I decided it is a good idea to start documenting my thoughts each month, what actions I did and why so that I can review them in the future and find out how my vision of reality played out in comparison with what actually happened.
As mentioned in the post here I am accumulating Bitcoin at this time at a rate of 0.15 BTC / month. Since there is not a lot going on at the Bitcoin markets at this time I decided to not take further action and trade on those levels, I will just continue to accumulate as I planned last December. I am also not willing to trade altcoins or Bitcoin on leverage since I find more fun to trade in the USA markets instead.
I started playing with USA options and I managed to not blow up my account yet. I started trading them on January and by end of January I am down 50% . For me this is a satisfying performance since I am learning how to trade them. I use online resources to educate myself and bought a couple of options books which I find very useful.
The biggest mistake that I made 2 times and that I am not going to repeat again is that I traded options on Twitter and on Netflix earnings. That is I bought puts and bet that the direction of the stock will go down for Netflix and I bought Calls and Puts for Twitter options.
Both options had very close expiry dates and there was not enough time for the stock to make a move that I would end up in profit.
All options were bought at the Money, however the Implied Volatility was really high when I bought them and that means that I overpaid for them.
Twitter actually went down but since I had Call and Put options with a ration of 5 / 3 the down movement was not enough to end me in net profit.
For those two trades I lost around $2000 so the lesson I learned is that I should never buy any options which expire shortly after an Earnings Release. Even if the stock moves at my direction I tend to close fast my winning positions and let my losing positions keep losing so this game is not for me.
For February I will be only trading Amazon options. My plan is to buy weekly puts and calls on the same strike price and review their performance and the end of each day. I have put a take profit limit and I will avoid looking at them during the day because my Emotions do not let me think clearly. I started with this tactic during January end and I made around $900.
I hope next month that the Bitcoin markets are more exciting so that I can trade a bit of Bitcoins as well.
My trading bot is too much hassle for me at the moment to maintain so I decided to release the source code with an explanation of what it does and how to use it. Another reason is that with time the Coinbase pump is not that strong and sometimes a coin instead of pumping it will dump, so I decided that it does not worth the risk of running it anymore. Lastly it seems like Coinbase for the time being is not doing any listings and I am not in the mood to have the Bot running for weeks without any listing. Having an instance running in AWS for months without getting any Coinbase listing is frustrating.
This bot is constantly fetching the Coingbase blog looking for new posts that include new coin listing in their titles and then buys them instantly on Bittrex. For example when Coinbase announces a new listing they title their Blog post something in the lines of:
ZEC trading on Coinbase Pro is about to begin. The ZEC/USDC order book will now enter Post-Only mode.
So we have previously defined a list of all currencies that we expect Coinbase to list in the future and we just keep fetching their website until one of them is listed. If multiple currencies are listed on Coinbase together as it happened in the past, the list defined mentioned above is ordered so the currency higher in the order will be bought in the end. For example if Stellar is higher in the listing than Ripple, it will be bought instead of Ripple.
Note that Coinbase Pro makes a new tweet every time they list a new coin, however their blog post announcement always comes first since their tweet includes a link to their blog post, so it makes sense to directly query the site instead of twitter, and believe me every millisecond counts.
varquery_milliseconds=460;// ms seconds between requests
vartrade_amount=0.15// BTC to sell for buying the listed currency.
We define the Bittrex key and the Bittrex secret we have generated from Bittrex. You can generate one from your account settings and also make sure to enable trading for this key but disable account withdrawals as a safe practice. This is because the bot uses your Bittrex account to buy the coin once it is listed on Coinbase.
We also define how often we query Coinbase for new listings, the order book depth that we want to run the buy order and the amount of $BTC we are willing to sell. I explain below what is the depth of the order book and why it is important for Bittrex.
Last variable is the Coinbase URL we are querying. Note that we only query their initial page. What that means is that Coinbase blog supports infinite scrolling and the more we scroll down the more articles are fetched and shown. However we only fetch the “top” page since new coins are listed on their first page always, as it is important to get visibility. We do this via the URL that you see above. It returns the Coinbase blog in a JSON format we can easily filter for every post title.
