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Crypto Waves’ Ryan Wilday addresses Bitcoin’s concerning price action (0:30). Why technical analysis is salient to understanding crypto markets (5:30). Why he’s not a fan of the miners (13:45). Trump, RFK, and Harris: crypto in election season (18:35). Not excited about ether’s price action (23:05). Keep it simple with bitcoin ETFs (26:10).
Transcript
Rena Sherbill: Ryan Wilday from Crypto Waves, always great to have you on the podcast. Thanks for making the time. Appreciate it.
Ryan Wilday: Of course.
RS: So let’s hit it, crypto. What is going on? Talk to us.
RW: What do we want to talk about first, price action, politics? I mean, I’m not a political guy, but…
RS: Let’s do it in order of importance as you see it.
RW: Well, I think that addressing price action is necessary because I think, last time I was on, I had mentioned 50,600. And so we breached that – although we breached it very briefly and came back up, it’s definitely a warning.
If it breaches again, I’m going to cut my positions way back to what I hold big long-term in Bitcoin. I think I mentioned last time that Bitcoin is kind of part of a long-term portfolio, including gold and general market exposure, which I flex depending on how I see the macro situation, not macro like economics, but the macro kind of price action and structure.
So it’s definitely in a dangerous spot. If it breaches again, I’m going to cut way back. There is another support at 43,000 if it does break. I just don’t believe in it nearly as much. And it definitely, at least, would reduce future targets from like 125 to 100 at the very least, maybe even 95. So it might even miss 100,000. So that’s…
RS: Dropping below the 50,600 level, is it the same concern that you had a few months ago? Are there different concerns?
RW: Yeah, it’s the same. I mean, it really was a support level. In my view that needs – this bull market. In conferring with colleagues and looking how they were – colleagues in Crypto Waves and our sister services Stock Waves, I became open to 43,000, which I never would have believed before for a few reasons, and I was looking at their view of it. And I was like, well, 43,000 is okay.
I don’t personally want to hold through another, I made good money on the cycle. I wouldn’t personally want to hold through another 20% drop after 50, 600 just doesn’t make like tactical sense to me other than again long-term holdings that I know I’m going to take some drawdowns on for the long-term, but not my swing trading portfolio basically would be cut way back.
So I’m only like part-time believer in 43,000 holding. 50,600 is far more important to me. Regardless, and yeah, we’ve come back and I actually kind of like the reversal. It’s not the cleanest, but it’s definitely got some buyers coming on. So maybe it sticks. But at the same time, even despite with that breach that we have, I’m kind of on a caution.
So my next nominal swing target was 88,000. I’m definitely going to cut back there anyway. And then I’ll hold – I’ll still hold a little bit of swing portfolio for the six-figure levels if we get it. But yeah, it definitely put me in a bit of caution. Certainly, it was precipitated a bit by liquidity prices across many markets. We saw that in gold, crude, stock market. I mean, nothing was led out of that crash, so to speak. I think bonds are rallying, if I’m not mistaken, or I might be wrong, I don’t watch bonds too closely.
So yeah, definitely a warning.
RS: Do you want to give the most compelling reason why you’re a part-time believer in the 43,000 range?
RW: It’s just, again, structural. I’ve talked about in articles when a third wave and Elliott Wave is progressing, you want the 40%, sorry, 50% level to hold. The way I viewed structure, the key third had started higher and that gave me 50,600. If I give it some room and say, okay, I can – and this is where Elliott Wave has both quantitative aspects and subjective aspects.
And this is where it’s like, okay, if I go subjectively and say, well, the third wave is here, “is at the bottom” of, let’s see, I can’t remember the date, I think it’s September 2023, something around 20,000, maybe 25,000. I don’t remember the exact space. If I move it there, the 50% mark in log is like 43,000 and change.
