FULL Cryptocurrency Trading Course – From Beginner To EXPERT
https://www.youtube.com/watch?v=2ByOXdddmDM
Transcript:
This crypto course will give you everything you need to get started trading cryptocurrency. All of these topics will be listed as timestamps down in the description below, alongside loads of other links, free resources and other videos that I mention in this one. We’re going to be looking at how macroeconomics affects crypto, why Bitcoin exists and how it spawned this entire industry, how altcoins play into this, then going ahead and analyzing crypto both from on-chain and technical standpoints
then how to actually trade at the end of this video we’re looking at how to use a blockchain as well if you don’t know me yet I’m James I used to work on the London Stock Exchange but I’m not your financial advisor and I can’t give you any specific financial advice so just keep that in mind when watching this video let’s get started though with what exactly is crypto anyway.
You may have seen sites like CoinGecko or CoinMarketCap and seen all these different cryptos and thought, what are these? How do they work? Are they the same or are they different? And why are they valued differently? Well, firstly, let’s split up the difference between a crypto and a blockchain. A crypto is simply a digital representation of value now that can be very different depending on the coin you can have something like bitcoin which simply represents the bitcoin network or you can have a token that represents a diamond or a bond and so they’re
not the same and they’re not equal, even though they’re both crypto assets. Ultimately, a crypto lets us transfer or trade value from ourselves to someone else 24-7, peer-to-peer, meaning that there’s no intermediary in between. We don’t need a broker, we don’t need an exchange, and we can do that on the blockchain 24 seven. So ultimately a crypto asset lets us transfer value peer to peer 24 seven 365.
The blockchain is the actual thing that enables us to transfer those assets. So a blockchain is simply a ledger of accounts. When you create a blockchain wallet, what you’re really doing is creating an account, just like opening a bank account. And if you had money in your bank account, the bank would keep a ledger of all of your transactions.
Now, the difference with a blockchain is this is distributed amongst unconnected participants around the world. So there’s thousands of people running the Bitcoin blockchain and they don’t have any links to each other and the blockchain keeps them honest in that they can’t mess with our transactions.
So when we submit a transaction the blockchain sends it through and those nodes go and carry out that transaction for us. It keeps a record of history around the world. So it’s basically like money in the cloud, but nobody really owns the cloud. And it allows for crypto assets to be sent between the accounts on that blockchain. So it’s a decentralized way to send value peer to peer.
And the blockchain network allows for that. no centralized authority like a bank or a money institution or a government it’s you versus me and i’ll send you money myself using the blockchain and no one can get in the middle now let’s look at the types of crypto that there are because blockchains would always have a specific blockchain layer one coin that represents that blockchain.
And when you want to use a blockchain, you have to pay a small fee to the blockchain participants for processing your transaction. And we call that gas. So if you want to use your Bitcoin and send it to someone else, you’ll have to pay a small amount of Bitcoin to the network and a small amount of gas is taken out of your transaction.
Every blockchain will have a layer one coin that you use to pay for gas on that network. Tokens though are completely different. Tokens are built on top of blockchains and they represent something else, not the blockchain itself. So you can have protocol tokens or exchange tokens, and these represent something built on top of the blockchain. So there’s a decentralized exchange or a decentralized lending protocol where I can lend money to you and you pay an interest to me.
That’s a protocol in itself, and that can have a token that represents the value of that protocol. There are also real world assets like stable coins, which represent dollars in a bank. So we can easily send dollars around on the Internet. And then there are many other types of tokens that represent something else.
For example, if you use a lending protocol, you probably need a receipt for what you’re lending out so that you know that you have it and you can call that loan back. Well, that receipt token would be its own separate thing and it would more be like a utility token in that instance.
Then you have non-fungible tokens, which we’ll look at in a second. And of course, many scam tokens, because anyone can create a token pretty much for free there’s going to be lots of scams and other types of tokens that don’t really represent anything at all other than basically the people that create them wanting to sell it to you to get rich so everything exists on the internet and everything exists on block chains because it can be represented by a token.
There are really three main different types of token or coin. You have this one, the coins. These are the layer one gas coins that represent the blockchain network. Then you have tokens which are fungible. This is a stable coin called USDT and this represents dollars. Just like dollars are fungible, if I gave you $10, you could swap it around with another one and give it back to me and it’s fungible. I wouldn’t care.
It’s exactly the same. It’s $10. Same for dollar stable coins on blockchains. But of course, you need to represent unique things as well, which is why we have non-fungible tokens. Simply unique things. So a token that represents one specific artwork has to be unique because you can’t swap it with anyone else. And hence we get non-fungible tokens as well.
They’re the three main areas within crypto. So we know that coins and tokens can represent value in completely different ways and can have different attributes. And the way that we try to write down those attributes in a way that we can understand is called tokenomics. It’s the economics of tokens or coins.
And so these can be very different depending on the blockchain or the crypto asset itself. So let’s have a look at this. Firstly, we value cryptos in dollars. So if you go to a site like CoinGecko, you’ll see down here all of the cryptos and they’re usually listed by the most valuable first, which as of making this video is BTC.