That is the main loop of the application that is performing the function fetch coinbase every 460ms as we defined above. You can adjust this value according to your needs and your network.
thrownewError("[COINBASE] Network error");
All the function does is continuously fetching the latest Coinbase blog posts. As they are fetched in JSON format we can easily filter and take all the titles from the latest posts. We pack all the titles in a single line and convert it into uppercase and then we call the extract_currencies function which will check if there are any currencies mentioned in the titles.
Here is the extract_currencies function which is pretty simple. It checks if the titles that were fetched before contain the word STELLAR or XLM. We do this for every available currency which is available to buy on Bittrex and is not yet listed on Coinbase. You see above if the blog title contains one of these two words the function get_bittrex_price_by_currency() is called and we also pass the trade_amount which is the amount of BTC that we want to sell in order to buy XLM. Let’s move to this function then.
We first make a query on Bittrex in order to get the latest market price. As you see we do not fetch the best available price but we get a bit lower in the orderbook as defined in the variable bittrex_order_depth. We do that because with Bittrex we cannot perform a market buy. We need to specifically define the price we are willing to pay.
Imagine a scenario where the latest BTCXLM price is 0.00003000. If we put this value in our order we have a chance that someone else’s bot is quicker than us to buy at 0.00003000 so all we have left is an open buy order that is not executed.
Since the price is rising tremendously in the second of the announcement we want to make sure that we will eventually get XLM, therefore we just buy the 40th order. I have done some experimenting and this is a good depth which can give us a 10% – 15 % return.
So once we have the price that we want to buy we call the function set_bittrex_order(currency,price,trade_amount) with the currency we want to buy and the amount of Bitcoin we are willing to pay for it.
This is the last part where we construct the signed request to Bittrex to execute our order. We need to include our Bittrex key and our Bittrex secret as defined by the Bittrex API and then perform an HTTP Get to the /marketbuy endpoint.
Once the bot places the order it then stops execution as it has fulfilled its goal.
You can download the Chrome Extension here. Make sure you add your Bittrex keys and secrets and you know exactly what you are doing. Make sure to add the coins you want to track and remove the ones that are already configured. If you mindlessly get the add on and start running it you will lose your money.
As mentioned here I am expecting the new Bitcoin Bull run to take place around 2024. That means that I will be using these 5 years in order to accumulate more Bitcoins.
Currently my only income comes from my day job so I will be assigning a part of it on BTC. I am currently writing a post that goes through my income distribution on various investments and this post will shed more light into it.
Making a long term plan like this does not give a great satisfaction since a small amount of USD is dedicated every month in order to buy a small amount of BTC. Also it is the nature of BTC that makes this adventure risky as at any point it can break down. In addition at the moment there is not at all any upside movement in order to make this grind a bit more exciting. I predict it to be a long grind which I will document in this frequently updated post.
To make this more fun I am planning of buying monthly the same amount of S&P500 in USD until 2024 and then have a comparison between them
I will not explain again in this post why I believe that there will not be a bull run at the 2020 halving. To summarize everyone knows of the next halving and it will be pretty obvious that this scenario plays as exactly as everyone is expecting. Everyone at the moment is pricing in that the next bull run will take place in or around 2020.
I expect that the halving in 2024 will be the catalyst of the next bull run since by then the whole Bitcoin infrastructure will have matured, having a history of 15 years behind it and with the help of Lightning Network enabling small low fee payments.
My goal is to accumulate in total 12 bitcoins by the end of 2024. That means that I will be buying around 2 bitcoins per year for 6 years in total. I need to invest also in a hardware wallet as at the time of writing I am just using a mobile wallet which so far has served me pretty good.
I expect the price to be around $1500 – $8000 up until 2020 and I will be buying more as the price reaches my lower limit and sell once it goes close to the upper limit. The $6000 acted as a strong support during 2018 so I am expecting it also to be a strong resistance on the way up. I have no idea what the price is going to be later as anyone else but with today’s data and given my budget I think the 0.15 BTC monthly allocation is something that I can afford.
