Transcription
Hello everybody! Welcome to Bitcoin.Crypto. I'm Forest, total on X and Twitter, and today we're talking with Caesar, who I found on YouTube doing some technical analysis on MicroStrategy.
I want to dive into what technical analysis is. I know a lot of people think it's, you know, astrology for men, right? I've heard that. I want to get your take a little bit and your history of how you learned this, but your take on what TA is, what is useful for, kind of what are the limitations of it, and yeah, we'll just kind of get a full idea about technical analysis today, hopefully on this episode.
Thanks for having me on, Forest. It's an honor to be here. Thanks, man! This is like the second time I've ever done a podcast, so this is pretty cool.
Everybody hit the like button and subscribe to Forest, by the way.
But technical analysis, I find it funny every time someone asks, especially the way that you asked. When people are genuinely curious, they do bring up the astrology for men side of things, right? A lot of people, I don't know if it's surprising or not, but whenever I answer the question, I like to say, "No, you're basically right." It kind of is like astrology for men to a certain degree, or ladies if you're doing technical analysis.
But it's a little bit more concrete than that at times too, right? Because it is all psychology. To that extent, it kind of is like astrology, right? Because astrology, whether it exists, whether it's real or not real, I think everybody could at least agree that if people believe it's real, there's some kind of psychological effect that brings that into reality, right?
You know, people associate themselves with a Leo personality type or whatever. They might inherit or exhibit those kinds of personality traits. Same thing with the charts. If people are expecting something to perform a certain way based off of a pattern that's in the charts, based off of the price action, you know, whether it's real or not, if people believe it's real, then it might behave as though it were real.
So technical analysis is not perfect. It's not a crystal ball. You know, it's like being a weatherman before modern technology. Even now, even with modern technology, the weatherman gets it wrong sometimes. But back in the day, you know, it's like a flip of a coin. You can make all these predictions, all the science you want, and the weather just does what it wants because it's this natural thing. No one can control it, even if you have all the right tools to measure it.
That's comparing it that way because that's kind of how it is in essence with technical analysis. You can have all the—I love saying this, I actually say this all the time—you can do the most perfect technical analysis that's ever been done. You can have all the facts straight, every single thing in a row that makes sense for the price to go a certain direction, and it doesn't go that direction.
So it's not a crystal ball. It is a way to statistically back your predictions with historical references and historically referenced indicators too that have worked across other charts, you know, that you can apply to whatever chart. But it's not perfect.
And that's where with technical analysis, if that's your go-to choice of analyzing markets and determining when to get in or get out, whatever your choice is—whether it's technical analysis, fundamental analysis, quantum analysis, whatever kind of analysis you want to do—it's not about being right or wrong. It's not about how accurate this analysis is. It's really about you. At the end of the day, it's about your psychology. It's about your risk management practices that will enable you to be successful or not successful.
I say this all the time because people think that you get into technical analysis. Whenever I got into it, I thought the same thing: "Oh, I can just be perfect at predicting things and make a bunch of money. Oh, it sounds so easy." But you can be right nine out of ten times in a row with technical analysis, and you can lose money if you don't have good risk management. You can be wrong nine times out of ten and make money as long as you have good risk management.
So I like to set the floor with that, right? It is a means of predicting an outcome using statistics and historical probability to predict an outcome, but all of that's worthless if you don't have good risk management. If you're emotional and you're making emotionally charged decisions, none of it matters. So it starts with you more than it actually does on the charts.
Yeah, this is what I liked about your content. You were very clear about this. Let's be frank, the technical analysis scene is full of charlatans telling you, "Oh, look at these candlesticks, this pattern. When this happens, do this," like blah blah blah. But really, it's a way of looking because the charts are a reflection of sentiment, right? Of people buying and selling.
This is actually a representation of what's happening in the market. If you can see patterns—although, like, I'd love to get your perspective on this—but I'll just say before I ask the question that in my eyes, I use a little bit of technical analysis just for entries and exits occasionally. It's just to get a little bit more of an edge, right? It's to increase the odds, in my opinion. It's just to, because if you're looking at this in combination with other things, you might have a higher percentage of success—not a guaranteed percentage of success, but just a higher percentage. That's kind of what I look at it as a useful case for myself.
But I wanted to just get your opinion as well. You know, humans, we're kind of really wired. How much of this is just the ability to kind of make patterns up, you know, based on just visual information? I would kind of compare that question to the same question that psychologists have been asking for a while, which is the nature versus nurture kind of theory, right? What makes people tick? Is it nature versus nurture, right?
There's a lot of people who could argue it is all natural, it is all nurturing, or it's a bit of a mix of both, but there's a heavily debated topic. Same thing with charts: is it all psychology? Is it prophecy making? Or what's the term I'm trying to think of here? It's like self-induced prophecy. There's a better term for it, but I'm just going to call it that, I guess.
Self-fulfilling prophecy, that's what it is. Is it that, or is it the nature of the charts? Is it the nature of the patterns, the nature of the psychology? It's all kind of the same. Whatever stance you want to take on it, there's truths to both. If you ignore the truths to both, you're not going to see the truth as a whole, you know what I mean?
I liked what you said too, talking about how you use it as an edge. You use technical analysis as an edge. You use it in culmination with other things, and I think that's smart. I think any person who does technical analysis, if you think that's all you need to be able to successfully and accurately predict the markets, you're going to not be as accurate or successful as you could be if you use other metrics too.
Using technical analysis as an edge, using your own gut, and then also fundamental analysis, just seasonality, all kinds of things—you have to use it in culmination to make the best decisions for yourself to give you that edge, right? It's not just one thing; it's all of it working together.
So, to get back to your question, I would say my theory personally—and I would say it's a theory because I don't think anybody knows. There's no way to solidify this as a fact—but my theory is that technical analysis is largely self-fulfilling prophecies. I think it is, and I think it's because human beings, sorry, because human beings are pattern seekers. We do look for patterns in nature, in people, in all kinds of things, and that's just kind of the way of nature itself too.
That's not just—sorry, my daughter keeps yelling. That's just how it is. So I really do think that it is self-fulfilling prophecies, but there's also sense to be made out of it with the sense of structural standpoints too. You know, if you continue to find support at the same level, is that a self-fulfilling prophecy, or is that people analyzing the data saying, "Oh, there's not as much demand," or "There's too much demand down here, so the price can't go lower"?
You know, maybe it's time to send it up here and see if there's more demand or more selling pressure up there. There is price discovery and exploration, stuff like that, that just happens naturally too. But I guess, yeah, I don't know. I feel like that's probably how I would answer it. There's a bit of that natural and nurturing aspect to the charts. The nurturing aspect would be our self-fulfilling prophecy; the natural side would just be kind of the sensible price resistance, price support, previous areas of support can become resistance, you know, that kind of stuff.
So it's a mix of both. I don't know if I answered that the best, but I tried.
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Yeah, so just a point there on the support and resistance. I find that kind of the most useful because it is like, you know, it's not just retail or traders or like YouTubers that are using technical analysis. Like, there's bots and there's institutional traders. If everybody—like that self-fulfilling prophecy you kind of talked about—it's like if everybody works off of these TA, this technical analysis, or not everybody, but you know, a large percentage of maybe the short-term holders, you know, which control the market before there's big kind of upswings or downswings in the macro, then people are going to be going off of this similar or same—I mean, everybody's got different time frames.
It's not perfect, of course, which again just goes back to the odds and percentages, but it is that self-fulfilling prophecy of like following the 50-day moving average and, you know, seeing a support line and then, "Okay, it's broken through the resistance. Now it's going to have a break up and then maybe taper down." Like, you know, we're kind of looking at the same metrics to some respect, and then that starts to feed on itself.
