The Truth of BTC (Episode 3: The Invisible Hand….of Belarus)

        1.)    So what is the Truth of BTC?  Where is the Bull market of 2014?  Why did Bitcoin sell off all year long?  Why does Tim Draper purchasing 29k Bitcoin mean absolutely nothing?  How did all of Crypto end up the bag holders of the premier cryptographic currency?  The answer is actually quite simple, 2nd grade math and the barter system 😉

Lets start at the beginning shall we!  The Wallstreet Cheat Sheet we all are familiar with shows us the psychology of markets during a cycle: We see this same pattern over and over and over again.  It happens in the Nikkei, Dow jones, Nasdaq, Stocks, Penny stocks, Oil, Gold, Bitcoin, and even shitcoins like Blackcoin it just doesnt even matter what.  What do all those markets have in common……Just one thing.  HUMANS!!!  Herd behavior at its finest! Reference Truth of BTC (Episode 1: Fractals) Now back in March I posted a chart on twitter and to this blog of a “Secret Bull Market” that was soon to come!…..um yah it was that obvious in March? (+1 for #TA):

1. A barter system is an old method of exchange. Th is system has been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return.

Simple enough question but you would be surprised the amount of different answers you will get.

Sounds simple enough right.  Like say I want a sheep and you need a cow we can meet up and we can do an exchange of COW/SHEEP.  Let say sheep are in short supply maybe then I need 2COW/SHEEP….whatever the agreed upon exchange rate as soon as you make the deal you guys have a market!

What you are looking at is nothing more than a fraction….like 1/2, x/y or COW/SHEEP or EUR/USD or BTC/USD…..see where this is going?  Don’t worry be patient it gets better.  Fractions that we all learned in 2nd grade is the magic of markets and it never gets old to watch lol.  Anyway in our market of COW/SHEEP or EUR/USD we are only really concerned with the part we own in the end.  So If I go long COW/SHEEP I go hope with a cow and the other person a sheep.  Another example if I sell someone Bitcoin for USD I will go home with USD while they take home BTC at an agreed upon exchange rate we look at as BTC/USD.  To own BTC in exchange for USD is what I am doing here.  If the person would accept one of my cows for it I would express this relationship as BTC/COW  and you would ask well how much btc do I get for the cow?

Lets say I get 100 BTC for my Cow  then my fraction/ratio will change to 100btc/cow.   This is no different than BTC/USD because markets are fractal it is exactly the same except instead of the denomination being cow it has become the USD.

In our modern economy we believe the barter system to be dead and gone simply because we have changed the medium of exchange.  By definition this is true but structurally nothing has change at all.  Lets look again at this cow example.  I know my cow is worth $10,000 or 10k/Cow.  I also know that my cow is worth 100btc.  So we have the value of the same cow in 2 different markets with two different denominations right?  Well in grade school we learned how to handle fractions or some of us did if you were awake and not drooling on your desk trying to hid the fact you were asleep behind one of your text books.

What happens when you divide 2 fractions? In our example lets say we divide (100btc/cow)  by ($10,000/cow)  = 100btc/$10,000 or 1btc/$100.

Your BTCUSD exchange rate would be $100/BTC.   This simple logic is of massive importance in markets.  We will revisit this point later.

 

2.)     Similar assets in markets tend to exhibit correlation over time albeit to varying degrees.  We see this in FX, Stocks, and in crypto.  This phenomenon has to do with our perception of exchangeability between these assets.

If Dogecoin runs up 100% and DRK BC VRC have not moved the perception would be that all things being equal if nothing has fundamentally changed about Doge then BC VRC DRK are now at a discount in the marketplace.  On the flip side of it you could also say that Doge coin is overpriced in terms of DRK VRC BTC.  These clashing perceptions are one of the main reasons we see correlation like this between similar assets in the market place.

Whether global currency or digital asset it makes no difference.  Within their own respective worlds these assets have a peer group.  In stocks it is the same when speaking about the Semiconductor group, Banking Stocks, Home Builders and so on.  Similar assets perform similarly under similar conditions.  The real opportunities lie in the perception of value and how one perceives it.  Recognizing overpriced assets early can leave you open for many opportunities most cannot see “The Year of Reversions”:

3.) How does this all play into BTC?  Glad you asked!  It takes all of that to get us to this point.  I entered the BITCOIN market space in mid early Novmember 2013 which if any of you recall was a very volatile period in the market prior to the Mt. Gox debacle.  At that time we saw BTC hit all time highs well over $1,000 only to be followed by an entire year of pain for longs.  So what happened?  There are endless technicians on twitter with a myriad of opinions.  There are millionaires and billionaires on CNBC, & BLOOMBERG ready to give you a different story. How about that TIM DRAPER or MARC ANDRESSEN surely all of them couldn’t have all gotten this wrong this year that called for a massive bull market and are holding tons of BTC with far more intel than the public.  How did so many BTC bulls get left holding the bag exactly?  And if all of them are buying then who is out selling everyone???  Back to fractions we go ?!

It comes back to our COW/SHEEP cross…..like our BTC/USD we have a choice of how we would like to obtain BTC.  I could give you X amount of Sheep for it and if your not interested in my sheep I could give you a dollar equivalent amount of USD.  To make it more simple:

LTCUSD is really LTC/USD which is right now $3.70.  BTCUSD is BTC/USD which is right now $354.  Divide BTCUSD/LTCUSD and your cow goes away!  You get LTC/BTC = 0.01045…. So what good does that do me?

ENTER BTCE

The often under rated secretive exchange in lawless Belarus probably made arguably the best case for regulations in capital markets I have ever seen.  What happens when you get a couple guys really good at math in a country that checks nothing against a market full of kids for the most part who don’t seem to know basic mathematics and are prone to herd behavior…..yup you guest it RAPE!!!