As far as shitcoins go, I have currently no open position. I am expecting them to slowly dissapear once people realize what a scam they are. As mentioned earlier I am not good at trading so I am trying to avoid it as much as possible. If the opportunity is given however I will trade a small part with the hope to accumulate more Bitcoins.
I am expecting a phase where Bitcoin price will be around $1000. I assume that this will be a desperation phase where most of people will have lost their conviction for the future of Bitcoin. I am also seeing myself being psychologically affected by such a price drop however I will stick to my plan and buy aggressively.
Below is my currently scheduled plan which will be subject to modification according market reactions. In the case that a Bull run would seem to start I will stop buying as scheduled and start selling instead. My goal again is to have around 12 additional bitcoins by the end of 2024. Below is the base plan that I have in mind. I will however deviate from it a bit as descirbed in the modifications. I will keep updating this scenario as well so that in the future I have a reference and be able to see how well I performed in comparison with it.
Theoretical Scenario of buying the same amount each month.
One week after I have written this post I was looking at the bitcoin historical chart and I had the following idea. I took the major support areas of the previous years and charted them below. You can see the price around these areas are around $3000, $1800 and $900.
So I was thinking that I will continue averaging down as originally planned but I needed to take into consideration these 3 significant support/resistance price areas. The big question is if that these areas are reached at all in the future. Because if they are not reached the plan that I am about to write will be useless so I need to take into consideration the case where these prices are not reached.
Why it is important to consider these 3 price areas other than their historical significance ? Because it is not the same if I buy bitcoin around $900 and If I buy around $3000. I get around 3 times more bitcoin when I buy around $900 in case the price is of course reached. So the point is to delay buying at $3000 so that I can buy 3 times around $900. But how do we do that ?
First let’s note that in the whole post I made the assumption that the price of bitcoin will reach lows around $1000. If it happens and the BTC price goes much lower then the whole model described above does not make much sense. So we need to think of a way to buy or to delay buying bitcoin according to the current price and these three future resistance areas. We also want to buy more when the price is near $900 ( which according to our model is around the lowest the price could go) and buy around 3 times less when the price is around $3000. ( which is about 3x 900 ). At the same time however we do not want to wait for something that potentially never happens, for example bitcoin reaching $700. So an example scenario would be : we avoid buying at the current level of say $2000 because we expect that the price will go lower at $1000 but we are wrong and the price begins to skyrocket so we are left with nothing because we were expecting to buy on lower prices that never came.
We need then to assign a probability at our current scenarios which are the following. Also we need to adjust this probability monthly since we update our model once per month. Also a monthly adjustment is required since the price of $BTC will eventually start moving upwards but since we are now in a downtrend movement the following will do:
Monthly Probability Chart – To be updated at the end of each Month
0 < $BTC < 800. – 10 % probability of that happening – action: Buy full amount 800 < $BTC < 1800. – 30 % probability of that happening – action : Buy full amount / 2 1800 < $BTC < 3200. – 60 % probability of that happening – action: Buy full amount/3
In addition I would like to cover the case that I am wrong and that there will be indeed a bull run in 2021, at the next halving. As i am writing my thoughts a lot of scenarios play in my mind that should be considered. But I would like in this phase to forget about this scenario and talk about it in the next modification, so I will continue will the current Modification 1 and talk about the 2021 Bull run scenario in the future.