There are bots that are literally—like the emotional part is totally out of it, and they're just working on just basically algorithms, right? Those algorithms are set up on the very rules that we have established for technical analysis. So whether it's real or not real, the bots treat it as if it's real, and they trade based off of these metrics, like Fibonacci sequences, like, you know, parallel channels and resistance and support lines, stuff like that.
There's even market-driven events, like news events. You know, you can have trading. You can implement a lot of things with bots and algorithms and stuff like that, but they all learn it from us. So if it is fake, if it is self-fulfilling prophecy, it's still real because we implement that. Like you just said, everybody's looking at it the same way or using the same stuff.
But as far as analysis goes, you know, yeah, for sure. It's an interesting way to look at the markets. What initially got you interested in learning about TA? Because you're pretty proficient and knowledgeable from the videos that I've watched. So I'm just wondering, how did you get educated in this space?
I think I got educated the same way that most people who do technical analysis get educated. It's trial by fire, right? It's a lot of applied experience, right? Just time and time again trying to figure things out, getting burned most of the time, and then finding the things that work and trying to stick to them.
And then you're a human being, so you're emotional, and you don't stick to those things. So it's really repetition and experience to get you set into this systematic way of investing in things, right? Like, you can't be—even if you are emotional, you can't act on those emotions.
But what got me interested in it—I'm sorry, I'm going off on a whole different topic—what got me interested in technical analysis was the first time that I saw somebody on YouTube just, you know, just somebody on YouTube drawing a Fibonacci from the top to the bottom and showing me that Bitcoin literally topped at a relative low in the 2017-2018-2019 bear market. It was at a relative high; it found resistance at the 618, which was the golden ratio.
I just thought that was so cool because then I'm like, "What's the golden ratio?" Oh, this is the stuff that the Romans used, the Greeks used in their architecture. This is stuff that we've used, and we notice in our own societies, in our own psychologies. And beyond that, it's in nature. You can Google right now, "Does the Milky Way galaxy respect the Fibonacci sequence?" and it does, right? The distance between the spirals in the galaxy, you know, like it's just something that we see in nature and we see it in ourselves and in psychology.
I just thought that was so cool. I'm kind of a hippie at heart, you know? I live in Colorado. I don't know how much I believe in various different things, but it was at least evident enough that there was something real to this that interested me.
Just like anybody who wants to learn technical analysis, once that door is open for you, once you see it for the kind of like genie in the bottle that it seems to be, you don't really go back. You just kind of dive headfirst into this stuff. I was basically watching YouTube channels, YouTube videos from various people who did technical analysis. I was looking up everything that I could online. I bought books.
You know, I didn't have a mentor who could physically teach me. There was one person who was more involved in stocks than crypto, so we just didn't really get along because I'm a big crypto guy. I like stocks too, but he couldn't get past the crypto thing, so I felt like that was why he didn't want to go forward. But his analysis is kind of different than mine anyway.
But essentially, applied experience, right? Just like trial by fire is how I came into learning technical analysis. I wasn't successful. I definitely—I shouldn't say that, right? My TA—and this is going back to what I said in the beginning—my TA was successful, and that's what kept me going. I would get these sprees where I would be 20 trades in a row correct, making money, right? Like having a great time.
But I had horrible risk management. I did those 20 trades in a row. I made money with every single one of them, and I made 20 trades winning in a row, and then that one trade cleaned it all out, you know what I mean? If you're doing that, if you're making—dude, if you're like up three trades in a row, there's no reason why you should lose all of that with one loss, you know what I mean? You should have some kind—let alone 20 or 10 or any kind of something significant like that.
So, you know, again, you think it's like this genie in a bottle, but it's a lot more, a lot less friendly than that. Or maybe it's just—I don't know how to explain it. You've got to respect it more, and you've got to honor your analysis. You have to stick to it. You can't go off of your emotional decisions.
The people who do good TA but they're still losing money, they have poor risk management because they're going off their emotional decisions. So it taught me a lot about myself too. Technical analysis, this whole journey taught me a lot about contrarianism. I look at the media differently, you know what I mean?
As an adult now versus whenever I started, you might look at the media for sources of information, and even now, obviously, you still do. But this idea with contrarianism came up to me, and I learned this all through my journey on technical analysis. It's just that you don't know what the truth is. Like with the mainstream media, you never know what the truth is.
But you know what the lie is. Whatever the story is that everybody just seems to buy into or believe, whatever is being promoted on the mainstream media, you can kind of assume that that's probably not what's going to happen or that that's not the truth.
I don't know. People were talking about World War III or like nuclear war back in COVID times, right? They were talking about all that. And the media, I just remember, was painting Vladimir Putin as this deranged egomaniac with a finger on a nuclear button. I'm not trying to say he's a good guy or a bad guy. I'm not trying to take that stance; that's not what I'm making. I'm just saying that was the stance of the media.
So I automatically thought in my head, "Well, it's probably not as big of a deal as they're making it out to be. This is for engagement. This is for fear. This is not to help us. It's not to tell us the truth. It's to tell us information, but it's not to help us."
So I went off on a whole tangent there, I'm sorry. But basically, that line of thinking is very helpful whenever it comes to doing technical analysis or any kind of market analysis because what people hear in the media, what the truth—the accepted truth is, if you can understand what that is, then you'll know what the lie is. You'll know what everybody's expectations are.
If we're at all-time highs, we've been moving up three months in a row, and everybody's talking about Bitcoin seeing a 2X in a week or two weeks, you know, that's how you know, "Okay, maybe it's time to pull back." When we're down at the lows like we're at now and everybody's talking about a bearish head and shoulders pattern and we're going to go below 70K, the bull market's over, when you're hearing those kinds of discussions only at the bottoms, not at the tops, that's how you know you're at the bottom.
You know, it's the same kind of thing. But I don't feel like I just went off on a whole tangent rant there. I didn't mean to, but no, there's lots of good stuff there. And I think you're right about the contrarian kind of positioning. It ends up working quite well a lot of the times.
I mean, a good example of that, of course, is the inverse Kramer, right? And Kramer is kind of, you know, Jim Kramer's famous for making bad calls. I'm that guy. I'm that guy sometimes, you know? It happens.
It does, yeah. Oh yeah, of course. But there's this kind of thing about trading, and like technical analysis kind of goes hand in hand with trading, I would say. Like, you know, for instance, a good long, a good trade, or a good investment, I guess, is just buy Bitcoin, hold long term, right? You never have to look at a chart again; you're fine.
So technical analysis goes hand in hand with maybe swing trading, day trading, like shorter positions, I would say. And in that behavior, it's like that behavior is not well-suited to everyone. Like, you have to be very unemotional, or you actually have to be recognizing your own emotions, right?
Like when I see, you know, I'm holding my MicroStrategy, and like I'm seeing my position go down, and I'm just like, I'm that used to—or would have made me very emotional in the past—being like, "Oh, like worried, like should I sell?" And now I just—I actually don't even—I feel that, and I'm like, "Oh, now would be a good time to actually add to that," because I'm feeling that way, right?
So I have to like counter. I have to do the opposite of what would naturally be my emotion, and that's a pattern you recognize because you went through enough trial and error, trial by fire to figure out, "Wait, I've been through this before. This feels all too familiar. I'm not going to make this mistake again. I know what this is."
Yeah, exactly, exactly. So I think that that's kind of a problem with the TA space, especially on social media, is that it's almost pitched like everyone should do this. Everyone should know how to do this and use this, but it's kind of more like only fitting for people that can handle the emotions, is it not?