So that definitely, when you do that, when you go to a higher degree third, you definitely lower your target in the situation. Basically, you’re saying the market move faster through the Elliott Wave structure. The weird thing is it’s basically missing the long-term fibs at 125,000. And I’ve literally never seen Bitcoin do that. It literally is like something weird. Now markets do that.
So markets become different to their past behaviors. But literally that I viewed 125,000 or a minimal 100,000, the worst case as kind of gold as a target. It may mean actually, sometimes when we see that when the bear market starts, you get a bear market rally that taps it. So we’ve seen that many times.
So you miss your target and then the market falls into a bear market and then it gets kind of a, call it a fake rally or a false breakout or whatever, and briefly hits your target from like years past, and then or a year past, and then it moves back into a bear market.
So we’ve seen that, which is I won’t be surprised by that at all with Bitcoin, because it actually does put in what is called B wave rally, which is a sort of bear market rally that does break out partially and then fails. It’s hard to do. I would talk to you all this in charts because it’s super technical, but yeah, it’s kind of…
RS: Synthesize for listeners, because at this point in our lifetimes, I think, there’s a chunk of investors who do understand technical analysis and do value it and do get it to varying degrees. But then there are always people who are like, what is this voodoo? What is this?
But synthesize really briefly and as articulately as you possibly can, why crypto is worthy of being looked at through this kind of lens.
RW: Well, it’s interesting because I mean, the Elliott Wave theory is really based on a theory that sentiment has a mathematical pattern. So it’s almost like feedback loops. So people get bullish, they get too bullish, markets retrace, market fools them into thinking a new bear market started, right? And those kinds of feedback loops have – our – it’s like our human public mass psychology has kind of a mathematical pattern.
You could see it. If you learn to look for it, you’ll see it over and over and over and over. It’s – and that’s the kind of quantitative aspect of Elliott Wave. And so my – our findings and Avi, when I – when he first hired me on, he said, wow, he was looking at crypto first time and he was a crypto skeptic back then. And he has looked at the wave structures and like, man, these are very pure.
And I think part of it is you really –I wrote an article very quickly after that. It’s like, well, how do you quantify crypto’s value? Like I’ve seen lots of people try to put a valuation on it. And I can put a utility value on it. I could say, like for instance, Bitcoin is great for overseas payments and just simply doing transactions outside of the banking system, which if you’ve done wrongly is illegal in the United States.
But if done correctly, and legally, it’s a fabulous way to do it and you do it with zero fees, right? Even now we have the Lightning Network, which basically has zero fees. We don’t have to pay the miners for every transaction we do.
So the utility has just gone up, it’s fabulous, but that doesn’t necessarily – you can’t value that utility in terms of a price, right? When you value a business, you can put on – you can measure some cash flows, right, free cash flow, assets and all of that, you can create a view of the business value.
Well, I don’t know how you value Bitcoin from that approach. A lot of people are trying to do fancy approach. Some people use mining costs. The mining cost is, I don’t know where it’s at now, but it’s just below here. It’s not very high, very low. It’s going up and going up because of cost of energy and cost of the data centers and all that.
So I think given that, and given that – assuming that the general perspective is that you can’t value it on fundamentals, all you have is emotion. I mean, all you have is sentiment. And I think it’s fair to say that crypto is a highly emotional market.
And so now the question is, do you have to jump – can you jump from there to say that, oh, emotions in the masses have a mathematical pattern? And I think in open markets, it’s pretty clear to an Elliotician that it does. That’s not the only tool that I use. It’s not the only approach to trading markets that I use, but for crypto, it’s a big one.
RS: Avi, by the way, who Ryan just mentioned is Avi Gilburt, who we’ve had on, we just had him on recently.
Talk to us about the next level of importance that you’re looking at in the markets, in the crypto market?
RW: Well, I would really like to see this low that we struck, again, with a – even with a slight breach hold, that would be a big deal. It was in a weird place. See, 43 is the bottom of my previous range. And I forget, I think it’s something like 47 or 46 is the top end. So it was right in, like, if I – I draw boxes on my chart, which is like by zones. And there was like, it’s basically landed in the air gap between the two boxes.
