LibreCharts

Curious…seems the CFTC is looking to take a front seat in crypto for dealing with DeFi.

That’s fairly bullish for DeFi and perhaps the broader crypto space itself since we all know the CFTC really isn’t on shit when it comes to enforcement in general.

This report cites a paper that’s based on a very faulty premise.

One major omission by the authors that warrants discrediting the entire paper: “We do not account for possible interest rate hedges that banks could have entered, potentially offsetting decline in value due to interest rate change.”

What do you mean you don’t account for “possible interest rate hedges that banks could have entered”? This is standard fucking practice for almost every bank on planet earth except for SVB…wait.

You don’t think that could be a factor attributable to their demise do you?

Ok, so beyond this:

1. The study cited improperly assesses & attributes the cause of the SVB bank run & eventual collapse

2. This leads to a faulty assessment of other banks considered to be comparable

3. Published March 13th, 2023 before the govt + Biden administration announced the bolstering of reserves available for banks to tap if liquidity is needed

$25k flipping to support.

Scared money don't make money. Said that before in this channel and I'll state it again.

That doesn't mean be reckless or invest with bravado. That's stupid. But it does illuminate the fact that when you know how to read charts and understand the markets, it doesn't matter what's going on. Black swan or not. You should have the wherewithal to make smart decisions.

This post by CoinTelegraph is untrue. All of the momentum indicators for Bitcoin on the weekly resolution (and below) were signaling consolidation.

This turn down in price was inevitable.

That's why we set our target at $25k. Hint, target means grab your money & cash out of the position. Then you wait for the price to finish consolidating and make your picks before the price curves back upward so that you can maximize the upside

Everything I said about Solana proved to be 1000% true in live time.

Trusting Analysis Over Personal Bias

I go with whatever the analysis tells me. It doesn't matter what my personal expectations are.

There have been many times when the indicators are telling me something entirely different than what I personally expected from the markets.

However, in the instances where I disregarded what the indicators were "telling" me in favor of my own predisposed biased expectation of future market activity/sentiment/price action, I've ended up way off.

Over time, this has conditioned me to tacitly accept whatever the indicators yield - no matter how weird, inexplicable or unlikely that may seem. The indicators are not biased. They're mathematical measurements and interpreting those readings correctly involves leveraging longstanding market principles derived from decades (sometimes centuries) of analysis and observation.

This is How I Forecasted Bitcoin Hitting its 'Bottom' in Fall 2022

Honestly, I thought we were still a ways off from being at the bottom when I made this forecast. Based on my expectations, I thought Bitcoin was going to make another leg down to the $12k realm.

However, after taking a closer look at the charts, none of the readings, indicator measurements or observed price action for Bitcoin justified this expectation (whether it did or not is irrelevant anyway).

All that mattered was what I could gather and interpret from the indicators and that interpretation led me to say "bottom".

Most Important Component of Technical Analysis = PROPER Interpretation

Do not rely on Twitter traders or other "gurus" to interpret indicators for you.

If you think that's hypocritical of me to say, it isn't. If you've read the price analyses that I've been publishing in this space for over half a decade now, you've likely noticed that I will often include direct links to stockcharts or investopedia to define terms or justify why we're reading an indicator in a certain manner.

I do this because I believe this is a critical facet of accurate forecasting. These resources give an in-depth understanding of how specific indicators are to be read or insight into what various chart patterns mean.

Having a clear, comprehensive understanding of these concepts is absolutely essential to accurate forecasting.

How I Got Good at Forecasting Price: Technical Analysis

Okay, so I explained above how having an actual strategy for every position you enter is a major key to remaining "disciplined" as an investor.

However, all that notwithstanding, discipline really doesn't mean shit if you aren't able to forecast the markets accurately.

Forecasting Should be the Easy Part

Yes, you read that correctly. Forecasting is supposed to be the easy part. This sounds crazy because this is the aspect of trading that everybody glorifies the most.

Who was "right" vs. "wrong". Who "called" what when and where and at which price.

Accurate Forecasting Comes From Knowing How to Accurately Read Indicators and Measurements

I've said this numerous times before - but 'technical analysis' is not fortune telling.

Consider it to be more akin to weather forecasting. Does your weather man use a crystal ball to tell us whether we should expect rain/snow/sun for this upcoming weekend? No.

They use doppler radars.

Weather Forecasting = Trade Forecasting (Technical Analysis)

According to weather.gov, "Weather forecasts are made by collecting data about the current state of the atmosphere and using an understanding of atmospheric processes to predict how the atmosphere will evolve. The chaotic nature of the atmosphere along with the incomplete understanding of atmospheric processes is what makes forecasting difficult."

Technical analysis works in the same way as a doppler does for weather forecasting. It gathers information about the markets, more specifically price action for a particular asset being examined.

Various indicators then yield measurements or readings based on the data being fed to it (i.e., RSI(14), MACD, EMA indicators, etc.)

Going back to the weather example, "Ground radar, weather balloons, aircraft, satellites, ocean buoys and more can provide three-dimensional observations that a model can use. This allows meteorologists to simulate what the atmosphere is currently doing and predict what will happen in the next few days or, for some models, hours."

^^ This is why I use a suite of indicators in every price analysis to help me forecast future price action for an asset. These indicators help me to develop a more holistic view & understanding of what's going on for a given asset.

Solution to All These Issues = Creating a Plan + Sticking to it

Let's go back to that Bitcoin price analysis again.

Beyond the technical analysis, forecasting etc., the most important facet of that report is the trade strategy.