That's kind of how I see it. I see both sides of that, right? I hear what you're saying because it's like if anybody and everybody had access to a flamethrower, right? They didn't need it, but they just had access to it, there'd be a lot of fires tomorrow.
Everybody might want to invest in crypto, but if everybody has access to TA, that might start a financial fire for the majority of people, right? It might be a better-bad kind of scenario that plays out there.
But I do think if you're investing—because what you're talking about is mainly not people doing TA. If people—if everybody should do TA, if TA is right for everybody, I feel like that's not necessarily what I heard being asked. What I heard being asked was, "Should everybody trade?" or "Should everybody invest?"
There are people who are meant for short-term trading, and there are people who are meant for long-term trading. You said that TA wasn't applicable in that long-term stuff, but it is applicable mainly for significant entry points.
And then also, if you're at a recessionary period or some kind of market cycle ending event, if you have a basic understanding of TA, you can at least notice these and make decisions off of that—whether you want to buy more, whether you want to sell, whether you want to just wait to do either, right?
You don't have to be actively trading for TA to be useful. But yes, the style of trading, the style of investing that I think most people would be suitable for is not the day-to-day swing trading stuff. I don't think that if everybody—and that's where I hear it on x.com or on YouTube, everybody advertising TA like you should know it.
I think it is a tool. I think it is helpful, and I think if you're going to invest, I do think you should know it. I don't think if you're going to invest or just because you're deciding to invest or trade that you should be thinking you're a professional day trader or a professional swing trader or doing leverage trading, right?
Like leverage, if you're new to investing, to trading at all, if you've just heard of technical analysis and it's been like your first three years of that, understand you're going to lose money. Leverage trading is not a tool to help you; it's going to screw you up. It's going to help you learn the hard way, if anything, right?
And that's that kind of trading, that kind of TA, which would be applicable for leverage trading, I don't think that's meant for everybody. Like me, for example, I like to gamble, okay? I like to go to Vegas. I like gambling. I like sports betting. I like betting just for fun with my friends on just like random dumb things, you know what I mean?
Whenever it comes to crypto, I treat this like it's my life savings because it is. This is what I want to build my generational wealth upon. This is this foundation of crypto, if that's what it is, and that's how I'm treating it, and that's how I believe it to be in my heart.
I shouldn't be day trading this. I shouldn't be swing trading this. This is my life. Do you do that with your bank account? No, that just sounds crazy right there. So let alone throwing leverage into the mix.
As an individual getting into crypto, you have to ask yourself, "Are you investing or are you trading?" Technical analysis might be appropriate for either of those, right? But the way that you apply it or the way that you utilize it to make decisions in a short-term or long-term, that depends on how you're going about it.
And even if you are short-term trading, most of your stack should be held for the long term so that if you ever do mess up or if you're ever left vulnerable or some kind of wicked thing happens where every other exchange is going up, but on the one exchange you're using with low liquidity, there's a wicked crash down, you get cleaned out even though the rest of the market was going up. Sometimes that happens; people do stop hunts.
So don't put yourself at risk for those kinds of events. Even if you are day trading, you should have a large position in investing, right? And even if you are investing in the long-term cycle over cycle, technical analysis is a helpful tool to kind of identify when good buying points would be, when it might be a good time not necessarily to sell, but just maybe not to buy anymore.
It's a good time to just wait, maybe hold on to your money. That's valuable too, to know when to not get involved in the markets, let your money ride, and then also key points when you know financial catastrophe might be happening or that there's some kind of cycle-ending shift that's coming around.
You know, if you want to catch the big moves, even as a long-term investor, I think TA can help out with that. But then especially if you're not selling, if you're just buying and buying and buying, and that's your plan, perfect! You can still use TA to identify good places to buy so you're hopefully not buying the top the whole time.
Yeah, I think that's a really fair point. And it can even be summarized visually. If somebody looks at a one-minute chart zoomed out a little bit and then a one-year chart or like a one-month in a very liquid stock, it's like you could do technical analysis on either one of those, right?
So I think you're right. You can look at this depending on if you're a trader or an investor long-term. Like all these things, technical analysis could be a helpful tool. Again, just on that percentage, right? How likely is it that we're going to go above this huge resistance line, right?
Even if it's long-term or short-term, I think you're right about that. A couple of things you mentioned there I want to get into: risk management. You kind of alluded to position size being one of those risk management tools and leverage, or the lack thereof of leverage.
What would be some of the kind of things that people want to think about with risk management if they're wanting to trade or invest?
I think it all kind of starts with you, right? It all definitely starts with you when it comes to risk management. You as an individual have to understand that your risk tolerance is different than anybody else's, right? Maybe it's the same, but it's likely going to be unique to each individual.
With that, you have to ask yourself, "Am I short-term trading? Am I long-term trading?" Right? Like what's appropriate? If it is a short-term trade, no matter how accurate and successful of a trader you are, if you are doing short-term trades, you probably shouldn't use—like really, and it's different for everybody.
I know people that use over 80% of their whole portfolio to do big trades, and they do it at rare points. They make like eight trades a year, maybe even less than that, and they're successful, right? But it's different. It's totally different.
What they do is they're not trying to jump in and force opportunities. They literally wait until an opportunity is so obvious in their face, and then they keep waiting until it's even more obvious. It's like where you're going to buy the dip, but then the dip keeps dipping. They buy at that point, you know?
Or they want to sell the tip, but the tip keeps tipping. It takes a lot for those moments to happen. And I'm sorry, man, I'm getting off on a whole different tangent here.
To answer the question, it starts with you. What kind of investor, what kind of trader are you going to be? That is how you allocate appropriately the amount that you're going to invest. When it comes to risk management, if you're going to invest—if this is your life savings, if you're talking to yourself and you're like, "I'm going to invest this money," that's what I want to do, then your risk management should be basically as follows: 90% or more of your whole portfolio should be in things that you're not going to touch for like a year or longer.
Okay? If you're just getting into the crypto markets, obviously, if you hold for a year or longer, you might miss the bull cycle, right? We probably don't have a full year, or if we have a full year, maybe it's about a year left in the crypto cycle, is my thoughts. But probably a little bit less than that.
But still, if you're going to hold for—if you're investing, if you're actually setting out to invest, then 90% of your portfolio at least, if not 95% or more genuinely, or 99% even, should just all be buying that you don't touch. You just buy, you don't sell, you don't worry about if it drops 20%. Whatever, that's good risk management.
Okay? That's understanding yourself. I want to invest; I don't want to trade. I don't want to day trade. I just want to get in here and then hopefully get out months later, a year later, years, decades later, maybe never get out at all, right?
If that's you as a person, then what you're looking for is ideal areas to buy. Part of that risk management too is ideal areas to buy. You don't want to buy at an area that's at the top, right? Because then whenever it goes down, that adds some emotion to you.
I feel like that adds to the risk factor overall because if you're inexperienced, you could then sell at the low. Buying a high is just as risky, I think, as trying to buy—trying to short-term trade because it can induce a lot of emotions in you. You could also have an event that forces you to sell off as well, right?
Like you don't want to be a forced seller. Yes, exactly. And that's if you can avoid buying the tops, which don't we all wish we could do that? And I still buy the tops. I bought the top on a meme coin recently. I literally posted it on my Discord. I knew I bought the top too, but it happens. It happens, you know what I mean?