The box that I don’t like below, the one that my colleagues are using, but I’m – they’re also very good at the field as well, so I don’t want to doubt them. And in my own study, I think it’s reasonable. So let’s see what happens at 43, if it does break this low. But right now, it’s kind of in this weird murky spot that it stopped. That doesn’t matter in terms of trading the bottom. What matters is it affects targets above.
So if it really should have landed in the lower box, the 46 to 43 roughly, then the target really is 100,000 and on the low end maybe 95,000. If it was simply a bad breach of a solid support, and these things are unknowable, really, until we see further price action, it’s going to hit 88,000. And like I said before, come back down in what we call the final wave 4, which should be around where we’re at now, and then take its final run to 125,000.
So we’re going to bounce around. It’s a broad range for a while. But if you know the projection of that range, which again, could be anywhere from here to 88 onto 100, you could make decent money. So yeah, it’s – yeah, so 88, 100 above, and I would say first, the low just struck. Sorry, I don’t have it offhand. I could pull up as I’m talking, and then finally 43,000.
So that’s – we have a couple of levels below and we have a couple of targets above. And we took the bottom. My chart is actually 49,000. I think there were some exchanges that went lower. And, of course, in crypto no exchange is the same, which is challenging in itself.
And to be honest, when you’re talking about a wave that went from 15,000, 15,500, I think in 2022 or ‘23, when it bottomed to now and having a top of 73,000, honestly, the difference between 50,649 is very, very small, in just sort of mathematical percentiles, really, it’s small.
So I can give it, that’s why I can say, okay, it – maybe it was just a bad breach of support, but it’s coming right back up. But it’s unknowable. It’s like, you have to – I will know it as we develop price action from here. I can’t make assumptions about it.
So I would urge someone to, if they want to get involved in Bitcoin and they haven’t learned it, yeah, buy the ETF, then take the time to learn the rest of it. And even if you have to take a while, that’s cool. So I would just encourage people to do both, right? Because yeah, if you’re going to buy Bitcoin right now, you haven’t ever thought about Bitcoin until it looks like it’s a bargain at 59,000, bargain in terms of recent history.
Yeah. What are you going to do? You’re going to pull up in your brokerage account and buy it. Like, I totally understand that. I totally understand that. That makes perfect sense. It’s like, I don’t need to be a purist or a holier than thou in that regard, right? But I just – it moves everyone in our current – the fragility of our current financial system to learn a little bit about self-custody in Bitcoin.
It’s like if you buy gold, do you want to put gold in your safe or do you want to put it with some custody and you never see it, right, and I have assets like that. I mean, obviously, a stock is like that, right? It’s at your brokerage.
And so what’s nice about Bitcoin is it’s incredibly cost effective to hold that Bitcoin yourself. And yeah, it has some security concerns, but it’s really not that hard to lose. Then there was also services that help with kind of a half custody. You have – they have a key, you have a key.
From an investor risk perspective, I mean, we have a lot of firms that have a good reputation, whether it be BlackRock, I mean a good reputation in terms of taking care of people’s funds, their money and benefiting them as clients, doing their fiduciary responsibilities. I think most of them in the space have done that and have a good reputation.
So my concern is having so much Bitcoin in one place can involve regulatory capture and all that. I mean, I dislike corporate and government collusion of all types. And those are concerns that I have. Could there be even worse? We have that much Bitcoin. Could they impact the network? Probably not. The miners really have a lot more impact on that.
I mean, if BlackRock started buying a bunch of miners and then started running a mining business and it was giant, then I would have even bigger concerns about that, for instance.
But I mean, I trust those guys to hold my coins in the exchanges that I trade short-term. If I have an asset that I want long-term like Bitcoin, I put it in my own wallets. So I’m trusting them, too. I’m doing the same thing, just different vehicle to trade. Stock market versus exchange versus a 24-hour exchange.
