. Now, well, here, for intellectual honesty, I said there was a high probability that we would reach $116,000. We didn't, and this is even more of a sign of doubt because here we were in a full short squeeze, so we had a big imbalance, a big capitulation phase, we were going straight up, there was a lot of liquidity above $116,000, and we didn't go to get it. So it's quite disconcerting. It means that here we found a huge selling counterparty that caused the price to reverse, even though we were in a full bullish phase. So this continues to lead us to be cautious.
I'm going to show you two or three weak signals that made me laugh. Jim Cramer. Jim Cramer, you know him, he's the influencer, the main influencer in the United States, so he appears on TV and so on. Well, he's not really an influencer, you understand me. He's a commentator on the equivalent of American BFM Business, who says it's time to buy Bitcoin, and so on. Well, you know that his success rate is close to 0% in crypto, and indeed in most assets. You have people who trade against him and make profits. When he says you should buy an asset, they sell it, and conversely, when he decides to sell an asset, it's time to buy. Well, here, unfortunately, he tells us to buy strongly. We have another black sign, our friend Eric Trump. Eric Trump, who says, "In my opinion, it's a great time to add ETH." Last time, Titan of Crypto shared this with us. The last time he told us this, well, the price of ETH dropped by about 48%. Well, another weak signal. In any case, it's still disconcerting to see that we have influencers, let's say, because now Eric Trump can be considered an influencer who, therefore, uses his notoriety to continue to send these kinds of messages to try to trap more retail investors.
We also have the big whale who had a long position on BTC and who, just now, a few hours ago, closed his trade to make a $5.7 million profit, and immediately opened a long position of about $32 million in short, so a short position, on the market, of about $32 million with a leverage of x18. Well, here, you see that you have whales on derivative contracts who are selling. You have the famous whale who made a maximum profit during the October 10th crash, who is also long for about $230 million, I believe, with a purchase price around $111,000, I believe. Yes, around here. Well, this is again, these are weak signals that allow us to say, be careful, be careful. This is to tell you that you need to adapt your portfolio to all these indicators.
So, I'll stop there for this video. For those who are a bit lost, who would like to adjust their portfolio but don't really know how to go about it, well, we develop that in our private investment circle. You can contact me via Telegram without any problem. I will reply. You can contact me for free to discuss with me and see if the circle might be suitable for you. And if you decide to take the plunge, you will obviously have many resources. You will have training in chart analysis and technical analysis, which will allow you to understand the market and be able to perform the analysis I just did, that is, to truly understand price action, the real price movements, to try to anticipate scenarios and then weight these scenarios to adapt your portfolio to the probability of these different scenarios occurring. Okay? So, I thank you for this video, I thank you for your support. Thank you to those who always leave comments. I see them and I thank you very much. Thank you, and I'll see you soon for another video.