Bitcoin absolute capitulation equities, I wouldn’t say capitulated. But, they’ve come down significantly here’s a question for you. I’ve been wondering if we’ve actually seen the equity crash yet and I know that we’re down 20ish. But, during the year. But, I would say there hasn’t been that I haven’t proceeded to panic selling right. Therefore you’d be led to believe that that event is still going to occur. We could wait for it. But, a counter argument. I heard recently that panic selling often comes in the heels of the newer less experienced investors getting scared and pulling the trigger now. Those newer less experienced investors. They’re not so much going to equities as they went to crypto where we did see that capitulation, so maybe that panic selling event already happened. I was just looking in the wrong place.
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It didn’t happen in equities. It happened in crypto any thoughts on that. So, I’m even in the camp. We haven’t even seen all-out capitulation in crypto yet so um now again. My early career was trading through the dot-coms that was when I first started and the dot-com similarity. This is why bubbles are very similar is because we as humans are trading right and we are ruled by the same emotions so in every bubble. There’s max greed. Everyone thinks it’s so easy. You can just put that dart at that board and just make so much money that’s a bubble. Everyone’s making money. The problem is bubbles collapse and in the dot com era we saw a ton of dot-coms go out of business. We saw many get bought out for pennies on the dollar. But, we’re just starting to see that in crypto right. I think voyager filed for bankruptcy.
Celsius is having issues, we saw the terra luna collapse. So, you’re starting to see that but you haven’t achieved that wipeout where you’re going to see. Let’s say 90 of all cryptocurrencies go to zero and they think that’s what has to happen. If you look at the dot-com bubble when we merged. We emerged out of that you, basically, had a handful of dot-coms you had amazon you had a few other ones out there that survived, everything else either got bought out or or essentially went to zero and went into bankruptcy. I think we’re due for a cryptocurrency bounce here. I think we’ll get up to about 25 000, maybe 28. But, I do think you have more downside in crypto. At least to 12 we need to see people just being like oh my goodness crypto’s done when people like to literally give up. I mean this happened in 2018 as well after the 2017 high there was like this. No one wanted to talk about crypto. It was like a fight club. You just didn’t talk about it right and that was the key when the bottom was in. We haven’t gotten that to that point yet in crypto so with the markets.
Let me pivot because I know you asked me about the markets. The markets are in that same position we’ve seen a drop. But, you haven’t even got close to capitulation right and so just to show my chart of the nasdaq here or the qqq at the very least. I think we have to go down to the pre-covet highs. I mean that’s just to me the pre-covert highs are even just going there even if we don’t go into a recession meaning that the fed. If they’re really taking out all the liquidity that was put in during the coven craziness of just printing trillions of dollars well in the very least. If they’re removed, we have to go back to that pivot high if we start going into a recession. Then you start looking at a trend line like this which would be the longer trend going back to about 2015 and both of these. By the way, they are quite a bit lower. I mean we’re talking about 15 lower here. This would be about 20 lower at that point or maybe even a little bit more.
I think that the equity markets still have a long way to go. We haven’t even seen an earnings recession yet where earnings start to drop versus still going higher. The consumer is certainly pulling back now even after the reopening. We’re seeing in the US here consumers being much more careful. I think again equity markets still have more downside and and after a bounce crypto is likely as well. So, there’s a lot of talk in the media right now about recession coming to the US. What are your thoughts there? I think the fed is just like they always do. They’re late to the party and when they’re late to the party they overcompensate so they’re the person that comes in late. They have to make that big scene and jump up and down. Everyone notices them at the party and not to make light of it because it’s obviously affecting the economy. But, that’s what they’re doing, they’re over compensating.
They did this in 2009 when we saw the collapse. They came out with gangbusters and printed tons of money. Now we’re seeing it again on the opposite side where inflation finally reared its ugly head and now they’re trying to play ketchup. The problem with ketchup is that they’re going to go too far and they’re going to push us into recession. Again I think by the end of 2022 to early 2023, we’re probably talking about a recession here. I think that’s super important to kind of go with that mental science understanding that it’s so hard to pick bottoms and then this way. You can do it and I’m a big long-term believer in crypto as much as I think it can go lower. I do think eventually it will just.
If you’re doing small positions you just dollar cost average. Then let things take their course and remember that bear markets and winters. They’re gonna make you think you’re gonna like it’s gonna make anyone that’s bullish panic that’s what a bear market does, when it’s bottoming out. You have to mentally be prepared for that and basically re-re-ask yourself. Is my thesis intact is the Fed still going to print money during the next depression slash recession or is crypto still a run on bitcoin of 21 million. All these things, you have to just continue to stay to yourself, when people put all their money in. They get so nervous you get so emotional that when bitcoin does flip around it’s going to make you generally do the wrong thing at the wrong time by diversifying. It’s kind of like all right. It sucks that it’s down there.
But, not the end of the world, so I’m going to stick with it and those are the traders and investors that end up making money. So, I’ve always said since we were at 69 68 000 is that there would be a time where I start accumulating a hottled position right. So, what I did was and this goes to your point too is like I don’t know where the law is going to be maybe. It is very very possible that the low is already in. So, what I did was when we got to 19 000 I started what I would consider to be a one-sixth position of what I want to accumulate of my huddle position. So, again if you think about it. Let’s say 120 000 is what I want to puddle on bitcoin I put in 20 000 at 19 000. I’m just going to leave that there because if this is the bottom and we go to 100 to 500. I do want to have exposure.
I think we’re low enough when we got below 20 where it’s smart to. I mean even if it goes to 12 if you’re in it like 19-18-20. It’s not that big of a deal versus if you’re in at 65 000 I mean then it’s like major pain and you just look at where Amazon was in the dot-com era right so this is the this is the m-top that bitcoin kind of has so even if bitcoin does correct down 80-85 90 look at where amazon went afterwards right. I think the key for me both short and long term is to put anything in my limit orders for a buy or anything let me first come up with my game plan right. So, let me think about what is my thesis for getting into this trade here, why am I liking it. Because it’s fallen dramatically and we’re into the 2017 highs. A valid technical factor double double or pivot high from 2017 and then also once you have a firm thesis. It should be something where you envision that you have to go before the board right. There should be like three things that make a firm case for doing it. Once you have that then you start saying well even with those fears is the biggest emotion that we have fear and greed. I understand that the price can go a little bit below my level. Let me decide what’s my total investment in dollars before I even do a trade, before I enter anything.
This article is a transcription of a video made by Jamie Tree
Original video: https://youtu.be/jYjsPK-5Vh4