RS: You mentioned the miners, anything to say there how you categorize them, how you look at them, ones you like better than others?
RW: Yeah, I just generally, we haven’t seen good price action this entire cycle. And I’ve warned our subscribers about that. And we’ve taken some trades in crypto waves, but they’ve been very minimal success. And even those trades came with me saying, here’s the best setup I’ve seen in a while, let’s try it. It really was not – they were never inspiring price action in this cycle.
In general, I’ve been in the space long enough to watch their balance sheets and earning statements and all that over periods of time, and they’re really not impressive. I think it’s a challenging business. High energy costs, high real estate costs, high data throughput costs, and they haven’t managed their costs well, and they diluted their shareholders like crazy.
And so I think that I assume that shareholder dilution has affected the charts, but I don’t take chart trading from a fundamental, I don’t try to color it with the fundamentals. I just – I trade what the setup says and I just haven’t seen any much that’s good, and lots of setups that were decent and then failed.
When you’re a technical trader setups fail, not every trade you call, it’s not a predictive game, it’s – you see a setup that has a certain risk to reward in the price structure and it works or doesn’t, and you learn how to do it with confidence over a period of time, so that the marathon race is in your favor.
So yeah, and it just hasn’t been great in miners. And there isn’t a single one that I say, yeah. I took a trade in (CLSK) today, for instance, CleanSpark. It’s okay, and it’s the best one I’ve seen in a while. I have low expectations because of how few have played out, but it’s a small amount of capital that I risk on it.
RS: What made you get into that trade?
RW: It’s a setup. I mean, it had a strong reversal off the bottom. It means that reversal came maintaining its trend line. In terms of other miners, it has a lot less range bound. We call it range bound chop. So its price action seemed to have a more of a clear structure where its buying goes on and then where to sell.
So it’s just like, again, technical trading to me is risk to reward. It’s like, if I expect this place to hold, and if it doesn’t, I’m out, and I expect the upside to go to here. And naturally, you would want that upside to be many multiples of the risk to the downside. It’s a very simple risk to reward game versus – and if you can get – if your trades expect to produce 3x the risk, if you get a full target, then you can lose 30% of your trades.
Now I tend to hover, but anywhere between 40% and 70%, depending on how hot the setups are being – are going. But yeah, you can end up in a – I’ve had a quarter where I was 30%, literally 30% profitable, which is a really rare, rarely bad win rate in a quarter. This was a long time ago. And I tallied up all my profits at the end of it in the account that had that situation.
I was profitable, but that’s simply because, barely profitable, but that was simply because this skew between my wins and my losses in terms of win rate, and that’s all trading is. And I know I’m making it sound simplistic, but that’s why I took the CLSK trade. It’s like, okay, we have a strong reversal and I know where it should go if it works and that’s good enough.
RS: How do you divvy up your attention between trading and investing?
RW: Investing has very little of my attention because I hardly change my portfolio. Like for instance, the – an example of one of a few moves I made in the recently was the Cloudstrike event and CrowdStrike (CRWD) price crashed. I had taken profit earlier.
Again, some of it was because our Stock Wave’s team saw it as risky. So I took some profit. So I was in a good spot and it crashed. And I was like, well, I’m going to get a little bargain here. And I think if I’m not mistaken, I’m up from that purchase, but now I’m going to trade it back.
So I’m going to trade some of it out. But by doing that, I just accumulate over time, right? I’m just looking for bargains in investing because I want to have low prices in investing because I’m holding for long-term.
In trading, it’s a little different. I might be choosing momentum, like I may actually buy a high price to sell higher if it’s advantageous. But in investing, I always want low prices generally. I want things – I want to buy things in bear markets if I can, but can’t always do that.
RS: Where should we lead the discussion? Do you want to hit on politics and how everybody thinks one candidate is going to be better for the space than the other? Is that important?