And you can see the price here. This price represents how many dollars it takes to buy one unit of the cryptocurrency. So as of right now, one unit of Bitcoin costs around about $46,000. Now you can buy a fraction of a Bitcoin so you can buy 0.0001 of a Bitcoin, no problem, that’s going to cost you a lot less money, but it’s one unit of the crypto, how many dollars does it take to buy that? Now every single crypto has a different supply meaning that anyone can create these coins and so they can create the supply themselves. So if we look at
Bitcoin we know that Bitcoin has a total supply. The protocol itself was written to have a total max supply of 21 million coins. That’s all that will ever be created and the protocol can’t create any more of them. There is a circulating supply right now, which is the amount of coins that are in existence.
It’s around 19.6 million coins right now. So what we can very easily do is work out the total value of this crypto. We call that the market cap or the market capitalization. So what you do is you take the price per one unit around $46,000 and you multiply that by the circulating supply which is around $19.
6 million and that gives you a total market value of $900 billion. so it’s the most expensive asset in crypto as of making this video we can also see there is a 24 hour trading volume that’s the dollar amount traded each day which is this amount and the fully diluted valuation is the valuation where we take the price per coin and we multiply it by the max potential supply which is 21 million coins.
So what we can know is that each coin has a different supply, there are a different amount of coins and so they have a different price. But in order to accurately compare the value of each blockchain or coin or token, you have to look at the market cap. That’s going to give you an overview of the actual total value.
So we know that Bitcoin has a market cap of 900 billion and Ethereum has a market cap of 300 billion. And so Ethereum is around one third the value of Bitcoin. But if you just looked at the price, you would see Ethereum is much cheaper. What we can deduce by this is that Ethereum has more coins than Bitcoin. So if you click into Ethereum, you can see there are way more coins.
You’re looking at around 120 million coins, right, instead of 21 million. So tokenomics can change, but to compare coins and tokens, we really need to look at the market cap. Why do people create these tokens? There are many different reasons. So Bitcoin was created by Satoshi and he created it as a peer-to-peer money and then left the network and it kind of spawned from there.
Other types of tokens can be created for other purposes. For example, ICOos or initial coin offerings that is when someone has an idea for a project and doesn’t have any money and so what they say is to investors give us dollars so that we can spend those dollars to make our idea or our project real and bring it into life.
And we’ll give you some tokens that we just created. This is basically the same as equity in the network that they’re creating or the protocol or the business that they’re creating. And that’s the same in equity as well. If you start a business, you can create equity within the business and you can sell that equity for dollars or other fiat currency to fund your business so what we can know is that bitcoin may be very different to some other coins because most other coins created the coin and then sold it to for dollars to fund their operations initially.
That’s why people create these coins and these tokens is to fund their idea. Not all of them, but that is a way that many of these tokens exist. It’s because you have entrepreneurs that need funding to start their network or their business and they create a token as investors can swap dollars for that token.
And then the idea is that that token goes up in value over time as the network or the business grows. That’s a very different thing to own than something like Bitcoin. Let’s have a look at some tokenomics here that we can see. So we know that a human being can create a token, and that means that if they control that token, they can sell it to other people in any way that they want.
Something like Solana is an example of a basically an equity token. It was created by people that are in Silicon Valley and so they’re very comfortable with this kind of equity model. They created Solana the token, they sold it to investors to get dollars to fund the operation to build up the blockchain.
So what we can see here is that the token, they sold it to investors to get dollars to fund the operation to build up the blockchain. So what we can see here is that the token was created and a huge amount, around 25% of the supply, was given out to investors in what’s known as a seed sale. So the token is given a very very very low valuation for people to put money in initially to fund the initial idea. So 25% is owned by a very small cohort of investors.
You then have another founding sale which is again just a way to raise money. So you give people these tokens that you created that represent some amount of the network and you sold that to investors. The foundation also owns a ton of these tokens. The foundation is basically the things that run the network and make sure that it’s up and running all of the time.
Then you have the team that own 20% and then tiny, tiny amounts that represent the public sale, which is, you know, open market investors that can just buy it in the open market this is kind of representing what would otherwise be known as a company so it’s a very similar to how you know startup companies operate where you get a huge amount of the supply owned by a small amount of early investors that’s not amazing as a representation of money itself, but it could represent the equity of a network. But it’s again very different. So you can see how these coins and tokens represent value in
different ways. There is also a supply schedule over time. Most of these coins will start with a smaller amount of supply and then increase the supply over time to a later amount of sums of some amount the reason is as you can see the supply increases to give some network participant more coins over time so for example the foundation could have a lot of tokens that vest over ten years and so they get a little bit each year over that time.
Maybe some other investors get tokens given to them over time, or you can pay out staking rewards for this type of blockchain, which is an incentive to network participants to actually run the blockchain. So what we’re saying here is that we’re creating value in some way and giving it out to people to do something.
And then we hope to create more value over time to make the thing more valuable. This is Cardano ADA, which is a very similar type of blockchain, a smart contract chain. You can see that the initial coin offering was around 60%, staking rewards over time around 30%, and then the team got around 11%.