No I don’t mean in these coins ppcbtc nmcbtc ltcbtc….but close very very close.  We see our beautiful correlated assets against btc trading over on BTCE nice and peacefully. Again we are back to grade school math and herd behavior.  Everyone wants to own some of them old BITCOINS….well ok thats fine.  Who ever said you could only do it one way?  You ever wonder why you need checks and balances in markets look no further than BTCE.  No one ever figured out why no other coins outside of LTC PPC NMC made it to margin land in the alt game.  But if you understand anything about how margin and shorting works in capital markets it would have been ridiculously obvious what was going to go down in March 2014 to BTC….. I hope TIM DRAPER’S TA specialist had this research or I will be taking his resignation letter and filling the void for Tim in the near future.BTC vs FIAT(s):

Here we see a number of selections you could use to own some of those BITCOINS you want so badly.  Ok fine no one wants to accept SHEEP or COWS for BTC but the will take fiat if you got it.  And again we see our beautiful correlated assets.  Same btc vs all these similar fiats nice!  Well about those fractions…..I can own BTC for anything right?  I know because of fractions if I want PIZZA/BTC or PIZZA/USD that I can find he exchange rate of BTC/USD.  Math is so cool! Well if the entire herd has to own BTCUSD and doesn’t realize that once you sell your fiat for BTC that you do not own BTCUSD but you own only BTC this creates a hell of an opportunity for an exchange that has unlimited shorting capabilities that is not under any checks and balances to be audited as to the holdings being borrowed against &  combined with secret miner farms producing incredible supply  ?….OH F***!!! These fractions are gonna be a killer on the test tomorrow……Lets take another look at LTCBTC PPCBTC NMCBTC……maybe people are a little too fixated on the numerator.  How about I use a simple function 1/x and help you see this one a little bit better:-)  Lets rewrite these guys as BTCLTC BTCPPC BTCNMC….

BTCPPC up 500% 2014 now that is a bull market chart!!!!  BTCNMC up 375% & BTCLTC 250% omfg how did we miss this in 2014.  Bitcoin was in a bull market all year W…..T……F!  LOLOLOL it’s that freaking funny.  A reciprocal of a fraction hid the entire bull market from 99.9999% of crypto…….(cricket noises coming from the audience)…..  That is just awesomely funny…..yah it took about 4 mins of looking at that chart for me to go long BTCPPC & BTCNMC and sit on them all year with a bucket of popcorn!!I watched a presumed authority on LTC from the Netherlands buy the ltcbtc ratio into the ground all year and recommend to countless followers to follow him into the fire.  ….if he flipped it over do you think he would have shorted into a bull market all year? ?????How about the guys telling you to buy LTCUSD because its like the Silver to GOLD in BTC….lol.  All crap!  Fractions baby! Dumping on all of you regardless of your opinions, dreams, fantasy logic or imaginary TA…..(more cricket sounds from the audience) If you do not understand 2nd grade math and fractions you have no business being in capital markets at all or directing others into the path of an oncoming train.  For the noobs be open to asking questions and taking in new information…Only a fool makes assumptions and there a great many in Crypto who wish they approached learning about Technical Analysis the right way.

BTC was in a bull market all year just not against USD RUR or EUR.  You are not buying BTCUSD….you are buying BTC in exchange of USD or DRK or PPC or LTC or COWS or SHEEP…….in the end you will own the NUMERATOR and be short the denominator.   #Math keeps us safe while the car is still moving kids.  Buying pizza with BTC, as the Director of the Crypto Economy stated, cannot destroy BTC unless you are a moron that doesn’t know how fractions work.  If you are directing anything it should be traffic only and that is probably a bad idea still ? So back on market focus  which one of these order books has the liquidity to make a market against the fools starring only at BTCUSD & PPCUSD lol….math is a funny as subject…..divide them away and we get ppcbtc or more correctly BTCPPC….  This part in itself is another all together but by now you should have enough info here to have had your own Eureka Moment!

The Nasdaq Crash cycle chart is old news…..If Tim Draper is who everyone claims he is either closing his hedge with the 29k btc purchase or he needs to fire his analyst and drop me an email.Enter “Wallstreet Cheat  Sheet Version 2.0. “BTCNMC —–My team and I exited with the little monkey and moved back to larger capital markets!! ?   Like Jim Cramer always says there is always a Bull market somewhere….sometimes its right under your noses you just have to look for it.

#TA or technical analysis gets thrown around pretty loosely these days.  Like I said before not everyone that sticks that on the end of a tweet knows TA.  The few of us that do just chuckle about the stuff that gets posted each day.  Do your own home work guys, there a lot of fools dying to lead you to the slaughter.  BTCE was the only game in town that allowed the short position to be long BTCPPC BTCNMC BTCLTC….Thank anyone that told you that exchange was nothing in the game and HOUBI OKCOIN BITFINEX were the place to be….Yah ok….ummm NO! You dumbasses you just dodged the entire BTC bull market of 2014 and helped everyone sit in BTC FIAT for Approx -50% losses while BTC vs PPC NMC LTC  went up nearly 500-300%… The worst part is many of you took your followers and misdirected pretty much every single solitary person in crypto away from the opportunity.  WOW!  Can’t wait till one of you tweets another one of your tremendous calls or analysis ?.  Bull Markets are all around you but it’s not likely many will find them before they are obvious.  Good ideas are scarce and there is no comfort in the herd. P.S…..All year I warned of the regulations that would be coming around fall and before the BTC ETF hit markets. The time has come and weak exchanges are an endangered species watch your BTC’s?…