So for now we have considered the worst scenarios that are about to happen and we want to adjust our buying strategy. With the initial assumption we would buy 0.15 $BTC per month. However with these additional scenarios in mind it would make sense to adjust this 0.15 according to the current price and the projection of the future price. So what I am about to do is that I will be buying less than 0.15 BTC monthly and the amount that remains I will put in on open limit order near the next support area since we are in a fully bear market. If the limit order is not executed until the next scheduled buy is due , the amount that is on the limit buy I will transfer and buy at the current month
Amount to buy monthly <= 0.15 BTC. The remaining amount will be transferred to be bought in a future date. If the current Bitcoin price were $800 ( which is the lowest according to our model) we would buy the maximum monthly allocated 0.15 $BTC. Since there is 10 % chance the price will go under 800 where we would buy the full amount , 30 % chance the price will go around 1800 where we would buy the half of full amount and 60% that the price would be around 3200 we have the following numbers:
0.1 x 0.15 + 0.3 x 0.15/2 + 0.7 x 0.15/3 = 0,0725
So instead of buying the full 0.15 we originally allocated as a monthly buy, we will buy 0.0725 instead and the remaining 0.0775 will be transferred and be bought in a future date. However what will happen if the price continues to rise ? That means that the next month we will have to buy Bitcoin more expensive. However if the price continues to fall it means we will have saved some of our capital to buy it cheaper. So the question that comes next is for how long should we continue avoid buying the maximum amount we are willing to dedicate each month ?
The remaining 0.07681 that I would have bought if I followed the original plan I have placed in a limit order if the $BTC price reaches the support around $3240. I chose the $3240 support since this is a level I am happy with to buy given the current market.
This is the strategy as of now and I will update it If I have some better idea during the next days or in February!
I will allow myself instead of just buying at the last day of each month as originally thought, to be able to buy during the whole month. I can chose the day that I buy.
Since Modification 2 allows me to buy Bitcoin during any day of the current month I thought of the following : I could trade the amount that I allocated to the current Month in order to trade it. That means I could buy for example 0.15 once BTC price is let’s say for example $3000 and then trade it in the same month in the hope that I can increase this amount by month’s end.
However this can play against me therefore I will test it only for February. I will allow for a 8 % stop limit of a total amount of 0.15 BTC that I allocated to the current month.
I thought of a modification what will allow me to reach my goal of gathering 12.5 BTC by 2024 faster. Since I am speculating in the USA stock market I will be using a part of my profit into buying BTC. The current plan is that once and If I become profitable I will be using the 1 / 3 of the profit into buying Bitcoin. This modification comes in effect at the time of writing this article , 12.02.2019.
Start of February edit: So far this tactic mentioned below does not seem to work. I fully followed my emotions and I made really bad trades. It has being a really painful experience but I have learned a lot. I left the original post up so that I can read it and see how foolish it was to just trade with Emotions the result is catastrophic. I have being trading however on USA Markets and not on Bitcoin markets. I am not willing at the moment to give away any of the hard earned Satoshis I have made.
I developed a system through the pain that seems to bring results which I am going to further exercise and improve and post an update on March post.
End of January edit: So far I have not made any Crypto trade this year. Just following my standard monthly BTC buying tactic as mentioned here.
Unfortunately our emotions blind us and force us to make irrational decisions when our money is at stake. When I am trading I always hear an inner voice telling me what I am doing is wrong.
There is however another voice that comes from deeper within that gives me the belief that what I am doing is right.
Sometimes I listen to both of these voices and position myself so that I can satisfy both of them. Sometimes the inner voice is right and sometimes the outer voice is right.I have come to believe that all this is just a game of chance and I am just paranoid.
There are just so many variables to consider when trading. It is a kind of freedom that actually constricts us, so we need to set some rules in order to make sense of it
Every single decision I make is based on the fact that I know nothing. I am putting myself out there with the goal of minimizing the potential damage and maximizing the potential gains that can be made.
History repeats itself but in unknown intervals so that we cannot base our decisions on her. What goes up has to come down based on the law of physics but the timeline of the rise and fall is unknown so for us it makes no sense to follow this and similar rules.
How can we make sure that our portfolio will continue going up regardless of what the market does ? Theoretically this is possible since we can both gain or lose by the market going up or down.
But maybe this is the wrong question to ask. We want a portfolio that goes up regardless of what is happening around us. In a way we want our portfolio to defy the rules of physics.
Can it be that we have being asking the wrong questions therefore we found no right answer?
How about a “liquid” portfolio that just follows the market, or maybe a portfolio that does the opposite of what the market does.
