Trading

Video Transcript:

Hello there and welcome to the HashPower Academy, your place to learn anything to do with Bitcoin. The topic of today’s video is timing the top of the market. So, we’ll delve into a few different things to help you gain a bit of a reality check as to how you can time the top of the market in the truly best way possible. Now this particular bull cycle might be different because we’ve got sailor the ETFs companies and all this different financialization and collateralization efforts of Bitcoin the asset truly being a virus in the system when it comes to traditional finance. So as to how high Bitcoin goes a million plus this year is not out of the works. So we’ll go back to some fundamentals because this is what we teach at the hash power academy. We go into the energy and compute layers. So one of the things we will add to this equation is yes the price going up and down in a nice creative sense but also the fact that there is a production cost of Bitcoin. Now other videos have delved into this in particular but we’ll use it at the end. Now the first thing to understand about the top the highest price of Bitcoin in any cycle and probably any financial market is if you look at the volume of particular assets by price, we get these sorts of distributions where you get a very large amount and majority of trade has happened in a more consolidated area and as you get to the top there’s a very nominal amount of people that actually traded and sold. pulled at that top. The majority, which is always where the moving averages are, are somewhere, you know, halfway down typically. Now, what this is basically saying is that there’s barely 1% of people that actually manage to sell at the top, and there’s always some majority of buyers and sellers on the journey. And so if you’re trying to get yourself from here up to the highest price that you could possibly sell, it means that you have to constantly guess where you think the highest price will be. Because Bitcoin performing new all-time highs, is it treading into new territory? Now, it’s the same aspect to the downside in a few ways, but not not it’s unique in the fact it’s treading into new territory. it’s forming new support and resistances if that’s the particular technical analysis that you can delve into on the price side of things. But you’ve obviously got this other aspect of people strategize their way of accumulating Bitcoin with something called dollar cost averaging. It means you can go about your life. Yes, learn as much about Bitcoin as you want without having to stare at charts all the time because dollar cost averaging is a way of buying Bitcoin whilst removing the volatility and the emotion of that from your buying experience. You’re not trying to picture this one particular moment in time. There’s a dip, you buy, and then it dips some more. You buy and it dips and more. If you’ve purchased in smaller increments and create an average price and over time, Bitcoin performs a compound annual growth rate. Yes, there’s bare cycle phases and years and there’s bull years and we’re in a bull year. And the way dollar cost averaging works so well for people is that accumulation method, buying up Bitcoin incrementally over time, say monthly with how they earn money. But you can also apply this to selling Bitcoin that instead of stressing yourself out trying to magically put yourself in this tiny 1% and it’s even less than that. And you can look at this across all different markets, there’s a nominal amount of trade volume at that highest price, which infers that there’s a very few amount of people that actually sell at the top and it’s closer to gambling to try and guess that top price. So, how you get yourself up in this group to being able to sell at a naturally higher price is something that I like to call the price to production ratio, which is looking at the electrical cost to produce Bitcoin and the price. And this is I’ve mentioned this in a couple videos now, but basically the the price of Sailor’s Strategy shares versus underlying Bitcoin value per share. That’s a a value metric of Bitcoin per share and the premium is the share price. So you can compare that same analogy across to Bitcoin and Bitcoin mining where the share price the premium is Bitcoin to dollar and the true value exchange rate of Bitcoin is electricity through hash rate mining into Bitcoin and the gap between these two creates a a difference. So in the right now we’re at $120,000 and a production cost of say 60k or 50 120 that’s a 2x. So price is trading at production of 2x. Now at the peak of the bull market, we can assume that the fact that the network is physically constrained on how quickly it can deploy machines, build out infrastructure, thousands of megawatts, hundreds of millions of dollars of mining hardware to to raise this production floor, that original exchange rate from Satoshi of producing Bitcoin. Every bitcoin was produced through compute and electricity. And to get yourself into this upper bracket, you need some form of information to determine, okay, Bitcoin’s trading at a eight times premium to production, four times here. So using using this multiplier or flip it the other way around as a ratio to un and use that ratio potentially to give you an informed understanding of okay, Bitcoin is massively overpriced to production. Maybe it’s time to have an even greater amount of selling pressure from yourself. And you can adjust how much you’re selling in dollar cost exit amounts based on that gap between price and production. Because if more hash rate plugs in, it’s raised the value of Bitcoin. The price is the price and the exchange rate of dollars. And so truly the best way to move yourself from the average to the top to the 1% of sell is to create some form of selling condition that as this price deviates from production that you’re selling more and at the bottom of the bare market when Bitcoin is trading close to production that is the absolute no-brainer. It’s the best time to buy. You can buy Bitcoin the same price that a minor plugs in. Land power, infrastructure, transformers, contracts, insurance, and la. If you could just log in a platform and buy at that same price that the farmer grows his tomatoes, so to speak, it’s a no-brainer. That’s a it’s you’re buying or even lower when the price drops below and miners switch off. That is a significant point to be buying. And one of the indicators for that is the hash rate ribbons, which is using two different durations of hash rate. understand when hash rate comes offline as a good buying indication. But the peak aspect is looking at the production floor to the price. And if that price is trading at a premium like the the treasury stock price of shares versus its NAV, the wider that that that premium gap is, it’s time to start selling. But not trying to magically pick one particular selling event. Just granularly drip feed out of the market. I don’t know what you’re trying to sell Bitcoin for because if it’s longer than one, two, three years, you’re going to get that new all-time high reality check that you’re sitting in a house that’s now worth hundreds or if not even more Bitcoin in the future or potentially, you know, the potential purchase of what you could have held in Bitcoin is now even more. Um just on that particular note, the intention to sell Bitcoin, the capital events, the capital gains side of things, um and the tax associated to it, people do lending as well. So you can always use this price to production as well as a way of managing your risk that if the price has jumped to 240,000 and your 60,000 production cost, that’s a 20 25% production to 100% price. Don’t loan more than 25% if you’re using credit. So you can use the production floor as a very good metric for loaning against your Bitcoin as well because what can the price drop to? Production. it will it can go lower but using the production floor or even using less as an LTV ratio is a very good way of it’s a very good way of managing risk of how much can Bitcoin drop that’s the threat vector of you taking out loans against Bitcoin so all the different ways people are trying to access the value of their Bitcoin reinvest it spend it live on it whichever the combination is or retire on it looking for ways of creating cash flow So everything we teach is all here on the academy for you. So yes, timing top of the market. Just the summary, the volume weighted distribution gives you a reality check that you can only be in the 1% to time the top. You can go and stare at the candlesticks all day, all night romantically. Timing the top is so very difficult to use the same strategy that many Bitcoiners do which is they live their lives work study and drip feed into the market. It doesn’t matter some most of them they don’t care about the price they just they buy in and and you can do the same for exits as well. Drip feed out of the market. Define how much you need. If it’s a dollar amount to buy a dollar based thing or pounds or euros and define that you’re going to exit with some overheated spike and just slowly sell out the market. It’s a more passive way of doing it. It could drop, it could pump even more. You could sell out and the price jumps double, but so long as you’ve given a long enough time period to average out of the market, you will be somewhere in here instead of down here trying to time up here. Thank you for listening. I hope you enjoyed this video. I’ll do some more price related things. I also definitely need to do some more uh recordings maybe on Trading View and other sorts of uh uh graphic interfaces that’ll be a bit more uh engaging than a whiteboard. But uh a lot of people I think truly value the human aspect of this video instead of churned up AI and hyper flashy text everywhere and whatnot. So yes, if you’ve listened this far, you have a very good attention span. Thank you for listening. I hope you enjoyed and I’ll see you in the next video.