RW: I think what’s most interesting is they have two candidates for sure that are pro crypto, Trump and RFK, all granted RFK, I assume, I think, I don’t trust polls, but he’s nowhere close, right? If you look at Kamala versus Trump, they’re like a couple percentages. Well, that’s a crap shoot.
I mean, I find a lot of people say, how could Trump be ahead? and the Trump fans say, how could Kamala be this close? And like, honestly, it doesn’t even, I mean, probably they’re both just as much disliked and liked, it’s the fact that what the polls say is it’s polarized, right? Our country is polarized, plain and simple, and each side can’t believe it, right, and it’s a crap shoot, like, really, like the percentile is going to change over the next few months, maybe.
But I think from a Bitcoin perspective, it’s interesting that two candidates have come out swinging for Bitcoin. I’ve heard all the theories that it could be just to win votes, right, on the Trump side. Okay, yeah, that’s fine. That’s – isn’t that what politicians do. And so I’m happy at least that, as long as he fulfills what he says he does, if he gets elected, great, it’ll be great for the industry. That’s not even a guarantee, right, that he fulfills his promises.
So I’m always a skeptic of politicians.
RS: As we should be.
RW: Yeah. I don’t care if they’re from a long life of politics or they just got in like Trump relatively speaking. So and then Kamala has classically been negative on crypto, but right now she’s quiet. And then if you listen to people “in the know.” like Scaramucci, who’s a classic Republican, but now a big Democratic donor, he’s in the crypto space. Ro Khanna, a Senator in California. And all of them, they say, well, the Kamala campaign is just waiting to come out with a pro stance or just trying to formulate where they’re at, right?
So, okay, that’s encouraging if it’s true. And again, these are all insiders supposedly, they know. I would love to see it, because then we have three candidates that are pro crypto. I mean, that’s a giant shift. Even Trump said, Bitcoin was harmful to the dollar. So he was very negative on crypto. His treasury secretary was even more negative during his first administration, Mnuchin.
So I guess position right, treasurer. Anyway, Mnuchin was very negative. And so that’s a shift. And now the Democrats are talking about shifting the – I don’t think they’re going to shift the platform, but they’re shifting a candidate’s stance or a candidate is shifting stance. I think if that happens, that would be phenomenal.
And yeah, so that’s a huge, I mean, it’s a sea change really, because we’ve basically had, I mean, the Biden administration was not so much negative as it let Elizabeth Warren have say, and she’s negative and she kind of ran the show, the negative side. She ran the SEC, she ran the – some of that banking policy and a lot of it was underhanded actually.
And then with Chevron, I think, the Chevron case being overthrown is really good for crypto because a lot of the actions against the crypto or crypto industry were being done via the previous Chevron ruling, which I’m not – I can’t name the whole case, but I know the basics of it that regulatory, regulatory agencies could fill in gaps in a bill or a statement of law by their own policies and regulations, like they could set policies.
And the Chevron overturn doesn’t allow agency to run rough shot against – if it’s vague, we can do this. They just simply cannot fill in the law where the – and it forces Congress to do their own work and homework and write proper bills, which maybe now Congress won’t be able to do anything because now they have a bigger job.
And there’s probably certain areas and areas of policy that I might go Chevron might hurt those areas, like I might actually be negative in certain things. But I just think that the previous ruling allowed for a sort of extrajudicial aspect of the law that is corrupt. I mean, it just – and I may be at times that it hurts things I care about that that was overturned.
But I think for law and order and for all of us to have people doing business and not having regular – regulation kill their businesses, especially for small mom and pop, I think, it’s a good ruling. I think now Congress needs to get on doing their job properly, which that’s a hard ask. That’s a difficult ask.
RS: To be sure, to be sure. So I wanted to ask you about the Ether ETFs now on the market, anything that you want to hit instead or before?
