In one week I made $20,000 dollars.
Tossing and turning I ignored the blaring of my phone. But, after a few minutes, I repented. Drearily rolled out of bed. A call from dad. Better pick that up.
On any normal day, my dad is a 7 a.m. sharp, creaseless bed making, coffee brewing, breakfast cooking, slamming yoga, one hundred pushups, five-minute showering, and straight on a business call before the clock strikes 7:59 kind of guy. So no surprise he calls me at such an ungodly early time on a weekend. But I love our calls. He captures the efficiency of a military debrief without losing the warm edge of being my dad as we catch up. Fifteen minutes, in and out.
On the agenda today, a task.
A friend told him about a new crypto-startup called Bitclout which had grown from one dollar to $50 in a few weeks. That’s insanity. And my dad wanted in. However, he wasn’t as familiar with the complexities of crypto wallets, exchange rates, and transaction fees to get his money into it with the least cost and as fast as possible. That’s where I come in.
Blitz out a shower, throw on some clean clothes, down a protein bar, and get to work. I had invested a few hundred dollars of birthday money in crypto-currency a few months earlier and made $500 dollars. And the few months of experience was fantastic to explore the crypto-ecosystem of trading.
So, I had $25,000 from him sitting in my bank account and I got to work.
At the time you could only purchase Bitclout with Bitcoin. So I needed a crypto-wallet.
Coinbase was my best choice. Upside: insanely simple to use; can trade anything; and I already had an account set up. Downside: simplicity means well built; well built means a trading fee of 4 percent. And every wallet I know of has an unavoidable three-day hold on bought crypto for security reasons (to stop scammers from faking a deposit, buying crypto, and canceling the transaction on their card).
Four percent of $25,000 is $1,000, so I needed to buy the Bitcoin in a way that I could make back the $1,000 on the last day of the three holding days. Luckily, Bitcoin is pretty volatile, so I hatched a patchwork trading strategy:
Find the average price for the past few weeks: that’s my midline. Next, glance at any news that might point to an upward or downward trend: it turns out a structural change was arriving soon that would increase the difficulty of mining. Thus, scarcity would increase leading probably to the same or higher price. Calculate out the total price difference between buying and exchanging needed to cover the transaction fee, and set an alert for when Bitcoin dropped to half that price difference under the average of a few weeks. Wait a few hours, ding, buy. Three days later, set an alert for when Bitcoin swings half of the price difference above the average. Wait a few hours, ding, exchange to Bitclout. The result: covering the whole transaction fee with a little extra on top from catching a higher swing before exchanging.
Four days later, Bitclout’s price snowballs up to a $20,000 profit and is still rising.
Experienced traders might scowl at my technique. It probably isn’t the perfect way to trade, and my judgments could even be seen as shots in the dark, but, maybe miraculously, it worked.
There is no one way to get rich from cryptocurrency, but examining the modern forces behind it will help.
The Power of Influencers
Elon Musk has the 17th most followed Twitter account with over 50 million followers. And there is a uniqueness to the youth and passion of his fans. To many, he represents a beacon of hope for a better future with space colonies, electric vehicles, and renewably powered cities.
So it comes as no surprise that he was able to make the price of Bitcoin drop by 15 percent in a day due to his criticism of the extremely high amount of fossil fuel used to back its mining and transactions. And he isn’t wrong, Bitcoin miners use more power than the country of Norway per year. But, it is terrifying to think that such individuals can single-handedly move markets. Because he’s done this before. He sent dogecoin prices up 30 percent in May after tweeting that he was working with developers of the cryptocurrency to improve its efficiency.
With globalization and access to fast reliable internet connections, icons like Elon Musk can rise to spectacular levels of popularity. Gone are the days of local legends. So look for those vital celebrities and make sure your notifications are on for when they post because we are seeing a transformation in the movement of markets at the whims of their fanbases.
Meme Stocks and the Gamification of Trading
Apps like Robinhood have given everyday traders (dubbed “retail” traders) easy, efficient access to trade whatever they want. Combine this with the ability to rally passionate communities of thousands on Reddit and you get the Meme Stock.
These graphs show the stock of AMC and Gamestop, two companies that were adopted by the subreddit r/WallStreetBets (a community of retail traders). In grassroots movements fuelled by memes, hype, and constant posts of support the community was able to make millions appear in days. One post detailed a teenager who went from $750 to $30,000 from investing in AMC early on in the hype wave.
And the adrenaline rush is enthralling. Regardless of making or losing money, in the end, it’s insanely entertaining for them. It’s not anything serious or long-term; it’s just a game. And I will be watching closely in the future for the next hype waves that roll around. And if you can invest early and settle before it’s too late, you can join in the excitement.
NFTs Are the Future
Non-fungible tokens represent a fundamental change in the ability for people to quantify virtual artifacts, representing the time and stories behind them. Whether it’s memes, artwork, or even tangible goods, the flexibility of NFTs shows the transformation of digital economies.
Our economy is unlike anything before. And it is evolving endlessly and rapidly. By keeping in touch with the crypto-developments of the future you can get in on the big opportunities that will present themselves to us retail traders.
And here are some reading suggestions on cryptocurrency:
Cryptocurrency Investing For Dummies
The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them
Blockchain Bubble or Revolution: The Future of Bitcoin, Blockchains, and Cryptocurrencies
The Bitcoin Standard: The Decentralized Alternative to Central Banking