For the first question we have already an answer with Index investing. We follow the market and we stop there. We buy a ticket and play along. And we of course cannot do the opposite of what the market does since we do not know what she will do.
What if we trade only based on emotions ? My gut feeling tells me buy and then my gut feeling tells me sell. How would this strategy work ? Not really good because everyone tells us to not trade with emotions.
So I decided to do just that. For 2019 I will trade with emotions. But not the kind of emotions of taking revenge or making the wrong right.
I will just follow the flow- the sum of my emotions so to say – and see where it takes me.
Here I want to post for reference the number of git commits each of the top currencies had during 2018. I did not include forked repositories as this would disturb the final results.
The results include ALL the repositories that belong to an organization, unless stated otherwise in comments, see for example Ethereum.
You may see different results reported on other sources however I assume that they only counted the main repository of an organization. For example bitcoin/bitcoin.
We need to take into consideration that we did not include the forked repositories. For example the litecoin and bitcoin Cash repos are both forked from bitcoin. Therefore changed done to the repositories after the fork are not taken into consideration, therefore their number is a lower.
For BitcoinSV they did not directly fork the repository but they just copy-pasted it and the commits from the old Bitcoin repository are left there so we do not have a way to say what really belongs to BSV and what not.
Unfortunately those numbers do not give us much to conclude but it is always fun to have them around.
They are getting especially interesting when we check repositories of smaller projects which are constantly promoted but once we see their repositories we see that there are almost no commits.
Edit: This Trade turned stopped out. A lot of information came out about how the Stellar Foundation works which made me completely revise my opinion and position on Stellar which was initially positive.
This is the XLMBTC trading chart during 2018. It seems that the resistance is always around 4*00 Satoshis and support is around 2900-3000. We are currently at 3134.
It seems pretty obvious that is currently a buy however check the following chart including December of 2017.
Now it does not look exactly like a buy, since its price was massively pumped during last December.
Should we follow the 2018 trend which is a scream Buy or should we consider also the 2017 pump that raised its value Tremendously ?
I decided to enter the trade at 3154 Satoshi. I will close the position once we fall under 2700 Satoshi which looks like a good support. I will also close the position around 3900 whatever comes first.
Additional things I considered:
XLM can be listed in Coinbase which can hopefully pump the price for a while. This trade looks similar to how BTC was behaving in 2018 in that it always found support around $6000. Once this support was broken the price fell to $3000, so I am afraid that the same could happen here.
I am somehow not feeling very comfortable doing this Trade, let’s gamble it how it will turn out !
In this 2 series post I try to explain why we see an instant price pump when a new coin is listed on Coinbase and Binance . I do not want to only explain why it happens but also to demonstrate it, by providing a bot that is programmed to do exactly that. Buy at the moment the listing is announced.
In theory when a new cryptocurrency is announced to be listed on Coinbase/Binance the coin becomes available to a wider audience so there would be more potential buyers ( and sellers as well – more on that below) something that would make the price rise. Bot traders try to maximize their gains based on this knowledge by implementing bots that buy the new listed currency the second it is announced and then try to sell it much higher later.
This pump is purely artificial . Above I mentioned that a new Coinbase/Binance listing creates new buy and sell demand. Why we do not see the price drop instead of rising then the moment of a new listing ? I think it is because of three reasons
History of new listings
Bot competition could only work upwards
History of new Listings
2017 was the year that one could make a lot of returns by trading new listings. Binance and Coinbase started listing coins and at the same time a lot of newcomers were buying crypto. These two were the exchanges with the most traded volume. As they started listing new coins their price would sky rocket and then it would continue increasing for the whole 2017 since we were in a Bull market. New listings could cause 100 % increase of a token’s value in seconds. This is also when the first bots appeared. Coinbase and Binance gave liquidity that was like never before.
in 2018 we see a continuation of this pattern, albeit with a much lesser effect. Pumps are not that hard, they happen, but their duration is as much as 2 or 3 minutes and then the coin’s value starts decreasing. We have also seeing the opposite effect on Coinbase BAT listing , the moment it got listed it got dumped massively -because everyone was expecting it to be listed.
