This post can be summarized really simply: “I buy as much Bitcoin as I can during bear markets”<\/em>.<\/p>\n
However, evolving in the market, besides just buying, I found an edge that I’ve leveraged successfully in the past<\/a> and I’m doing it again now.<\/p>\n
You can consider this post an intro to making mad gains without getting lucky<\/a>.<\/p>\n
A market cycle is a time period in which Bitcoin goes from boring to explosive and back to “Bitcoin is dead”.<\/p>\n
You can observe the cyclical nature of this asset class in the image below:<\/p>\n
I carefully dissect this in the post The 4 Year Cycle<\/a>, so make sure to understand it.<\/p>\n
And the reason the cycle resets on a 4 year time-frame is because of Bitcoin’s block reward halving<\/a> (the vertical lines). This is an event that’s programmed to occur approximately every 4 years.<\/p>\n
And after a cycle or two, this becomes predictable:<\/p>\n
Fun fact – this is the meaning behind this popular sequence of emojis: \ud83d\udfe2\ud83d\udfe2\ud83d\udfe2\ud83d\udd34.<\/p>\n
Of course, past performance is not a guarantee for future results. But until all market participants understand the supply and demand<\/a> dynamics of Bitcoin, the opportunity will be there. And when they do, it will be reflected in the price<\/a>.<\/p>\n
Before going further, there is one distinction that even experienced bitcoiners are missing: trading vs investing.<\/p>\n
Before deploying capital into anything, you have to have a crystal clear representation about what you’re doing:<\/p>\n
Thus, I want to clarify that I’m ideologically aligned with the inevitability of Bitcoin<\/a> and I have a multi-coin position that I’ll never touch.<\/p>\n
At the same time, I also have a trading allocation<\/a> which I use to overperform the market, realize profits, and boost my holdings.<\/p>\n
When it comes to how the Bitcoin cycles currently play out, I’m not a big fan of price targets.<\/p>\n
Setting price or net-worth goals means taking unnecessary risk.<\/p>\n
For example, let’s say you plan to sell all your Bitcoin at $150k. As I mentioned before, being 100% out of $BTC is a massive risk. But since we’re discussing in the trader role, we can entertain the idea:<\/p>\n
If it turns out that it doesn’t reach that target this cycle, you’ll end up bag-holding for 4 years. And if it turns out to go to $500k this cycle, you’d have missed out on serious gains.<\/p>\n
Nobody knows what price will be the top, so focusing on a specific number for a 100% exit makes no sense.<\/p>\n
I understand that people are in love with round magic numbers and have net-worth goals. But I assure you that reaching $1M is not much different than reaching $900k or $1.1M.<\/p>\n
That’s why I have multiple targets. And they’re not distributed per price, but through time.<\/p>\n
For example, as we enter the second half of 2024, I’ll start considering exiting in percentage terms. These are not definitive numbers, but just an illustration of an approach: selling 5% per month starting 3 months after the halving + additional sells based on circumstances, sentiment, and feeling.<\/p>\n
There should always be something left to ride the full wave which minimizes the both the risks of exiting too early or too late.<\/p>\n
As long as you entered during the bear market and exiting during the bull market, you should be in a significantly better place, regardless of price.<\/p>\n
The Bitcoin halving was the single indicator I used to position myself for every cycle.<\/strong><\/p>\n
I divide each cycle into 3\u00a0periods:<\/p>\n
During the\u00a0Accumulation Phase<\/strong>, I go in heavy.<\/p>\n
Heavy and with size.<\/p>\n
My bank account balance never crosses \u20ac10k during this phase, as every cash inflow is immediately\u00a0<\/strong>invested in Bitcoin.<\/p>\n
Also, I’m selling parts of my stock portfolio<\/a> to aggressively acquire even more Bitcoin.<\/p>\n
During the\u00a0Post-Halving Phase<\/strong>, I’m not going all-in anymore.<\/p>\n
I’m still a buyer, but mostly targeting local dips or market inefficiencies caused by too much panic due to some news.<\/p>\n
Btw, during this period there are many opportunities emerging, but that’s beyond the scope of this post.<\/p>\n
And during the\u00a0Serial ATH Phase<\/strong>, I’m done buying $BTC.<\/p>\n
I’m actually starting to slowly DCA out<\/a>, expecting that the music can stop at any moment.<\/p>\n
This phase lasts 6-18 months after the halving<\/a>. And while I uniformly distribute my sell orders, I allow myself some flexibility based on intuition. Maturing in a market gives you this superpower, but that’s a topic for another post.<\/p>\n
Here’s a picture of my last cycle exits and reentering during this cycle’s lows:<\/p>\n
And during the selling phase, I’m rebalancing<\/a> the profits back into my globally diversified ETF portfolio<\/a>.<\/p>\n
The stock market is a safe place to keep profits<\/a> until the next Bitcoin accumulation phase where I can do the opposite.<\/p>\n
PS If you’re wondering how I’m managing this tax-wise: I live in the Netherlands where we’re taxed based on net-worth, not capital gains<\/a>. So it’s as simple as reporting all my accounts’ balances as of 1st of January.<\/p>\n
Although visible in hindsight, in the present we can’t be sure which all-time-high will be the final one.<\/p>\n
That’s why I’m not starting to buy back immediately after a crash.<\/p>\n
I’m actually in a “do nothing phase”<\/em> for a 6-12 month period with no new all-time-highs. This is a sufficient time-frame of downward price action to confirm that the music stopped for the cycle.<\/p>\n
And then I restart the\u00a0accumulation phase.<\/p>\n
If you want a more detailed post about my experience in the previous cycle, read Tales From The Last Cycle<\/a>.<\/p>\n