It explicitly declared:

1. What price we were entering at.

2. What position we were taking (long or short)

3. Stop/loss point.

4. "Target"

^^ These features are all binding. That's why I factor in the risk v. reward ratio in my decision on whether to even enter a position in the first place (potential upside) and, if I do decide entering may be worth it, what my "target" and stop out points will be.

That's because when those decisions are made, I'm pretty much completely committed.

That means when I published that Bitcoin price analysis, I was resigned to the fate that:

A) That trade would either reap 27%+ ROI

or

B) It would net me a 5-6% loss

One or the other. There are some minor exceptions for instances like the one we're in currently where the price is so close to our target that deciding to 'cash out' is really up to discretion (R/R of eeking out an additional 2-3% on the position vs. risking the same in losses lopsides the ratio in a way where an exit becomes an increasingly wise decision).

This plan is what allowed me to remain steadfast in the trade from Jan 30th-Feb 11th when the price backslid by 10% because (a) Trade strategies shift your focus to final outcome vs. interim results & that's critical because only the former matters and (b) we were still in profit anyway and this is due to entering our position at the right time + plotting a S/L point that was meant to guarantee we'd never be in a position where we're sustaining net losses >5.5% of our principal.

With that in mind & the acceptance of my fate in mind, all I had to do was just sit and wait for one of the two scenarios to play out (target hit vs. trade bust). Since I'm confident in my price forecast & technical analysis skills, my trading strategy serves an example of me "putting my money where my mouth is".

Reverse FOMO Kills Traders Too

You know what FOMO is. "Fear of missing out". In this context, it refers to investors piling their money into an asset or opportunity that's already reaped incredible returns (or is projected to yield such) with much less forethought than usual out of fear that "waiting" or taking the time to properly research & strategize.

Some call it "apeing".

This is a concept we should all be very familiar with - so I won't waste any time speaking on it. Instead I want to touch on a concept I like to call, "Reverse FOMO"

Example of Reverse FOMO

Let's go back to that Bitcoin price analysis I published on January 13th. Suppose I had no R/R or strategy for how I was going to manage my position.

I enter into a long on Bitcoin that very day and - lucky me - $BTC's price moves steadily north from that point in a near-linear fashion for the remainder of the month (until Jan 29th).

On Jan 29th, that position was up +19%. Pretty damn good. However, from Jan 30th-Feb 11th, the price drew down 10%.

Without a plan, another trader might have been inclined to sell their position during that Jan 30th-Feb 11th period. Their logic might have been, "Hey, I was already lucky enough to make X% on my trade. Now the price is going back down. So I better exit this position ASAP so I can salvage my profits while I still have some."

I refer to this process and rationale for exiting the position as reverse FOMO. Why? Well, what's the opposite of missing out? If you ask me, I'd say its losing out. Thus, Reverse FOMO = Fear of Losing Out.

In this case, we've already profited a decent % on our position. However, once we sent the markets may be moving in a direction contrary to our interests, we may be inclined to exit prematurely out of fear that the profits we've obtained thus far will be wiped if we take too long to actualize.

Not Having a Plan = Purposeless Trading

This leads to inevitable losses.

The psychological burden of remaining "disciplined" by sheer force of willpower is too great of an ask for any normal human being in the cryptocurrency markets (in my opinion).

Also, there are exceptions to every tenet, axiom and principle you can imagine. Sometimes it is smart to buy the news. Or to quickly exit a position to "chase green candles", 'HODL', etc., so if you restrict yourself to religiously adhering to any one of these philosophies, you'll find yourself either (a) taking enormous + unnecessary losses or (b) foregoing great opportunities.

Why Having a 'Plan' is the Answer

Even when I got good at charting and figuring out when an asset would go up/down or identifying pivots in price or underlying price trends, I still struggled to be a profitable trader.

There's way more to investing than simply "calling" whether an asset will increase or not. For ex, I could've put out a price analysis that just said, "Bitcoin looking bullish!" and left it at that. Then, everytime Bitcoin price went up, I could follow up and say, "See guys? Told you I was right! I said Bitcoin was going to go up and it did."

But what good does that do? Price action is never linear. Right after I put out that price analysis, Bitcoin shot up to $23.7k right after I published that price analysis (Jan 13th-Jan 29th).

Then from Jan 30th - Feb 11th, the price retraced all the way back down to $21.5k.

If I had came in here on January 29th and said, "See how right I was guys? Bitcoin went up!", I would've looked like a fool a week later when the price drew down ~10%.

Disciplined Investing

It isn't about willpower. Its about having a plan.

When I first began investing in this space, all I was concerned about was whether I was "right" or not.

This led to me making undisciplined choices like:

1. Exiting as soon as my position started taking losses

2. Exiting a position and placing the principal from that investment in another project that seemed like it offered a higher upside than what I was getting previously.

Example

I'd invest in "crypto A" and maybe be up 5% in that position after 3-4 days. But then I'd see "crypto B" was surging and up 10% in one day alone.

So I'd sell my entire position (exit) in "crypto A" to go run & invest in "crypto B". Sure enough, it seemed like everytime I'd pull the trigger on that decision, "crypto B" would start losing value and I'd actually end up incurring losses on that position. At the same time, "crypto A" where I just left would go on an unexpected run right after I sold that position.

This process was maddening.

But since I had no plan, I would say to myself, "Ok James, you learned your lesson. Don't go chasing green candles like everybody says. Just stay in one position and 'HODL'. That's the key."

That didn't fix things because that just led to me getting stuck in positions that were in loss that were never going to recover.

So that triggered another dilemma for me where I had to ask myself, "Ok, when is it smart to 'HODL' and when should I actually sell?"