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It’s a crisis, nothing new under the sun!
It won’t have escaped your notice: it’s crisis time!
Diplomatic crisis with the conflict between Russia and Ukraine, but also with Biden playing vatenguerre with China.
Health crisis with COVID giving way to Monkeypox.
Economic crisis with all stock markets collapsing and inflation breaking records (5% in France!!!! 8% in Europe!!! 70% in Turkey!!!
Raw materials crisis…
So it’s a crisis! And for what we’re interested in here (the crypto market): the question is whether we be worried about the security of the capital we invest in the Crypto Bulot strategy?
To answer this question, let’s take a look at what happened in the new technology market (remember, I believe that the crypto market will experience the same evolution as the new technology market, but at an accelerated pace) at the time of the last major crisis, i.e. the subprime crisis of 2008.
As you can see from the graph above, the market has risen from 1,600 (beginning of the graph at the end of 2006) to 2,200 after 1 year, i.e. at the end of 2007.
This represents a 37.5% increase in the market!
37.5% in 2007 is huge!
But then things get complicated.
Late 2007 saw the start of the subprime crisis… All markets collapse, including the new technology market. As a result, the market went from 2,200 to 1,000 (end 2008)!!!! A drop of 54.5%!
Parallels with the Crypto market:
Now let’s compare it with the Crypto market…
To do this, let’s look at the evolution of Bitcoin:
In January 2021, BTC was at $34,000, rising to $64,000 by the end of 2021, an increase of 88%… That was before the crisis! With the crisis, we’ve gone from $64,000 to $30,000 (in June 2022), a fall of 53%!!!!
Don’t you feel like history is repeating itself??? 🙂
So if history is repeating itself, let’s take a look at what happened in the new technology market AFTER the subprime crisis…
I’ve circled the 2007 crisis in blue on the graph above, because in the grand scheme of things, it seems anecdotal… And yet the figures at the time were impressive! As impressive, in fact, as the crypto market slump we’ve been experiencing since late 2021.
I think you can see where I’m going with this graph… 🙂
Admittedly, the crisis caused the new technologies index to fall to 1,600… But 14 years later, that same index has risen to 16,000, a 10-fold increase!
Why is that? Because crises are fleeting…
Technological evolution, on the other hand, is a long-term process!
Now what do you do when you’re emotionally caught up in a crisis?
The 1st piece of advice is to take a step back from the situation, because when you step back, things look very different.
I’ve written this article so that you can regularly come back to it and say to yourself, “Oh yes, it’s true that on a timescale what seems huge to us today will be ridiculously small in a few years’ time”.
Just as the foamy waves seem to rise out of the chaos, when in fact the sea is relatively calm.
The 2nd tipis not to look at the waves, but rather at the horizon!
When you’re on a boat and feeling seasick, the trick to getting better is to look at the horizon… This way, the information sent to your brain is less hectic, enabling it to regulate it. But if you look at the waves, your vestibular system becomes saturated, and that’s what makes you sick.
What’s the skyline on the crypto market? Well, it’s all the structuring news on the market.
One example is the evolution of crypto adoption by investors. At the beginning of the year, 8% of French people had invested in cryptos, and this figure is expected to rise to 50% by 2022(see my article on the ADAN/KPMG study).
In mid-May, an ECB study indicated that 10% of European households have already invested in cryptos.
Another example: the AMF is tightening its regulations for service providers linked to the crypto market. Do you really think the AMF would tighten its regulatory constraints for a market doomed to disappear?
The latest examples:
Following the outbursts at the Champions League final over counterfeit tickets, the Stade de France will be using NFTs (which are property titles guaranteed to be unique by Blockchain technology) as tickets to the Ed Sheeran concert on July 29 and 30.
You see, this information has no short-term impact on the crypto market… But it’s valuable information, because it’s a weak signal that the technological revolution is underway.
As I explained in the training course, with the Crypto Bulot strategy, we’re not aiming for short-term gains that are driven by market fluctuations that escape us… We’re aiming for the market explosion that will be driven by the adoption curve of uses linked to crypto technology.
When blockchain technologies become ubiquitous in our daily lives (with the payment of our small and large expenses, with the certification of property rights backed by NFTs, with smartcontracts…) as the internet and social networks have become, where do you think the crypto market will be?
I’m convinced that it will be light years ahead of what it is today… And if the market for new technologies has grown x10 in 14 years, I think we can expect AT MINIMUM the same thing in 2x less time.
The 3rd piece of advice, is to remember that with the Crypto Bulot Strategy, you can’t lose all your capital like with any other trading strategy.
What do traders do? They have a global capital and then decide to make very short-term trades with a small portion of this capital. They don’t stake their entire capital on each trade, because they’d risk losing it all on just 1 transaction. But even so, if the trader makes a series of losing trades, over time his capital only shrinks until it disappears altogether.
With the Crypto Bulot strategy, we don’t run the risk of losing everything following a bad series of trades. It’s impossible, because we put all our capital into the top 30 cryptos of the moment. And so the rebalancing that takes place each month only involves margin trades (of small importance) to keep only Top30 cryptos.
So, as the months go by, the value of your capital varies according to the value of the cryptos, but you still own the quantities of cryptos you’ve bought.
It’s like buying a classic car. Over the months and years, its value may go up and down depending on its rarity and market appeal, but whatever the value of your car, you still own it.
It’s important to understand this principle, because it’s what makes it possible to understand that as long as you haven’t sold (and you haven’t exited the strategy), well, you haven’t lost.
Which brings me to Tip 4…
Tip 4is to remember that 100% of investors who exit during a crisis are losers!
Why do the majority of investors lose out? Even in a market that has long been bullish like cryptos…
Simply because they entered the market out of greed when it was rising. And they got out out of panic fear when it was going down. So they bought at almost the peak and sold at almost the bottom.
It’s not “common sense” that drives these investors, it’s emotion.
And in the crypto market, as in the stock market, you need to be aware that it’s a zero-sum market, meaning you’re investing against others.
In the end, investors who are driven by their emotions lose out to those who have a strategy and stick to it.
And on this subject, remember that the Bulot is a scavenger that feeds on the dead flesh of crabs… So let’s leave the crabs to fight it out in the foam of the waves, and wait quietly for the weather to give us something to eat and our capital to grow.
In conclusion:
I’d like this article to help you gain some perspective on the situation…
Yes we’re in a crisis. Yes, the crypto market is doing badly. Yes, it’s bearish and we still have no visibility as to when it will rise again.
Now, the Crypto Bulot strategy is not one to be evaluated over 6 months or even 1 year… I’ve always transparently explained that you need to invest with a time horizon of at least 2-3 years. And that the biggest gains will be made when crypto technology becomes ubiquitous in our daily lives. And believe me, when we get there, the crisis of 2022 will seem ridiculous in the same way that the crisis of 2008 seems ridiculous in terms of its impact on the new technology market after 14 years.
And when we take a closer look at the structuring elements that inform us about the adoption of blockchain technologies, we realize that the technological revolution is underway.
So, now more than ever, it’s time to fully embrace your Bulot role and stick to your rock, no matter how high or low the tide! Bulot’s word!!!
