Bitcoin Market Update

Since the BTC market is trading down about 35% in the past few days I thought I would write a quick blurb about my thoughts and personal trades.

I am buying small amounts at these prices and also anticipating the price will go down more from here. I made a withdrawal from an exchange in June of this year for a decent amount of dollars but it never came through. I asked to have the withdrawal canceled so I have the ability to buy right away. In Canada at least it can be difficult to move dollars to and from exchanges. I always keep a balance of cash in my bank account and stock brokerage accounts so that in the case where they go bankrupt I will have enough to pay taxes and live until I can move other assets around.

My thought is that BTC is a good thing to have as a long term investment. I think the chance of it becoming much more valuable in the next few years is higher than the chance it won’t.

The market tends to cycle through extreme peaks and valleys. Looking back you can see this between $0.30 – $30, $10 – $1000, $250 – 20,000.00. Being in a downtrend now I wanted to see how the current price relative to the last peak compares historically so I put a new report together.

The red line chart shows the relative level from the last peak. When the value is 0 that is an all time high. You can see that of all past data that I have collected only 8.7% of it has been been at a price level lower relative to the peak than is it currently. You can also see several trend reversals below our current level.

I think it’s reasonable for the price to go down lower so that it matches the same past levels but then hopefully it will continue in another uptrend.

Here is another chart I like to look at. It plots the relative rate of change. Currently the rate of decline in price is so fast that only 1.31% of the past data has exceeded it. I use this chart to sell when the rate of price rise approaches the previous maximums. When the rate of decline is low like it is now I buy small amounts regularly.

These charts are available at http://algomega.com. I plan on implementing email notifications of significant market opportunities as a service later on if there is any interest.

 

Update: Down From Peak with Time

Part of my interest in making charts to visualize relationships of price metrics over time is to find possible indicators that somewhat accurately measure the scenarios that correspond with with beginning of a bull run in order to buy and conversely the end of a run in order to sell.

In this case I have a drop from peak by time chart for use as a possible buy signal. The hypothesis is that the market runs up until it’s overvalued and people jump in and drive the price into a peak then it corrects and sags for a long period until everyone is convinced that the price has bottomed before people slowly start to reinvest. So I have added the time from the last peak as a multiplayer to the ‘down from peak’ value. This is because if the market is cyclical between under and overvalues states, the longer the market remains in a valley state the less likely it is to remain there. I suspect that people look at the price charts and recognize the undervalued state to buy in.

This report does accurately show the bottom price in 2015 as the black line is very high. The chart isn’t scaled very well in that it doesn’t show a consistent result between different cycles so I will keep thinking about this.

 

I don’t have much data for Ethereum, Litecoin and Dash but the charts are pretty interesting as well.

 

Update 2 – Nov 25, 2018

Just noting that after another day the price has dropped again and the rate of decline over thirty days is so fast that only 0.42% of past history or 11 days have been faster than this and only 2.92% of past history (76 days) has ever been lower from the last peak down from 9% two days ago.

Financial Independence One Year On.

It’s been one year since I was let go of my job as a software developer. A lot has changed over the last year and I thought I would share some of my experience and thoughts.

To me financial independence meant that I had to accumulate enough money and invested assets that I could draw on them an amount up to 4% of the total each year with an additional margin and have that cover all of my living expenses.

It took me about ten years to achieve this when it was the primary focus meaning all other financial decisions come second to investing only for independence. And most of the gains happened in the last year thanks to gains in Bitcoin.

After not working a job it took more than six months for my stress level from work to wind down. It’s hard to describe how stress manifested for me, it was like a pressure on my chest.

Over the year a big perspective change comes about from a change in habits. Most days I stay up late working on my car company because I love it. Each day it free to socialize or walk my dogs. I inherently feel like I can afford anything I want and need. My dog needed surgery that cost $10,000.00 and the only reaction was of gratitude that my dogs need was effortlessly met. Social gatherings are pure enjoyment regardless of the cost. I feel like everything is free for me, strata fees, bills, groceries, wine for gifts when I go to other peoples houses etc.

Passion for projects and people has become the primary topic of my awareness which is motivating and incredibly satisfying.

The primary source of suffering has gone from the need for dedicating 8-12 hours a day to the job to more fundamental and evolving issues around personal growth. I think the core issue is that at a job you can only work on a few issues at a time because the time is dedicated to production where as personal freedom allows us to address specific issues head on and move on when we are done.

One question I had while working as an employee was about the nature of happiness and reward. I have always wanted freedom over my time to do and think about the things I want and not what I have to in order to pay the bills. I wondered that when I didn’t have to work would the satisfaction of achievement of that goal diminish over time. Well it hasn’t. Personal freedom for me has been a new horizon. It is a paradigm shift and my consciousness feels more alive in a way I could only envision for brief moments in the past.

My current plan is to build my car company, http://armaautomotive.com so that the very few people who really want a supercar can have one. The price is high but not necessarily money. Additionally I have a few other business project lined up but the large focus for me is in building a more connected social network and meet new people to learn and enjoy fun and service based explorations.

 

A Riddle on Money

Here is a fun riddle for the next social gathering you find yourself at. Before I get into it I will say that it is a fair riddle in that it is not a trick question. Anyone who knows how the dollar / monetary system works will be able to figure it out just by thinking about it. The answer is common sense but also sounds nonsensical at the same time.

The question is: How many dollars are there in total for the whole country. This works for both Canada and the USA. This includes all of the money that everyone in and outside of the country own for, Citizens, government, foreigners, including Cash, coins, bank deposits, etc. The answer is correct if within 100% of the actual number. So if the answer was hypothetically one trillion dollars a two trillion dollar answer is close enough to be correct.

The only rules are that you have to subtract all of the debts from the total. I.e. A dollar can’t be used even if you have it in your wallet or bank account if you also owe another dollar to someone. This is because you don’t really own that dollar, you are effectively just borrowing it.

The answer? The grand total of all dollars in the country? It is $0.00. There are no dollars when settled on a balance sheet.

I know this isn’t really fun riddle I promised at the start. The paradox is that we think of dollars as an asset even though they are a debt instrument. The reason for this is that all dollars are created as debt from banks with interest attached. But the interest currency is not created so there will always be more debt then currency.

I used to have a website that tracked the amount owed by each Canadian citizen for the interest on debts owed by the government. I haven’t updated it in years so I will pull down some new data and update that soon. I think it’s around $18K per person.