But part of that risk management is trying to get in at a good position. The best way to get into a good position, at least from my perspective, would be to have some kind of technical analysis, right? And then just be like those guys that I was talking about where they're waiting for opportunities. They're not actively—necessarily, they are searching for it, but they're not trying to make it happen. It's more like it has to happen for them.
It has to be so obvious. So don't try and force things, right? If you're getting into long-term positions, don't try to force things. Understand that you're trying to get into a long-term position. 90% to 95% or more of your portfolio should just be buying and not selling for a long term, right?
If you're in the shorter-term stuff, let's say mid-term stuff, you're trying to swing trade. Maybe you're trading month to month. Maybe you're trading a couple of times every couple of months or something like that. You know, your risk management, your portfolio allocation, it's different for everybody. Who am I to tell you what you could do?
But I would think then, you know, maybe you could do 20% to 30% of your portfolio that you want to trade. You should still have 70% to 80% that you don't touch, right, in these more kind of mid-term swings.
Okay? But 20% to 30%, you could probably mess with that. You know, there's nothing wrong with doing smaller than that. You could probably trade like 5% or less and still be fine if you're doing these short-term trades or not these short-term—sorry, these mid-term trades.
And then if you're doing very short-term trades—and again, who am I to say this? These are all just kind of things. This is how I would do it personally. It's not like there's a rule book for this. It's all dependent on the person.
But for me, if I was doing short-term trades, I was doing day trading, it would go back to this 90% to 95% invested in long-term stuff. Even if I was day trading only, I personally would probably only day trade if—and I don't day trade. I've given up day trading. I've given up leverage trading because it's just not for me.
There are some people who can leverage trade, right? But this is back to that question you were saying: is technical analysis applicable for everybody? Yes, it is. But day trading is not. I'm one of those people. I can make predictions every day. I can make accurate predictions every day. I can get 20 predictions right in a row.
But if I treat it like day trading, it's different than investing. For me, and like I said, I'm a gambler. I like to gamble. And when I gamble, I'm a little bit more risky. If I'm day trading stuff, knowing me, knowing myself, I can't day trade my portfolio. I can't day trade my life savings and be successful. You know, that's just not how it is for me.
I oftentimes lose money gambling, so I try to stay away from that. If that's you, then the short-term stuff probably shouldn't be something that you do. But if you want to do it, treat it like gambling because it is. Even if you are successful at it, there are successful gamblers, but they're still gambling.
If you're leverage trading, you're doing the short-term stuff, you're absolutely gambling. So 5% or less of your portfolio—I don't care if you have a thousand dollars to your name—5% or less. You want to leverage trade? You want to do short-term stuff? If you can, if you're successful with leverage trading, you could turn 5% into over 100% of your portfolio in no time if you're a successful trader.
So why risk more than that, right? And then what you would do, part of the risk management there, if you're a short-term trader, you would take your profits. You would take profits and build your trading account a little bit, right? It'd be like a third of the profits or less goes to that, a third goes to building your savings, right? Your big term, or maybe even two-sixths, whatever you want to put in there.
And then another third, you should take profits for yourself to use in your day-to-day life, pay your taxes, do that kind of stuff, set money aside, right? It should be like a job. If you're doing short-term trading, it should be like a job.
If you treat anything other than like a job, you're not going to be successful. You might be lucky; you might hit a hot streak, but then it comes to an end. The more that you practice, right? It's just—it's not necessarily the house always wins in this scenario. It's that you will lose to yourself, right? If you're not using proper risk management, you're going to make yourself lose. I don't know how to properly say that.
No, that's good. Yeah, for sure. In there, you mentioned again the kind of making 20 successful trades and maybe one not successful. When I think of that, I think about the importance of, you know, stop losses—not letting your losses ride. Is stop losses something you use or think about?
I think stop losses, just like anything in trading, can be a tool that's useful. It can be a tool that hurts you, right? Because stop hunts do exist. For me, if you're doing short-term trades, stop losses, I think, are essential. I think they are. You'll get stopped out a lot more, and that BS will happen where you have a stop loss $10 lower, the price wicks down there, and then boom, then it rips.
That'll happen to you a lot more. But if you're practiced, if you're patient, if you have the reserves in yourself to not try and chase that, you know, you'll be fine. It'll happen. Stop losses are a pain in the ass. It sucks getting wicked out. It sucks getting stopped out, but it happens.
If you're going to short-term trade, you should definitely use stop losses, and I think it would be more beneficial if they're tight. Because if they're tight and you get stopped out, it just wasn't meant to be. But if they're tight, if you get in at the right point—like getting that right point, that's the whole point of day trading. You want to get in at very near the low; you want to get out very near the top.
Or at least, I guess if you're getting in at the low, you wouldn't have to get out at the top. You just want to make whatever your desired percentage gain is. Maybe it's 5%, maybe it's 20%, whatever, right? But you shouldn't necessarily—and you can try to catch the whole move, but you should be taking profits at key points too.
I'm very bad at using stop losses. Again, when I short-term trade, I'm risky, and I'm not the best, right? I don't practice what I preach, but I do think stop losses are useful. If it comes to long-term stuff, if you're going to hold things for months or longer, you really probably shouldn't have a stop loss.
I mean, maybe you should have an exit plan if things go wrong. What happens? At what price would I exit? You should always have those discussions, and those are never fun, right? You might take more of a loss if something like that were to happen, but if you're doing your analysis, you're picking out the right projects to get into, hopefully at first, and you're diversifying, even if one out of the 10 coins or projects that you invest in goes down, you've got those other nine to kind of help.
Because you never know. You can invest in something that the team is perfect, they have the right tech, they've got the right goals, and everything just for whatever reason, it doesn't work out. It just doesn't work out, and that happens a lot of the time, actually, right?
You can invest in a solid project that just never solidifies itself, you know what I mean? And that's why diversity is key. But you never know when that could happen. There's plenty of projects that do 100x, and before they do 100x, they get a nice 50% dump.
So why would you want to stop loss on something like that where if you just held through it and you didn't care if it's a long-term investment, you would have been fine anyway? So stop losses, yes, I think they're great for risk management. I think they're essential for day traders.
Depending, you know, not every day trader uses stop losses, but I never used them because I always hated getting stopped out. But if you're practiced, if you have discipline, it doesn't matter. You can get stopped out, and then you'll have more opportunities to rectify that, right?
If you're getting stopped out with tight losses, you can lose nine times out in a row, and it would suck. It sucks getting stopped out. But if you lose nine times in a row, and that last time, that 10th time, you might have had your funds whittled away a little bit, but you caught it at the right moment, and now it's working out, and now you don't get stopped out.
That one time is all you need to make all the losses back, then actually see some profits too. So it's about risk management. It really is. So tight stop losses, yes, I think are a must if you're short-term trading, if you're day trading, or even swing trading, depending on your position size.
Makes sense.
So you mentioned you got interested in crypto instead of stocks and trading crypto. What made you interested in that? Was it just purely the volatility, the gains, being able to trade these things, or do you have fundamental beliefs around Bitcoin, crypto, any of that stuff?
I'm invested in crypto because I want to make money for myself and for my family. I want to do good for my people, and I want to do good for the people outside of my people. I want to do good for this world, and I saw crypto as a paradigm shift in the financial ecosystem.
So I see a lot of money coming into this industry. Beyond all of that, what got me like romanticizing about crypto—what made me, as I like to call it, like I'm a missionary, right? I go knocking on people's doors saying, "Hey, do you have time to talk about the good coin today? I'd like to indoctrinate you."
