Making preparations for the coming bull run moon rocket trip
I spent a good deal of time this weekend getting my cryptocurrency affairs in order. More and more of my attention is getting pulled into the space, with the price of bitcoin hitting a yearly high, and insane price action happening in the distributed finance space. Altcoins are starting to make moves, and I needed to do some housekeeping to prepare for any possible parabolic runs.
I’ve got several dozen ERC-20 tokens associated with my Ethereum accounts that are easily accessible via my hard wallet, but a lot of tokens have their own softwallets, and I’ve many of them haven’t been accessed in months. Several are nothing more that backups of wallet files on old hard drives that I have laying around.
There are numerous stories over the years of people who have struggled to recover bitcoin funds after having forgotten about them for several years, only to find that their magical internet money is now worth millions of dollars. My favorite one is the guy that tried to dig up the city dump to find an old hard drive that he tossed out. I have no intention of being one of those guys.
Multicoin wallets
I’ve been debating whether I want to mess with syncing blockchains locally, or just doing it on a small AWS instance. A few days ago though, the subject of multicoin wallets came up, and spent some time Friday loading up Guarda, and figuring out how to import things into it. I managed to recover several chains successfully, but it doesn’t have everything that I need. There’s just too many coins and tokens out there for any one solution, so I kept looking at other solutions, like Coinomi.
I have a hard wallet that I’ve been using for my primary cold storage, and yesterday I found out that Exodus integrates with it. So I downloaded and gave it a go. It’s solid, allowing operations with the hard wallet directly through it’s UI. Operations still have to be confirmed on the device, but it allows operating on the Ethereum tokens without having to use MyEtherWallet or MyCrypto.
One problem that I have with it is that for many tokens, it doesn’t actually allow importing existing accounts, per se. It allows a “move funds” operation, which basically sweeps funds into Exodus’s (non hard-wallet) accounts. This leaves a bit of dust in the accounts. Guarda, by contrast actually stores the account keys, which means that they’re not moved.
Mental preparation
In 2017, my first bull run, I watched as bitcoin and various altcoins exploded in value, and my crypto portfolio increased ten times over in the span of a few weeks. I wasn’t mentally prepared, even after ten plus years of managing my own stocks. Nothing can prepare you for crypto’s parabolic runs. But just as quickly as things ran up, did they fall back down, and I watched what was potentially six figures of coins drop down to one-fifth over the following year. Now I’ve got strong hands, and didn’t sell anything, but I cursed myself for not taking profits when things were going crazy. I’ve spent the last two years of this dark crypto coming up with a plan for what I was going to do when bitcoin has it’s next bull run.
I feel that such a run is imminent. In the past, bitcoin’s runs have followed the four-year halving cycle, which passed earlier this summer. On chain metrics seem to be where they need to be, hashrate is at an all-time high, coins on exchanges at an all-time low, price action seems to indicate that we’re nearing the end of a long consolidation period; even Google trends seem to be indicating retail interest is picking up. And with institutional investors at the doors, there are all indications that this next cycle will be intense.
I had been dollar-cost averaging bitcoin weekly up until earlier this year, when I decided that the percentage of my net worth invested in bitcoin and adjacent public equities bordered on over exposure. I’ve set price targets on my equities based on value averaging protocols that I’ve implemented, and I’ve got a price target for bitcoin based on they Mayer Multiple, which tracks the price of bitcoin as a multiple of its moving average. My target is near the 2017 top, and when bitcoin hits it, I’m going to take some profits.
I also have a secondary target that I’m eyeing, which I’ve calculated as the price that bitcoin will hit that will give me financial independence, allowing me to pay off my car, student loan, and mortgage debt. I don’t have any plans to sell at this level, but when we hit this level (and I’m convinced that we will), I’ll be taking steps to make sure that this wealth is preserved.
Trading again
Since I’ve got all the fiat I can spare locked up in bitcoin for the foreseeable future, the goal now is to convert the other various cryptoassets that I’m holding into more bitcoin. Many of the other assets that I’ve acquired are doing quite well, but I’ve got a lot of others that have not. It’s time to clean them up.
Several tokens that I’ve been bag-holding for the past two years have had some signs of life lately. I’m still down eighty percent on some of these and they’re worth pocket change at this point, so it’s a perfect opportunity for me to get in the habit of selling. Carter Thomas was a big proponent of this during the last run. Selling small amounts and taking some profits, to make it easier to do so when the time comes to make life-changing trades.
There are many trading indicators that people can use to make decisions; the disciple is making it automatic, and not on emotion. I need to develop a system that I can write down and refer to so that I don’t mess things up and lose money. I’ve decided that I’m going to use the TD Sequential indicator, which is available through Trading View.
A couple of my tokens have hit new yearly highs, triggering this indicator, so I moved them to the exchange last night and set limit orders. Most exchanges don’t have trailing limits like most brokerages, so for now I’ll be keeping a tight eye on them while I research automated options. I could only bring myself to move the ones worth three figures in value. The ones worth less aren’t worth my time right now, and I can’t bring myself to touch the ones worth more.
Things quickly get serious when trades have a thirty or forty percent gain overnight, and you’re looking at a five figures trade. Having a plan is good, but when things take you unaware, then doing nothing is usually better than falling prey to emotion. Price may take a dive, but most times I’ve found things tend to consolidate, giving you time to think. This is more true of more established tokens. Many small cap coins are heavily susceptible to pump and dumps.
The important is not to get caught by FOMO and rush into a decision. The goal here is to buy low and sell high, not the other way around, so a plan is a must. While my long-term strategy is to accumulate more BTC, I’ve got several other tokens that I’m bullish on long term, and will be looking for entry points on these as I sell off some of my other losers. Getting caught up in some other shitcoin because of a recent pump is a no-no.
Risk management is critical, as is having a exit strategy. If I’m going to base entry on a position based on the TD Sequential, then I’ll makes sure I have a stop loss based on my two percent max loss rule, and will use the sequential indicator for when it’s time to sell. None of this fly by night trading.
…and Taxes
Taxes are inevitable. I’m aiming for life-changing gains in the next year or two, and I’ve got to make sure that the IRS gets their due. I’ve used CoinTracking during the last bull run, and renewed my subscription last night in preparation for my first sales in a year and a half. There’s going to be a lot of loss harvesting as I clean up positions, and CoinTracking will make sure that all my realized gains and losses are compiled into a nice report that I can use next April. It will pull the transactions directly from many exchanges through APIs, as well as public Ethereum transactions. I’ve got some work to do to get things cleaned up with my softwallets though.
It also tracks mining proceeds, but it’s a bit more difficult to keep that up to date. The proper guidance is to declare cost basis when the coins are mined, but keeping up with the sheer amount of transactions is impossible. Instead, I prefer to use cost basis of zero and record the transaction when coins are exchanged. I’ll admit that it’s a bit of uncharted territory for me, and a lot depends on what the coin is and whether they touch exchanges that I’ve KYC’d on, or addresses that may have interacted exchanges in the past. This isn’t a big deal for me since most of the coins I’ve mined, with the exception of some ETH or ETC, have never left the mining address.