Source: Talking about Li and other things
Yesterday (December 16), the price of Bitcoin broke through $107,000, setting a new record high. As of the time of writing this article, the price of Bitcoin remains around $106,000, as shown in the figure below.
Some analysts believe that the recent breakthrough in Bitcoin prices is largely due to Trump's reaffirmation of his plan to establish a strategic Bitcoin reserve in the United States. It is reported that when Trump was asked in an interview with CNBC whether he planned to establish a crypto reserve similar to oil reserves, he replied: "Yes, I think so."
I tried to find the source of the news and found this report on the Forbes website on December 14, as shown above. But it seems that mainstream media, social media, and KOLs began to focus on reporting and discussing this matter since Bitcoin hit a new record high yesterday.
The market is often like this. When prices rise, all kinds of potential good news and various analytical judgments based on this will appear in front of people. For example, some analysts attributed the breakthrough of Bitcoin to factors such as the expectation of the Federal Reserve's interest rate cut in December.
But no matter what, from a long-term perspective, these are all good things for Bitcoin. After more than ten years of development, Bitcoin has finally changed from a "scam" in the eyes of most people to an asset allocated by more and more large institutions. It may even become an asset in the strategic reserves of more and more countries in the near future.
Judging from its price performance, it is no exaggeration to say that Bitcoin is the most efficiently growing asset in the past 12 years. From around US$10 in 2012 to the current US$106,000, the increase has exceeded 10,000 times.
Although many people now regard Trump's plan to establish a strategic reserve of Bitcoin in the United States as a huge conspiracy to repay the US debt, which seems to be reasonable, I will not comment on this view, let alone refute or discuss it. I only know that I am an ordinary loser who cannot change the world situation. I don't know whether Bitcoin is a conspiracy theory of the United States. I just know that Bitcoin can make money reasonably.
On the one hand, the number of Bitcoin itself is limited (21 million, some of which may have lost their private keys), and on the other hand, the demand for Bitcoin is increasing, which will also lead to a long-term bullish price for Bitcoin. I remember a few years ago someone said that Bitcoin might rise to $1 million in the future, and many people scoffed at it at the time, but now, it seems that more and more people are beginning to believe that this is likely to happen in the future.
According to a data report released by 10xresearch this month (December), the supply of Bitcoin is running out. As shown in the figure below.
The reason they gave is that the Bitcoin balance of exchanges is decreasing rapidly, and the on-chain data further shows that long-term holders are still holding their ground and not releasing supply to the market. Currently, only binance, coinbase and bitfinex still have sufficient Bitcoin inventory, but considering the purchasing power of the amount of funds flowing into the Bitcoin ETF, Bitfinex's reserves can last about a year, and binance and coinbase's reserves can continue to last for 2-3 years.
If Bitcoin is used as a national reserve by the United States in the future, it is not ruled out that more countries will follow suit, and the adoption rate of cryptocurrency will increase further. When many grandparents know about Bitcoin, the influx of new liquidity will theoretically be huge.
As for the short-term attitude of some countries towards Bitcoin, we will not discuss it here. We can now look at it from a global perspective. Some people and money can flow, some people cannot flow but money can flow, and some people and money cannot flow. This depends on the different cognition and choices of individuals. Anyway, the world is round.
Of course, what we talked about above are more about long-term perspectives. Perhaps the question that most people are more concerned about is: What will be the short-term peak price of Bitcoin?
I just counted on my fingers... um, I definitely don't know the answer to this question.
But in general, there are two main risks facing the price of Bitcoin in the future: upside risk and liquidity risk. Based on these two perspectives, we might as well try to make some assumptions or guesses.
Just a few days ago, I saw Raoul Pal (founder and CEO of Global Macro Investor) post a picture in X:
Based solely on the comparison of the Global Macro Investor’s Total Liquidity Index and Bitcoin RHS (RHS stands for Reproductive Health Science) in the above figure, it seems that Bitcoin has now entered the “parabolic phase” of the market cycle and is expected to reach a peak of around $110,000 in January 2025, and then fall below $87,000 in February 2025.