You know, I'm that guy. I will be getting a cup of coffee. I'll be getting—I don't actually drink coffee, okay? So I'll be getting a smoothie. I'll be at the bank, and I'll be talking to my bank teller. I'll be talking to the barista behind the counter. I'll be like, "So did you guys hear that Bitcoin broke 100K?"
I'll casually talk about it because some people—that's all it takes. Most people, 90 out of 100 people won't listen to you, but 10 out of 100, they will. I like to consider myself, like I said, like a crypto missionary. Maybe not a crypto evangelist; I'm not at that level.
But I want to get people in because I see it as the tool that it is to bring about financial wealth, right? It is a transition of finance as a whole. What really got me believing in cryptocurrency was just the whole story of Bitcoin, right?
I think that's everybody's—maybe not this day and age, but when I got in, it was 2015. I bought fake IDs. I didn't buy fake IDs; I'm sorry. I bought novelty IDs for me and my friends just for novelty purposes, right?
We weren't 21 yet, so we had these novelty IDs that said we were of age, 21, you know? And we bought them with Bitcoin. I'd never heard of Bitcoin. My friends knew what Bitcoin was by the time I figured out what it was to send it to these people to get these IDs. I'm like, "How the—? You guys knew what Bitcoin was? You didn't tell me! How long have you known this? Like, it's 20—it's the summer of 2015. How have you known about this for a year? Why didn't you tell me? I would have been investing in it this whole time!"
I told myself because I saw the potential. I looked into it more and more, and I saw—I didn't really see the full potential of it yet. I had no idea about Satoshi. I had no idea about the 21 million supply cap. But just the idea that you could do transactions with things online, even whenever it's—and across countries, you don't need to do a wire transaction. It's cheaper in fees.
It was a little bit scary sending things, you know, from my wallet to another wallet the first time, right? I checked everything. I literally went through, and I made sure every character was in place the right way, right? Manually input it. I didn't trust the copy-paste. I had to do it myself. I still do that sometimes.
But that I saw the potential there. I'm like, "Wow, I can transact this even on a holiday, even on the weekend, no matter what time it is." Like, I'm like, "I'm going to invest in this every single week, every paycheck. I'm going to invest in this."
I didn't—I forgot. I totally forgot to invest in it, and then it was late '16 that somebody was talking about Bitcoin moving up a lot, and I'm like, "Oh, I was supposed—I was going to put money in this thing! I was totally going to put money in this thing!"
So then I got more serious about it late 2016. I got a lot more serious about Bitcoin and crypto. I did my research. I figured out who Satoshi was. I figured out that, just like all of us, that he's this anonymous figure, right? Just kind of like a superhero, in my opinion.
I don't know, maybe he's a good person, maybe they're good people, maybe they're bad people. I don't know. But the whole idea of it was very romantic to me at first. That's the word I'm going to use for it. I was obsessed, man. I was obsessed.
There's a 21 million coin supply. The US dollar is infinitely inflatable. The dots connected right there. The switch went off in my head right there. I'm like, "I don't care." It was to the point I was so sure that this was something I wanted to do, that I wanted to be a part of, that I wanted to invest in and be involved with.
I was so certain of it that I just like went head in. I would talk to people at bars about it. I remember I was talking to this guy who he was a gold bug, and he was an old guy. He was an old guy, so he's got a lot of experience. He's got a lot of knowledge, and he had all the facts to contest anything that I had to say, this new person in crypto that didn't know really anything.
But I knew—I knew when I was arguing with him about gold what was better: Bitcoin or gold. I knew Bitcoin was better, and I knew that I just didn't know enough to have a proper argument and put this guy in his place. I knew that.
I knew I knew that. I just didn't know enough. So at that point, I'm like, "This is never happening again. I'm going to do all the studying I can so that the next time somebody comes to me with this stuff, I can—I don't want to rub it in their face. I don't want to be like, 'You're wrong. You suck. You're dumb.' That's not me. I want to be like, 'Look, this is why it's better. This is why you should get into it. Here's the facts.'"
I don't care about—of course, I'm a human. I've got pride. But I would rather see you, the person who was laughing at me for getting into Bitcoin, trying to tell me that gold is better. I'd rather see you see the light and get in with me than me—that than us poking fingers at each other and being like, "Ha! You're wrong!"
You know what I mean? Like that. And that's what set that stage for me. I was like, "I'm never going to lose an argument about any other asset that's not crypto being better than crypto. I'm never going to lose that argument again."
So I got obsessed and just learned everything that I could. I was—I mean, I don't do it as much now, but I was obsessed to start it off. It happens. It's—once that idea gets in your brain about, you know, you mentioned the 21 supply cap, it's like once you realize the significance of that and that there's never been anything else with digital scarcity or anything else with true scarcity at all, it's just—that's so revolutionary.
And then you think, "Okay, well, the difficulty adjustment. Well, when there's more miners, there isn't more Bitcoin issued." Like that's another thing. You know, you go down this rabbit hole about Bitcoin, and it's just amazing. Like it keeps—it kept me up at night when I first got into it, you know? I'd be driving and all of a sudden have an epiphany about it, right? It's awesome.
All the epiphanies, man. Yeah, crypto's—it's those things that got me excited, man. I love TA, and that's what—you know, that's something that I've made a career out of is technical analysis. But crypto is a really exciting thing.
And as you know, right, this is probably a very common phrase in the space, but the only people that don't like crypto are the people who haven't—who don't know anything about it, you know what I mean? That's it. If you know about it, you can't—that's—you have to like it. It's obvious, you know what I mean?
So, okay, so we talked a lot about Bitcoin there, but you're into some other crypto stuff. What is your interest in that beyond Bitcoin? Like why have you moved from Bitcoin into some other crypto stuff?
So primarily—and that was the first answer I gave—was money, right? I'm in it to make money, baby. I'm not going to lie to you. I'm not going to lie to anybody's face. I love the technology. I love the innovation. I love the prosperous opportunity that this presents the world, this whole niche aspect of crypto.
But the reason why I invest in other projects besides Bitcoin is because I see more potential in growth on a percentage basis, right? And that's—I'm in this space. I'm a speculator. I do technical analysis. It's no secret. I'm in this to try and make the smartest financial decisions with the tools that we have in front of us, right?
The projects that I've chosen to invest in, they might be the top performers of the cycle. They likely won't be. That's not what I'm trying to achieve. I'm just trying to achieve something that I'm certain in will grow and then also will outpace Bitcoin, right?
And that should be anybody's goal in crypto. If you can find a coin or an asset that has a chance at outpacing Bitcoin, then invest in that and then rotate that into Bitcoin or rotate that into something, another crypto. You know, maybe XMR, maybe Bitcoin Cash, maybe Litecoin, whatever coins you see having a long-term future that don't have these humongous 90% plus drops during the cycles, you know what I mean?
But yeah, I invest in other cryptos essentially short and simple just because I believe there's more potential in price growth, and there's also potential in their certain technological aspects too. Like Decentraland, I like Mana and Sandbox because, you know, they're metaverse tokens. I think that that's interesting.
You know, they're the first metaverse tokens. Will they be used in the future? I don't know, but I think there's a place for them now. I see the potential for them to grow or outpace Bitcoin from here to the rest of the cycle.
So, you know, I like those coins, and just stuff like that, right? It could be for technological reasons, but the main reason is primarily what I see the potential being, right? If—I mean, USDT has a lot of potential, right? But I can't make money with USDT, so I'm not going to invest in USDT, you know what I mean?
That's—yeah, it makes sense. I mean, you have different time frames for different projects that you invest in. You feel you're knowledgeable enough to do that. I think a lot of people think, "Oh, well, alt season's coming. These things are going to run like crazy," but they don't have the skills to do that.
