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How to Beat Bitcoin Holders at Their Own Game

My inbox has been flooded with emails since sharing my Greed Gauge last Tuesday.

Your emails mean a lot to me. They show me what you want to see more of.

And sometimes, they show me opportunities I’ve been missing…

I want to share part of an email from Marcus D. He insightfully noted:

“I am thinking this Greed Gauge of yours could be applicable to crypto, where the daily gains can reach thousands of percent. Just thinking ahead here.”

Now, I’ve been researching crypto for months. But when it came to testing my Greed Gauge, I overlooked crypto markets.

Marcus, you pushed me to do what I should have done earlier.

And frankly, the results blew me away…

Greed Gauge & the King of Meme Trades

I’ve been trading for decades. When crypto came along, I thought I had enough markets to trade. I couldn’t even think of adding another.

That is until I saw how volatile cryptos could be. I realized this volatility could make for great trades.

To be clear, I’m not ready to believe bitcoin or other cryptocurrencies are going to change the financial system. Most cryptos will go to zero, in my opinion.

But that doesn’t mean we can’t profit off them in the meantime.

Just take a look at this chart of Dogecoin (DOGE):

(Click here to view larger image.)

DOGE was created as joke in 2013. It didn’t move much until December of 2020, when Elon Musk tweeted about it. After that, the coin soared.

Gains were measured in the thousands of percent some days. And followed by huge losses on others.

When tweets dictate price action, trading these moves is next to impossible. But not if you had the Greed Gauge.

The green shaded areas above signify a Greed Gauge buy signal. It accurately timed four out of five moves higher — including a 350% move in January 2021. 

Now, I think of Dogecoin as an “edge case.” That’s a term programmers use to describe an extreme example. Relative to the stock market, it’s possible to look at the entire crypto universe as an edge case.

But the oldest crypto, bitcoin, seems to be the least volatile of the tradable coins. It’s what I’ve focused the majority of my research on.

And when I apply the Greed Gauge to bitcoin, we get an extremely profitable crypto strategy…

This Makes 7,494% Look Bad

The initial price for bitcoin was about $388 back in 2016. The recent price is about $29,465.

That’s 7,494% — an incredible return for a buy-and-hold strategy.

But it pales in comparison to the Greed Gauge’s returns…

To backtest the Greed Gauge, I assumed I held bitcoin only when the indicator was on a buy signal. I simply “bought” when the signal turned bullish, and “sold” when the indicator flipped to bearish.

Starting with $388, the amount needed to buy one bitcoin at the start of the test, the account value grew to $36,026.

That’s 22% more than buy and hold. Not bad at all.

But even better? The Greed Gauge also reduced risk compared to just holding bitcoin.

Bitcoin experienced five declines of at least 50% in the past six years. It dropped more than 80% in 2018.

Yet, when trading it with the Greed Gauge… the worst drawdown on the account was just 32%. That’s still high, but much better than buy and hold.

Thanks to Marcus, I now know that the Greed Gauge can also be profitably applied to crypto. And this proves to me that the dynamics of greed and fear permeate through all capital markets, no matter how new or old they are.

So, if you haven’t yet seen my presentation on the power of the Greed Gauge, you’ll want to click here and check it out.

No matter what kind of market we’re trading, we can depend on the Greed Gauge to churn out profitable opportunities.

Regards,

Michael Carr, CMT, CFTe
Editor, True Options Masters

P.S. I hinted at this earlier, but I have another new trading strategy in the works. Unlike the Greed Gauge, it’s tuned specifically to bitcoin.

And it’s an even more profitable and less risky alternative to holding bitcoin than what I showed you today.

It’s still in the early stages, but keep an eye out for more on this in the weeks and months to come.

Turns Out, Brick and Mortar Is Sturdy

By Mike Merson, Managing Editor, True Options Masters

(Click here to view larger image.)

While digesting the latest red flag from Target (TGT) this morning — the retailer is dealing with a severe glut in inventory by lowering prices and canceling orders — I wanted to see how the competition is faring.

And it paints a clear picture…

Remember a few years back when everyone and their dog proclaimed the end of brick-and-mortar retail?

Well, it seems that the brick-and-mortar-killers are the ones getting killed — and twice as fast.

The chart above compares the price performance of traditional retailers Walmart (WMT), TJX Companies (TJC), Williams-Sonoma (WSM), and TGT…

With two key internet-based home furnishing companies — Overstock.com (OSTK) and Wayfair (W).

As we can see, the two “techy” retailers make the losses in the brick-and-mortar stalwarts look like a speed bump.

What to make of this?

Expect further weakness in retail across the board, and especially in the internet-based names, as the issues facing Target continue to pile up and show up more prominently in these other stocks.

There will be a great time to buy some of these stocks, but it won’t be until the dust clears and the retail inventory picture begins to improve.

Regards,

Mike Merson
Managing Editor, True Options Masters

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