RW: I’m just not excited about Ether’s price action. I mean, last time we talked about it. I wrote an article and it’s simply the summary of it is the Ether Bitcoin pair that is available on most exchanges is in a strong, strong downtrend. And I don’t see – and it has blown to – I put up a level of support, let’s see, and it doesn’t hold, and it’s support after support, and now it’s on the edge of another one and shows no sign of holding. And so even this last crash hurt that pair even more.
So as a trader, I’m really not interested. I mean, Ether has a place in my portfolio to a degree because I work with DeFi, I do a lot of decentralized trading on the on-chain. I don’t know if I need to unpack what that is. That’s probably – that might be beyond a lot of your listeners, but I’ll keep some around, but even then I prefer Solana.
RS: You could give it a brief descriptor.
RW: Well, I mean, what’s interesting is some blockchains are what we call smart contract platforms. And so basically a smart contract can allow exchange between two people that agree to a smart contract. So how does a smart contract agreed upon the wallets? The wallets that we use allow a functionality.
So now you’ve got this what’s called a swap exchange or decentralized exchange, and you can go there and say, okay, I’m going to trade this token for this token. And what’s happening is those tokens are all in large pools that investors have put their money into in return for trading fees.
So where today, our exchanges are market makers that have an institutional duty to keep the market sane and liquid. We’re trading shares with them. And, of course, there’s also a counterparty. If I’m buying a stock, there’s always a seller on the other side, but the market maker sort of makes sure that happens fluidly and gets a profit out of it. The exchange gets a fee out of it.
Well, in a decentralized exchange, the decentralized protocol might get a fee. Most of the time it does a small one. But then in that situation, Joe Schmos like myself and others, we can put our capital in there. Like if I have Ether and say, the USDC stable coin, I can put it in there. I put both of them in there and that allows people to do a trade with my pools of assets, and then I get a fee in return.
So it’s a totally different model of exchanges. And it’s one where no one owns your asset, but you. So, you don’t have a broker clearing house holding your stock shares or clearing your options. You have the coin until you sign that smart contract to make the trade, and then you have the other coin instead and you never lose custody of your assets.
So it’s very safe from that standpoint. You do have to have security, just like in Bitcoin, you’ve got to have your security protocols down, but…
RS: What else do you think is important for investors to know or crypto investors or investors looking at the space?
RW: I just think in general, if you’re new to the space, just buy Bitcoin or a Bitcoin ETF, I mean, keep it simple. Like, even in my long-term, like I said earlier, long-term for me is some level of bonds, some level of dividend stocks, some level of general stock market, gold and Bitcoin. That’s it.
And I don’t mix Solana or Ether and like that long-term perspective because it – until it’s – until Bitcoin shows signs of not performing long-term for whatever that might be, how that might be, maybe it’s some change in the protocol or whatever, unless that changes, that is the long-term Bitcoin, and I haven’t – I have not seen yet any long-term price action from any crypto that makes any other choice warranted that may change.
There are lots of people that fan clubs for various protocols from Litecoin to Ripple that would say this or that about their favorite coin. The price action doesn’t stand up. I mean, Bitcoin has climbed cycle by cycle higher and higher, and is now, now we’ve got all this institutional support.
Ether, yeah, it was getting institutional support. We’ll see what that means. We’ll see if it changes the chart. The chart is really unhealthy right now. We’ll see if that changes.
RS: Is there something that might happen in the Ether space that would catalyze that kind of change? Is there something that you predict or not predict, but if it happened that that would…
RW: I don’t know. I mean, right now, basically, it’s like it’s got – been given the biggest go green light that it could possibly have in terms of the public space.
RS: And yet.
RW: Yet, no, the price action is terrible. And then I think that that just says that, again, research shows that news doesn’t impact things long-term. That’s a really good question.
I mean, in Elliott Wave people don’t tend to think of sort of the exogenous impacts of this and that. We tend to just see – we see the chart for what it is and make a judgment. But yeah, and I should say this, it’s fairly bad locally, I would say, or I would say price action is very bad over the last two years. It’s not to say that nothing in the chart says it will go on forever being bad.