But with the boost from the M2 money supply in 2025, for example, assuming that there is an expected $20 trillion in liquidity growth next year, of which 5% of liquidity ($1 trillion) is attracted to the crypto market (including crypto ETFs), then the price of Bitcoin is likely to continue to reach a new interim peak before the low of 2025 (in the third or fourth quarter).
Or let's continue to look back at history. During the bull market in 2021, as Coinbase officially landed on the Nasdaq, Bitcoin also reached a peak of around $64,000 at the time. Now, with MSTR included in the Nasdaq 100 Index, I don't know if the same story will happen again. The difference is that MicroStrategy's continued buying and injecting liquidity seems to have delayed the occurrence of this scenario. Let's take it one step at a time. Just yesterday, MicroStrategy spent another $1.5 billion to buy 15,350 bitcoins at an average price of $100,386. As shown in the figure below.
Of course, in order to avoid unnecessary trouble, I need to state again that the above are all predictions of certain analysts and do not represent my personal opinions. Do not take the above specific numerical conclusions (guesses) as investment advice, DYOR.
Just like a phenomenon mentioned in our previous article: Many people always like to conduct short-term high-frequency transactions, and even always hope that they can beat the market, such as buying at the lowest point and selling at the highest point. However, they often do not have the basic market judgment and analysis capabilities, as well as the psychological qualities necessary for trading, so they will pin these ideal hopes on others, such as looking for bloggers or group friends to ask various deterministic answers, such as how low will Bitcoin fall this week, how high will Bitcoin rise next week, should I sell Bitcoin if it rises today, can I still buy Bitcoin now... and so on.
We still say the same old saying: your trading should be based on your position management, and position management mainly includes capital allocation, investment portfolio, goal setting, execution cycle, execution strategy, risk management and other aspects. When you have not planned your position at all and have not customized an execution plan, any blind buying or listening to the words of others (such as those of teachers who post orders and masters of eternal profit) may be the beginning of your losing money.
Just like the guess above, even if it is based on some "so-called certain" answer, different people may have different approaches:
- If Bitcoin can really reach $110,000 in January next year, would you consider selling it? How much would you sell it for? If you choose to liquidate your position directly and Bitcoin breaks through $150,000, what would you do?
- If Bitcoin does fall back below $87,000 in February next year, would you dare to buy it? How much would you buy? Would you make a profit-taking or loss-taking plan when you buy it?
- If you think Bitcoin is still "expensive" and you just like to buy altcoins, then for each altcoin you buy, can you quickly list 3 reasons why you must buy and hold it within 10 minutes?
- How much "zero" funds are planned in your positions? How much Alpha funds are planned? How much Beta funds are planned? How much time and energy do you spend on paying attention to the market, screening news and researching projects every day?
In short, position management determines the scale of your profits, the scale of profits determines your investment psychology, and investment psychology in turn can affect your position management.
Some people make money by relying on strong backgrounds and connections, some by relying on first-hand information filtering capabilities or information channel sources, some by relying on personal patience and a set of mature strategies that suit them, some by relying on leading tool systems or their own unique secrets, some by throwing dice and betting on the size of the dice, and some by using differentiated methods (such as selling water and food to gold diggers in a gold mine, or directly selling gold of various qualities to those who can’t dig out gold)…
A field full of more opportunities and dreams of wealth also means higher risks. Take the crypto market as an example. There are not only ordinary people here, but also highly professional people (including institutions, market makers, etc.). The money we earn is often the money lost by others. So please think about this: What is our advantage compared to others, and how can we beat them in a game of gambling?
Trading not only relies on so-called technology, but also requires a certain psychological construction. If you are losing money now, we suggest that you continue to consider the following 3 basic ideas:
First, stop
Once you are in a dilemma or feel overwhelmed by the market, it is recommended that you stop first, keep yourself calm, and seriously review and think about some of your past transactions. Then ask yourself: Did those past transactions follow your plan, or did you have no plan at all and just blindly followed what others said!
The second is to hold on
The persistence here mainly includes several aspects, namely, adhering to the most basic trading principles and adhering to one's own trading strategies (or trading discipline).
I wonder how many people still remember the basic trading principles we have mentioned many times in previous articles: protect your principal and don’t touch it if you don’t understand it.