So, I mean, for me, it's something that I try to deter people away from. I never give advice really on what people should do or shouldn't do, but for me, like Bitcoin is the long—if you have a long vision, long-term horizon vision, then Bitcoin is the one, in my opinion.
But anyway, I will ask people whenever they ask me, "What coin should I invest in?" I'm like, "Do you want a safe coin, or do you want a risky coin? Do you want a very risky coin, or do you want a kind of risky coin?"
If anybody says they just want a safe coin that they know they can put their money in and it'll gain, the only coins I recommend are Bitcoin, Ethereum, and I'll talk about Bitcoin Cash too, which I know not everybody's about Bitcoin Cash. But those are the three coins that I normally talk about that I see as safe bets personally.
XRP, I think, is a safe bet too, probably, but that's all speculative. You never know, right? But yeah, I saw you roll your eyes there.
You ever look at those charts compared to Bitcoin in the long term? It doesn't look good.
Yeah, no, and yes, and yes. So that's what—in the long term, I think all those charts have actually seen a lot of losses versus Bitcoin. But in the bull markets, you can see growth versus Bitcoin, and that's why I'm invested in them now.
I fully intend to sell everything that I have. The only things I might hold on to, I might hold on to some Bitcoin Cash, but I'm going to sell basically all my crypto by the end of this cycle and predominantly in cash and ideally some cold storage BTC as well and BCH.
You know, that would probably be my goal personally. Maybe some exchange tokens. Exchange tokens can be a good hedge, I think, in bear markets too.
So you mentioned the cycle there. So there's a lot of talk about the super cycle, the cycle's not continuing. It sounds like you believe in the cycles.
Yeah, okay. So what I mean, maybe for the viewers that are a little bit less familiar, you know, haven't been in this space for a while, why are the cycles—and what are the cycles? And why do you think that they're still going to happen? And to what degree do you think it's going to be a muted cycle?
I mean, that's kind of what my thought process is. It might be a muted cycle. A cycle, a crypto cycle, a Bitcoin cycle, what it is, is it's based around the halving. And I do believe in that. I do believe that the halving for Bitcoin has a huge role in the Bitcoin cycle, and the Bitcoin cycle has a huge role in the overall crypto cycle as a whole.
And they're different. The Bitcoin cycle is different than the crypto cycle. They're basically the same; they look the same. But crypto altcoins, they normally top off—that their cycle ends after Bitcoin does, not before Bitcoin. Normally, that's kind of the case.
So what a cycle is, is theoretically, it's this thing that's revolved around the Bitcoin halving. Every four years, or it's however many blocks. I actually don't know what the amount of blocks is off the top of my head, but after a certain amount of blocks—which comes out to be roughly every four years—the supply that's getting mined, that's getting put into the Bitcoin supply, circulating supply every day, that gets cut in half.
Because of that, we get a supply shock. Fundamentals of economics, supply and demand, we cut the supply in half. It's going to—even if we keep the same exact demand, even if we have the exact same demand, there's no increase in demand at all, but we cut the supply in half, you're going to see price increase. It's just inevitable.
And then the rate of inflation too for Bitcoin is getting lesser and lesser while the dollar's rate of—even if it stays consistent, the total amount of dollars inflating is going to outpace Bitcoin. So Bitcoin's going to just grow in value.
The cycles—I'm sorry, I keep getting away from that. The cycles, I think, are predominantly revolving around the halving. A lot of people assume that the cycles will stop, that we're not going to get this, that they will be muted, that they will be more tame or something like that.
And I don't know. I really don't know. I don't believe—I do believe the cycles will get more tame, but I don't believe that the four-year cycle will go away. And here's my reason for it, right? A lot of people say the four-year cycle is going to go away because as we progress further, there's going to be a less—it's going to be a more insignificant amount of Bitcoin being mined every single day.
With that lesser and lesser significance in Bitcoin being mined every day, it'll have a lesser impact on the market. That's the theory. My theory is opposite. I think that it'll have the same effect.
I mean, obviously, it has less of an effect on the total circulating supply, yes. But the reality of the matter is fundamentals of economics dictate supply and demand dictate that with less supply, even at the same rate of demand, you're going to increase in price.
Regardless of how much that supply is being put into the markets every four years, 50% of it is getting cut in half. Or 50% is not getting cut in half; it's getting taken out, right? So every—you're not changing that. Even if you're changing the total amount, and it is less significant to the total supply, that is still significant.
Like imagine if you had all the Bitcoins, and it's 10 years from now, and the rate of Bitcoin being mined is dramatically less than it is now, right? You've got two cycles, two halving periods from here until then, so it's cut in half twice.
Ten years from now, but now you've got all the Bitcoins. Ten years from now, that are being mined in a one-year period, is it going to still be significant when all those Bitcoins, that supply, gets cut in half again? I think it will be. I think it always will be.
So I think the four-year cycles will always be a thing. I think they will. I think it will be less significant to the total circulating supplies, so we'll see bear markets getting more tame. We'll probably see bull markets going forward getting more tame, but I think it'll always be significant.
The cycles always revolve around that until the last Bitcoin is mined. I think once the last Bitcoin is mined, then the four-year cycles probably might go away, or by that time, they might have already been phasing out, right? We might have a more kind of stable coin in Bitcoin as far as that goes, or a more stable market overall.
But yeah, my opinion is that it's kind of different than what I feel like most people's is. Just to summarize it all real short here, in as short as I can, is that everybody thinks the halving cycles will become less significant going forward because it's a less significant amount being printed every single time.
But I think it'll be just as significant because the amount that's being dropped will always be 50%. I don't care how much it is annually. You cut out 50% of your supply, that's significant. That's a supply shock that will induce price going up.
It's the laws; it's the fundamentals of economics, supply and demand. If you're cutting supply in half every four years, I don't care what the amount is, the percentage of the total circulating supply, that will have a largely beneficial effect on the price.
So I do believe in the four-year cycles, and I actually suspect—I kind of have a suspicion that this might be not the last four-year cycle, but the last one that we see that's so predictable or that's so kind of in line with the rest of them.
I think going forward, we will always have four-year cycles, but I think it'll be less normal. It'll be different. I don't know how to put it. You might start earlier; you might end earlier. You might have a trickier cycle, or you have multiple peaks in it.
It's not going to be as simple going forward because I think everybody's attention is going to be on it. But at the same time, I think we always will respect the four-year cycle.
So, there is that sort of self-fulfilling prophecy as well, right? Like people will begin buying it because they expect it to go up in next year because historically it has in the four-year cycle or 2025, right? And then they expect it to go down at the end or into 2026, right?
So it's once again, is it a self-fulfilling prophecy? What came first, the chicken or the egg, right? It's like, you know, it's all based around the election cycle too, like coincidentally or not coincidentally. So that has an effect too without the halving. That has an effect too.
Yeah, and global money supply as well, increasing in these four-year cycles. So there's a lot of variables. You mentioned supply and demand, right? This is the four-year cycle, in your opinion, is directly connected to the halving, a lot of people's opinion, which is a supply cut.
But there's also been an incredible amount of demand as well. You know, you look at these charts talking about MSTR and the ETFs, and they're buying so much more than what is being mined every single day or every month.
And you know, I wanted to talk to you—we're coming up to an hour here—but I wanted to talk to you a little bit about MSTR, MicroStrategy. It's something that's, you know, that you've talked about a couple of times on your channel.
What is the significance of MicroStrategy to you? What do you think about what they're doing? And yeah, do you have any input maybe even on their technical analysis on their chart, anything like that?