It’s just right now that the reason I don’t bother with Ether is, one, the technology is a little slow and old compared to the other smart contracts. So I don’t favor it from a utility standpoint. And number 2, the Ether Bitcoin pair is in, as I said, a chronic downtrend.
So it doesn’t – if I’m making a bet on, say, let’s get some of these classic points in my portfolio, never mind arguments about which one’s really scarce and you can go on and on about the fundamentals, which one is a more stable protocol, which I would throw towards Ether, I mean, sorry, towards Bitcoin, I would choose Bitcoin if I – in those arguments.
Despite that, it just doesn’t make any sense because they’re very similar beta volatility, and one of them is in a strong downtrend versus the other. And so I would simply just pick the better performing asset.
RS: And withstanding all this volatility, best advice to investors, keep your wits about you? What you got?
RW: Yeah, I mean, get used to it. I would just say size down. If you are in this asset long, and there’s a great meme I saw today was like, OG Bitcoin during this Bitcoin or during this crash. And the guy was like drinking wine and burgers, and then they had green screened like rain and like tanks going by and he’s just sitting there drinking his wine and having whatever his cheese or sandwich or whatever and just relaxing. And with all this crazy stuff behind him. That’s kind of how it is for me.
I mean, I’ve been in this space for a long time now since before 2016. I think most time I quote 2013, I think that’s pretty accurate. I wish I just kept Bitcoin since then. I can’t say I did that. I was still trying to learn the space up until really 2015. But yeah, you have to get used to it. And so don’t panic sell.
And I think that it’s a very simple thing is to say, okay, I’m going to have 10% exposure. And then if it’s dropping, that means I’m going to buy, so it gets back to 10%.
So that you’re always buying lower, right? I think just something simple like that will keep you sane. And 10% usually, for most people, they can handle fluctuation. So if you have 10% of your portfolio in Bitcoin and it does another one of its 50% to 75% bear markets, which it should because that’s normal in it, then you’re buying a lot more at a very cheap price. But yeah, you’ve only lost like 5% to 7% of your portfolio’s value.
And that 5% to 7% loss will be given back to you, if patterns play out, will be given back to you 10x, right? That’s what happens when you buy at those – when you’ve lost 7% of that 10%. If you bought, then you would be soon have Bitcoin at 40% of your portfolio at the end of the next bull market. It’s really insane, but that’s how it works.
I’ve been through that, like okay, I lessened my exposure at the top. Now I’m down to 10% of my portfolio in Bitcoin. It drops down. Now it’s like hardly anything. I started doing DCA, dollar cost averaging. I started adding to it, try to get it back up to 10%. And then, yeah, right now, so right now, after this bull market, I’m really careful that way. And right now, in this bull market, Bitcoin is almost – or crypto in general is almost 50% of my portfolio, which is ridiculous, like it really is.
And so I’m trying to cut back, but most people would, I mean, there are a lot of Bitcoiners that this is all they do is buy Bitcoin and they have 100%. But for me, I’m a little more conservative. But that’s mostly gains. It’s mostly gains.
RS: Explain why the bear market is normal, why it goes down in a bear market, why that’s normal?
RW: It’s actually a fairly illiquid asset. People will argue with that. But if you look at a spot exchange, so when you look at an order book, one thing nice about crypto is exchange, you sort of see the level two, we call the level two data, which is all the orders that are sitting on the exchange. And you get that for free in the crypto space.
And you see it back in 2017, I would see that’s what we call top of the book like the bid and ask would be at like five, six to 10 bitcoin. You go look at it now, it’ll – it might pop to like one to three, but most of the time it’s like 0.5, sometimes even 0.03, 0.02. So if I came along with like one of my larger orders and just put it at market order, whether it be buy or sell, I wouldn’t move the market.