Bot Competition could only work upwards
Once a new listing is announced the bots would immediately buy the to be listed coin on an Exchange. That exchange could not be Coinbase/Binance since the trading was not available at the time of the announcement. Since it is historically expected that the price would increase, the bot would continue to buy the newest coins. This is the only way to make money when the price is expected to go up.
In general this is what is happening right now as of December 2018. The bots pump slightly the price but then since they know that the coins they pump do not have any real value and since we are in a Bear market and the sentiment is negative they try to get rid of them as quickly as possible. If you see the latest Binance and Coinbase listings you can observe that after the initial pump of the coin its value after a couple of weeks gets halved or even more which is in line with all the other coins.
Exchanges are not regulated and there are privileged employees that get information ahead of others. Of course we cannot blame anyone that insider trading happens since everyone is denying it but I firmly believe that it does based on the bot reactions I have seeing, where a coin’s price would pump before the announcement.
Now there are other ways to check for a new listed coin, for example an API call could return a result of a coin that is not yet officially listed and that would give us a hint, so it can be that other bots more clever than ours found a way to “discover” a new listing.
I wrote a simple bot that listens on Coinbase blog and waits for new coin listing announcements. The millisecond the announcement is made the bot will buy the to-be listed currency on Bittrex. I will be posting it with a source code commentary on the next Post.
I bought my first Bitcoin during December 2017 and then I kept adding on my position so as you can understand so far I have theoretically “lost” money. Since I bought what I could afford to lose the current situation does not bother me.
My philosophy along the journey was to to trade other shitcoins against Bitcoin so that I would end up with more Bitcoins in the end.
I have kept my original investment and I was lucky in some trades where I would buy around 6000 which was a great support during 2018 and then sold much higher. Still with the current valuation I am looking at a big lose but I really admire bitcoin and I never thought for a second to sell any Satoshi of it.
Around that time I also started to read about Bitcoin and I was really amazed of how could a human being, or a team of them come up with such an elegant discovery. I fell in love with it and I started developing bots that would trade the news for me with the goal of increasing my bitcoin bag as much as possible.
There is a group of people called Bitcoin maximalists that maintain that sometime in the future Bitcoin will replace all global Currencies and it will become the dominant way people transact and store value. I tried to adapt this philosophy but somehow it did not click. I do not care what is the most acceptable medium of exchange or store of value as long as I have enough of it to lead a comfortable life.
By definition the most acceptable medium of exchange is the currency that most people accept and at the moment this is USD. I am not willing to get in a fight with anyone that claims that a specific currency should be established as the dominant one and I will simply use the one which is at the current moment.
I believe that the all time high of $20.000 was achieved through market manipulation. In general the whole Cryptocurrency market is very shady and extremely prone to manipulation. I also invest in USA/Europe markets with a lot of success but the way the crypto markets behave leave me feeling useless.
I do not claim that because I cannot consistently trade BTC markets that the markets are manipulated but that because the market is manipulated I cannot consistently trade them so I avoid doing it anymore.
The only action that I am performing right now is Bitcoin accumulation. So far I have only being buying Bitcoin but I have some ideas that I could also sell for Bitcoin.
Given the nature of Bitcoin where miners are rewarded less of it every couple of years, it is to follow that the price should increase, since the rate of Bitcoin creation is falling. That is what at least happened in the past. I expect it also to happen in the future therefore I believe 2019 and 2020 will be a good year to accumulate.
However there are risks involved in a continuous accumulation like the one I am performing since it is not guaranteed that Bitcoin will not be hacked , deemed Illegal or just cease to exist, thus turning the whole investment useless. This is a risk I am willing to accept.
So during this Bear Market I am accumulating more Bitcoin. I am considering buying every month $500 worth of BTC until the end of 2019. Also I would be trading any opportunities if given. With the current price valuation that would mean that I could increase my stack of Bitcoin by 2. However this is a rough estimate. Here is to the next year.