Well, I think it's very valuable and interesting what MicroStrategy is doing. We'll definitely do some technical analysis. I'll pull that up. I'll show it on the charts here in just a second and just give you guys my expected outcomes for the coming week and maybe what we can expect by the end of January too.
I'll go over a brief kind of explanation on all that. But I think it is unique what MicroStrategy is doing, and I think that it makes sense that they are one of the most successful stocks as far as percentage growth goes over this year because they are the first to incorporate Bitcoin into their treasuries, into the value of the company itself, effectively becoming like a Bitcoin bank.
I do think it's a bit ironic to call them a Bitcoin banker that they've established that because the whole point of Bitcoin is to be unbanked, is to be—you know what I mean? To not be custodial. So it is kind of anti-crypto in like the original days, but there are benefits to it too.
As Bitcoin or any crypto gets bigger, there will be institutions that hold it, that house it. So it's inevitable; it's going to happen. MicroStrategy was just the first one to do that. You go back in time, you look at the first of anything, right? The first company to—I don't know, like Amazon. Amazon was kind of the first company to do what it's doing, and it's a behemoth in the space.
Google, kind of the first company, you know what I mean? Dogecoin is the first meme coin, and it's the top meme coin in the whole crypto space. Bitcoin, the first Bitcoin, it's the first crypto, and it's the top, you know what I mean?
MicroStrategy is the first stock to do this. I think that, you know, whether it will always be the top stock in this kind of niche aspect or not, it'll always be successful. I think that will always have some kind of dominance so long as Bitcoin remains solvent and successful as well, and I think that it will.
But I think it's interesting. I think it's valuable, and I think it's really, really cool. It puts a lot of spotlight on Bitcoin. What Michael Saylor and MicroStrategy are doing, and that kind of spotlight, it familiarizes Bitcoin. It makes it seem less like a scam, and that opens the door for people.
It's like, "Oh, you've got this multi-billion dollar institution that's regularly buying the top on Bitcoin. How much of a scam could it be?" It tears down that worry or that concern that something wrong could happen whenever you see an institution like this getting involved.
So it definitely legitimizes us. That's the one thing that if I had to sum it all up, the thing that I like about MicroStrategy the most is that it really helps legitimize and cement cryptocurrency to the masses. Because now you have people who they would never invest in cryptocurrency. They're 60 years old or older; they would never invest in crypto.
But they will invest in Michael Saylor's stock, right? They'll invest in that and let him invest in crypto for them. They're okay with that. So it brings a whole new generation and also type of person to invest in crypto indirectly.
Also, getting listed on the NASDAQ, you're—anytime if you're tracking the NASDAQ, you're investing in crypto now by default anyway. So it really legitimizes it. That's probably the best thing to say about MicroStrategy. It's really helped bring some legitimacy to the space this cycle.
So kudos to Michael Saylor on that. Now let's look at some charts if you're cool with that, or unless you want to do some other stuff first.
Yeah, cool.
Okay, so I've got the chart here. I'll pull up the little me. I think you could see me, right?
Okay, so MicroStrategy here, we're looking at it on a daily time frame. I want to zoom out to the weekly. I'm going to just blow up the chart.
So last cycle, our peak happened in February of 2021. We had the low down in May, and we consolidated for a bit, and then we progressed higher afterwards, right? Using this tool over here, the Fibonacci retracement tool, you attach it to the top of this range to the bottom of this range, and you could project out.
There are lines. You don't have to know what these lines mean or signify. All they do is identify Fibonacci extension zones, Fibonacci ratios, and we just base the price off of that, right?
So you can see here this 1618—that's the golden ratio. You can type in, "What's the golden ratio?" It'll say 1.618. That's exactly where MicroStrategy topped. This kind of thing is literally what got me excited about TA. The first time I saw something like this, I'm like, "That can't be a coincidence," right?
Here I am drawing from a high to a low years away, years before what we got going on now, and the 1618, the golden ratio, right? I can't make it go there. I just—it happens to be there when I put it to this low. We topped at the 1618, found resistance.
Okay, I've been doing technical analysis for years, right? This is something that I've been doing. I've got some experience with it. I'm not an expert by any means, but you know, I'm not new.
Generally, I identify this, the 1618 to the 1272, as the primary target zone. Whenever you break above the 886, you've got access to the primary target zone. Once you break above the 1618, you've got access to the secondary target zone, which is anything between the 2618 and the 1886.
And I'll tell you what those prices are. That's anything from $99.94 to $5,300. Now, that does not mean that you have to go to $5,300. It doesn't mean they have to stop there either, but I doubt—I don't know if we see that number.
I would say that if I had to give an expectation of what the maximum potential for MicroStrategy could be, it might be this number. But likely by that time, we will have had a split or a couple splits in MicroStrategy, so the price would be different anyways.
But that's just an idea there. Essentially, what I'm getting at by talking about the secondary area here is that once we break above the 1618, the recent high that we had, we would have an immediate kind of move to the next target zone, which at a minimum is $994.
We're at $312 now. Okay, so we've dropped a little bit down to $312 now. We broke out to the downside a little bit here. We could keep going down to the 1272 to find support. That's fine. You could keep dropping. You could even go below $250, and you're still fine, right?
You're still on the proper path to these higher numbers. What the Fibs tell us is not necessarily what's going to happen in between these ranges, or at least for the most part, for me, that's not what it is. It's more like barriers to the next zone, right?
How you interact with it, you're finding resistance here on the 382. Okay, you finally break above that, and where do you go? Right to the 0.5, the next zone. When you come down to find support, you go back to the previous zone for support, then you go to the golden ratio where you find some resistance here.
You continue to build up. Whatever, this is kind of abnormal, showing the disrespect in the golden ratio there, but it happens sometimes. But once you get above the golden ratio, that gives you access to the 786, 886 zone.
Once you break above that, that gives you access to this, right? I'm just—I'm probably boring people with this, but essentially, the whole thing that I'm trying to say is that whether we move down from here, whether we move up from here immediately, whatever it is, when it comes time to breaking above this high at $539, the next immediate given target that we have is at $994, and there's no disputing that.
With the fact that we respected this 1618 here, this golden ratio, we tipped it so perfectly, there's no doubt in my mind that we will not just hit $994, but we will hit higher targets. We likely will hit the 2272, if not potentially as high as the 2618 by the end of the cycle.
As far as when the end of the cycle is, that's a hot debate because MicroStrategy last cycle topped off in February. Bitcoin, for example, it did not top off until November, right? It topped off in November, and even then, even still, MicroStrategy topped here in February. Bitcoin didn't top off really until April of that year, right? That's whenever it actually had its high.
So MicroStrategy topped off well before the end of the Bitcoin cycle, and then let alone the November high that we had over there. So there's a bit of decoupling from Bitcoin, yes. And that's kind of my thoughts. I think—and I think a lot of people's thoughts are that MicroStrategy will top off before Bitcoin, as it did last cycle.
It'll just top off before Bitcoin, but that doesn't mean that it's going to do it. If last time it was February to November, what is that? The second month to the 11th month? It doesn't mean there's going to be a nine-month gap in between Bitcoin and MicroStrategy.
I think that MicroStrategy will top off before Bitcoin this cycle. I think that it will, but maybe instead of a nine-month gap, it might be something more of like a three-month or less. It might even be like a one-month gap in between.
So I would expect MicroStrategy to get back to the TA, to get back to the chart here. Whenever it tops off at these areas, which I would expect to be anything from about, you know, what was it? $2,300 to $5,300?