I’m just a retailer. And so it’s just volatile because it’s just thin. It’s a thinly traded market, at the end of the day. Or you can say, okay, it’s traded by the billions every day, but that’s spread across hundreds and hundreds of exchanges, thinned out, right? When we trade stocks, Apple (AAPL) trades a number of shares, but it’s traded out of centralized quote.
So everything is arbitraged to a very tight $0.01 “bid and ask.” And there’s so many shares out there traded in the same central quote that it doesn’t – someone comes along with – it takes a lot of money to move the Apple share market. But in Bitcoin, it’s really not that hard.
In fact, how you look at the book now? I’m not saying I’m that huge in Bitcoin, I’m just saying some of my orders, I just look at where we’re at in the liquidity sometimes and choose whether I want to take an ask or sell into a bid, or if I just want to do a limit and wait for the market to take it, so that I know what price, I mean, I have to make that decision now.
But as a retailer, I don’t have to make that decision in any other market. I just do market orders most of the time, options are different. The options I have to limit order, just not liquid, I mean. And so when you start getting fear in the market, people are selling at any price and it just goes down and then that’s – you get a feedback loop. So this goes and goes and goes and goes than any little rally people sell because they’re now nervous. So, yeah. Just natural feedback loop.
RS: I said this on another podcast. John D’Agostino from Coinbase said that volatility is not the same thing as risk when talking about the crypto markets. Yeah. I like that.
RW: Yeah.
RS: Yeah. Ryan, another conversation I really appreciate. I think our audience will as well. Any final words you have for our audience?
RW: Yeah, I mean, I’ll just say that, I wrote a recent article in Seeking Alpha. And I was – it’s clear that sentiment actually is not very pumped on Bitcoin because classically on Seeing Alpha, I’d have a lot more interested parties in my articles, and they would be more positive at this stage.
So I would say, I mean, despite my caution in the market, I would say sentiment in Bitcoin is rather muted. Actually, quite a lot of people that were so negative on Bitcoin. I mean, they were really – I don’t want to say insulting the article, but they were kind of going there. And that just speaks to where we’re at in crypto.
I would say don’t listen to those voices if you’re crypto curious as we say, do, again, like I said earlier, buy Bitcoin, just buy a little bit, keep it chill, and then learn to see how you handle it, just take it as a learning opportunity. And really if it’s okay, maybe not 10%, maybe that makes you nervous, 5%, whatever, get to a comfortable level. And if you prefer the ETF, do that.
And then I – and then learn how to buy when it’s dropping and crashing and all of that, learn how to do that because that’s what makes that makes crypto great actually on the wealth building side. I mean, it sounds crazy to some people, but you have to do it to understand.
RS: Yeah. So much of what we’ve talked about today and in general, when I look at the crypto space, it reminds me of cannabis, which I have a Cannabis Investing Podcast, and like politicians pandering to the community, check; price volatility, check; people stigmatizing what you’re talking about, check; burgeoning industry, check. And I think all those factors play into it and may cause for a lot of stigma, a lot of attacking. And to your point, I feel like when the attacks get really pointed and vociferous, I’m like, okay, we’re getting close.
RW: Yeah, yeah, yeah. Yeah, it’s weird that we’re there not too far off all-time highs. That’s what’s really strange about this cycle. It’s really, really, really strange. Yeah, I mean, people make cracking jokes, we just lost 30% of its value. I’m like, well, that’s about half of normal. This isn’t really bear market yet.
The standard in stock market is 10%, right? 10% correction is the beginning of a bear market. I don’t like characterizing bulls and bears that way. But yeah, like 30% of Bitcoin certainly is not – it’s a normal actual correction within an uptrend right now. So yeah, anyway, it’s a very different kind of market.
RS: Good stuff. Good stuff, Ryan. I appreciate you. Crypto Waves is Ryan’s service, Ryan Wilday on Seeking Alpha, on Twitter. Go check him out if you want to learn more about Crypto and how to invest and trade the space. Thanks for the conversation, Ryan. I hope to talk to you soon.
RW: You bet.
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