In any financial field (including the crypto market), protecting your capital should always be the first priority, followed by how to make money. If you want to trade in the short term, such as 3-6 months, you should set a corresponding take-profit or stop-loss according to your risk appetite. At the same time, don’t hold too many positions (according to the suggestions in our previous article, in addition to BTC and ETH, it is enough to hold a maximum of 5 types), and different positions should also be allocated different proportions.
Of course, different people may have different definitions of the trading cycle. If you think that trading from a few hours to a few days is short-term trading, trading from a few days to a few weeks is medium-term trading, and trading from a few weeks to a few months is long-term trading, then just operate according to your own definition. It's a matter of personal opinion.
Similarly, if your trading strategy is a well-thought-out plan, then you should try to overcome your fear of the market, try to stick to it, and strictly follow your own trading discipline, such as your entry and exit criteria, risk-return ratio targets, etc. Although sometimes our trading strategy may not be perfect, there is no so-called percentage perfection in any strategy itself. If you make money based on the strategy, you can reasonably take profits, and if you give back to the market after failure, then you can take the opportunity to optimize your strategy.
When you gradually maintain a certain balance based on your own strategy, your positions and psychology will also be in a continuous improvement process, and then you will find your own secret to long-term success. I remember in an article two weeks ago, I mentioned that I sold some positions when Bitcoin was $100,000. After that, some cute people left a message in the background saying: Bitcoin is at least $200,000 this round, you sold it and still write articles every day to brag... For this kind of message, I just want to say: You Can You up, No Can No BB.
The second is to reduce leverage
A friend of mine told me before that he sold his house in March this year and borrowed a lot of money to enter the market, and then bet it all on Ethereum. As a result, he watched ETH fall all the way, and BTC continued to break new highs. So he was often anxious and kept leaving messages in the background asking me when ETH would take off!
Many people enter the market with the goal of getting rich quickly, but they engage in various retaliatory trades, trying to accumulate wealth quickly by chasing the trends they see at the moment. As a result, due to excessive leverage, they cannot withstand the slightest market fluctuations. In the end, losing money or having their positions liquidated is secondary, and it may even cause their own mentality to collapse.
What's more, after they suffer losses or see other people's profits from various orders, they hope that they can rely on others to take a shortcut, so they choose to blindly follow other people's recommendations to the Pheasant Exchange, or even directly trade them. If your funds (exchange account, wallet mnemonic phrase) are handed over to the other party for operation, most of the final results will definitely be that you lose all your principal, and you can only admit that you are unlucky. In more serious cases, you will also be saddled with various websites. loan.
Here is another story. I remember that a friend wanted me to do the operation for him. He wanted to give me all the money. He invested hundreds of thousands of dollars in his savings and hundreds of thousands of dollars in loans. Then I could buy any currency I wanted with his money. He would give me a certain percentage of the profit! To put it nicely, he trusted me. To put it bluntly, he was trying to lead me to commit a crime.
First, collecting other people's funds to participate in financial activities without any compliance procedures constitutes illegal fundraising. The People's Republic of China (Regulations on Preventing and Dealing with Illegal Fund Raising) clearly stipulates that the act of absorbing funds from unspecified objects by promising to repay principal and interest or give other investment returns without the permission of the financial management department of the State Council in accordance with the law is illegal fundraising. If the amount involved is large, it shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and fined. Secondly, it is not worth the loss for me to take the risk of fixed-term imprisonment of not less than three years but not more than seven years to do such a thing. My body is now in China. Thirdly, it is okay to make money, but I will also lose money. If you lose all of it, you will curse and choose to jump into the river to reincarnate, which is a bigger matter. I can consider collecting $55 from others for the group fee. After all, it can be regarded as a form of knowledge payment. At the same time, it can also provide some better communication opportunities for people in need. But I will definitely not do such illegal things as raising hundreds of thousands of dollars to participate in financial trading activities!
In short, for most people, there are some things that can be done, and some things that can be left undone. Not all money can be earned. Trading itself is sometimes a complicated matter. You may encounter many problems in the process, and the goal cannot be achieved in one day. Finding problems, thinking about problems, understanding problems, and solving problems will be a continuous process. The market changes in real time 24 hours a day, 7 days a week. We can't always think about defeating the market. We might as well look at the problem from a larger spatial and temporal perspective.