What was the target area here? Let's see if it tops off. Yeah, anywhere from $2,400 to $5,300, I would expect that happens three months or one month before Bitcoin tops off. I'm expecting Bitcoin to top off in October.
So if that gives you an idea of the time frame, you know, when we might hit these targets. But I definitely expect—I do expect that by the end of January, we're going to see this $994 target.
And I want to go over that real quick, and then I'll stop doing the TA stuff here. End of January, that's really quick.
It is really quick. And today is—today is Monday.
Yeah, so we had—we went down a little bit. We've got a lower low. It's not to be expected. I definitely did not expect that this low would come in. There's still that gap there at what, $270 or something?
There is, yeah. This gap right here. A lot of times, we do see those gaps get filled. We got so close. It would be hard to imagine that we don't fill it with how close we've gotten to it now.
But a gap fill, you don't have to go all the way down to fill the gap. You could just partially get into it, you know? And we don't have to fill the gap either. It's possible we don't, as we've been moving down. You can see that the volume has just been abysmal. It's died off. It's non-existent.
We've had below-average volume for the last week now. Oh, hey, that volume actually just came in. Do you see that? That it literally just came up above there? We just got some volume.
But it's still below average. We got nine minutes left in the day right now. So moving down with below-average volume like this tells me that this move is not necessarily induced by anything real, and it likely will be given back.
You know, we might have to go a little bit lower. Maybe you fill that gap. Maybe you do the classic thing, which is you find resistance at your 1618, you come back down, you find support at your 1272, and then you go forward and you build from there.
But the reason why I'm expecting January, or at least the end of January, to be bullish from MicroStrategy, I'm expecting a bullish result for Bitcoin as well. But if we look at MSTR, I like to pull up this website here, option charts. MicroStrategy open interest.
If we go here, we can see the January 17th options interest. Is that what you're—yeah, that's exactly what I'm going to—yeah, exactly. You can see here all the call—it says call open interest, put open interest, and you can see the number of calls and puts that are open, right?
There's 428,000 puts that are open. There are 288,000 calls that are open, and that ratio is at a 1.5 essentially put to call ratio. It was higher before this day, Monday.
So that tells me some people might have taken profits. MicroStrategy went down a little bit. It might make sense that if you're in a put, you might want to take profits at the lows, right?
But this tells me that likely, as long as this ratio stays positive, it stays above a one for the put-to-call ratio, likely we would see some kind of bullish event going into here because most people that trade—and these are traders. Anybody doing options, you're a trader.
Most people that trade lose money. Most people don't make money. Sometimes it happens where you have more puts open, and you still dump into it. Sometimes that happens, but most of the time, the market is meant to take money from most people, okay?
So if most people—that's what this is telling us.
Most people are bearish on the 17th expiry. Most people here on January 10th have less volume, but there are still more puts than calls. You have a 1.4 ratio here, and a 1.49 ratio there. Most people are expecting January 10th and onwards to be bad for MicroStrategy. Even up to the 24th, there are still more puts than calls open.
This might imply that the end of January could be bullish because, again, most people are wrong. However, at the beginning of January, going into January 3rd, we have a lot of calls open. It makes sense that by the end of this week's expiry, if we have more calls open than puts, our call-to-put ratio is 0.6. The put-to-call ratio is also 0.6, which is the only one that's below one.
This week, we just happen to be moving down while having more calls open than puts. I would suspect a lot of those calls won't move up until they either take a loss, get liquidated, or have to roll over into the next expiry. So, are you saying the market makers are going to try to make them expire worthless? Right. If they do nothing, then they will expire worthless. Or, if you can roll it over, you can do that as well.
There’s going to be some kind of shift that has to happen here by the end of this week. A lot of these puts or calls are going to go away, and if they don't, we'll probably just keep moving down throughout the week. My assumption would be that after this week, after the 3rd, if all these calls can go away and the puts really start to come in—maybe there are more puts that are open before the end of the week—then we could see a turnaround point.
I think if we get more open interest leaning towards the downside and less towards the upside, that will generate a bounce. With the amount of puts that are open now versus calls, the ball is still in the Bears' court. I would say because it's the Bulls right now that are underwater. All these calls likely got opened before today, which means they were opened at higher prices, putting them underwater.
So, it's going to continue to squeeze those guys until they cover or until they hit zero. That would likely mean we do fill this gap. It could even likely mean that we bounce off the 1272 MicroStrategy at $36. The crazy thing is that it could go down to $240 and all the way back up to new all-time highs by the end of January.
If we don't see that $994 target, I do think that's the next area. But if it's not by the end of January, we don't have our low. So, it's not really fair of me to draw this, but let's just say it was at the base of this gap. There are likely going to be targets around $650 and $800 as well, based on this relative FIB, wherever the low might be, which we don't have yet.
If I draw it here, the minimum target is $637. If we keep going lower, that minimum target only raises. So, whether we stop at $1,000, just below $700, or just above $800, somewhere in that range, I definitely suspect that by the end of January, we see MicroStrategy coming back up, making new all-time highs.
There's just more interest in this thing going down by that time. These guys are not underwater; if anything, they're in a good position and have taken some profits. We'll just see how it all goes, but yeah, it's super interesting. It's going to be an interesting time with the change of administration in the US to something more friendly.
Bitcoin looks like it's trading sideways and down, ready for another run-up soon. It's just a very interesting space we're in right now. Thanks for doing that TA; I really appreciate that. That was really cool to watch.
I think we'll just end it here. Cesar, I really appreciate your time. I'll put your links in the description, but do you want to tell viewers where they can find you?
Forest Stevens: Thank you, man. I appreciate you, brother. Thanks for having me on; it's been a blast. You seem like a really good guy, and I hope we can continue to build this relationship from here.
If you're looking for my content, you can just type in "Cesar Gets Crypto," just like the name I have up here. That's my YouTube channel name. It's actually kind of an inside joke for me, but it's the name that I got. So, if you want to find me there, you can.
If you're also looking for technical analysis, this is probably something that most people don't do, but there are other YouTube channels besides me that also offer valuable insights. There's a guy named Eric Crown—Crown's Crypto. If you're in crypto, you've probably heard of him. He has a formal background in technical analysis and has this whole trading psychology series.
If you go to his channel, Crown's Crypto, or Eric Crown Crypto (it used to be Crown's Crypto Cave), he's gotten a little more professional. If you go to his playlist, there's a trading psychology series section. There are so many different options on this playlist, but the trading psychology series is something I think anybody and everybody should watch.
Whether you're an investor, a swing trader, or a day trader, it’s very valuable. It will teach you that, as we've discussed in the last hour and 15 minutes, it's mainly about psychology. It's not about the stars in the sky aligning perfectly; it's more about psychology.
The better you understand your psychology, the better you will be as an investor, trader, and technical analyst. Eric Crown has a playlist called the trading psychology series. You could binge-watch it in a day; it's brilliant. I've watched it several times personally; it's a good thing to watch.
There are other technical analysts out there too, like Kevin Spenson and Tone Vays. I mean, there are all kinds of technical analysts to follow. Don't just follow one technical analyst. If you want to follow a multitude, compile your own opinion that way, or do your own research aside from them and still compile your own opinion.
Don't just take one person's word for it. Everybody will be wrong again; it doesn't matter how hot of a streak they're on or how cold of a streak they have. People will be right, and they will be wrong; it's inevitable. It's just the name of the game.
So, don't think that someone's a god for getting a prediction correct, and don't think that someone's terrible because they get a prediction wrong. It's all about psychology and risk management at the end of the day.
That's it; that's awesome. Great recommendations, and thanks again for being on the pod!