So this is definitely more distributed than Solana. The ICO is an initial coin offering that was initial investors that could get in, but it’s certainly slightly more distributed than something like this where you’re getting a huge amount owned by basically insiders. So a little bit different there. And you can see the supply schedule is pretty standard, right? You have the token sale and the team, and then you have staking rewards over time that try to incentivize people to run network nodes, to run the network.
Then you have BTC, which was created by Satoshi. No pre-sale, no ICO. He simply created the protocol and he started mining the network initially. Now, Satoshi’s coins have never moved and so they’re essentially lost coins at this point. So no control over them or the network. This is very different in terms of its tokenomics because what you’re seeing is over time, the supply started at zero and the proof of work network has created all of these coins up until 21 million where it will just simply stop
producing new coins. These are the block rewards as new coins are created over time that of course goes to zero as block rewards go to zero the emission of new coins is zero hopefully this shows that Bitcoin is very very different to most other stuff where most other chains created these coins or these tokens sold them to investors to get some money to fund their blockchain projects and it’s owned by different types of people Bitcoin is really different in that respect where it was designed and created to be money and nothing else and it has this extremely fair schedule over time.
So how do any of these coins or tokens represent value or capture value in some way? For Bitcoin it literally does nothing other than represent the Bitcoin network. Because Bitcoin is decentralized as a network, it is strong and reliable, that network has some value because people may want to store some value in that network. And so Bitcoin simply represents the blockchain’s value.
For smart contract chains like Ethereum, things can be very different. Ethereum is more of a computing platform and it lets people create smart contracts where they can do things together. So they can trade or they can lend and borrow and they pay fees for that. And so Ethereum is a decentralized network as well, but it also earns very good fees and it pays those fees back to users if they stake their coins.
We’ll get to that later but because ethereum pays fees back to users it also has some value because it pays a yield to them bitcoin pays no yield but ethereum does and so ethereum may have value in different ways a stable coin that is essentially representing one dollar only represents one dollar.
If you invest in this you just are holding dollars and therefore it’s not an investment and there’s no value to be captured. You can see that right here that Tether is valued at a dollar and always will be valued at a dollar. So that simply represents something else. Then you have protocols like Uniswap, which is a decentralized exchange. An exchange charges fees to its users who trade tokens.
And so if an exchange charges fees, it’s basically a business at that point. And you can value that token based on how many fees it makes and if it passes some of the profits back to you as an investor. passes some of the profits back to you as an investor. So blockchain assets represent different things and they have different values depending on what exactly they do.
You may be wondering where I get all of this information. All of the resources that I show you in this video and everything that I use will be listed down in the resources section in the video description. I recommend getting an account on X, formerly formerly twitter lots of news and research on there and it’s a great resource there are also tax and portfolio trackers that you’re going to need if you’re trading in crypto or investing now your exchange may give you this for free so definitely don’t pay for anything if your exchange is going to give you that for free
look on your exchange though now for research and and analytics, these are amazing. Look into Bitcoin, DeFi Llama, June Analytics. They show you everything that’s happening on the blockchain in real time. It’s a fantastic resource and we can do this because of blockchain technology. If you want pricing data and charts, definitely use TradingView. It’s industry standard.
It’s free to have an account and look at pricing data so why not have it now at this point I want to plug the crypto course as well this is the professional version of what we’re doing here you can see that there’s a Discord group where you can come and ask me questions I update the course for free of charge forever I’ll leave it link below I get much more in depth into you know really what’s going on with the crypto types you can also see a lot of trading articles as well we have an entire trading section
uh a little bit more professional than what we’ll do in this video you can see all of these different videos here if you want to request a video because you don’t know something or you want to ask me a question just come and ask me in the private discord group so i’ll link the crypto course below as well and i update it with all of my research.
I just updated it as of making this video as you can see here with my latest research and what I’m doing with my portfolio and everything like that. So lots of resources to use and just check everything down below. Now we move on to a crash course in how the macro economy can affect crypto prices. The macro economy which is really interest rates, central bank policy, all of that over the short term can manipulate asset prices.
So central banks control money, the fiat currencies that we use to trade, and they control the interest rates on the debt that we take out and they control the supply of currency that we use and they do that to try and push and pull us into this kind of smooth and predictable way of moving in the economy so every central bank tries to grow its economy a certain amount.
And of course, economic growth is not the same around the world. Some countries have a young population that are growing and producing more value. Other countries have an elderly population or an older population that are just past their best years and are not producing as much as they did before. In any case, central banks know that they can’t control that. You can’t control demographics.
But what you can try and do is slow the pace around and not make it, you know, too crazy, because financial markets don’t like to be upset. If they know where the destination is, they’re fine with that and if they get there slowly then they can plan for it. But if things are unpredictable, markets are mayhem.
And so central banks really just try to slow the pace or the extent of any financial moves that may rock the pricing mechanisms that we use to trade. And so what this has come into in modern finance is really this cycle of macroeconomics. And so everything is tied into one, of course, because everything that happens in the world influences the price of the assets that we trade.
But the main cycles that we can look at really that influence what the price of the assets that we trade. But the main cycles that we can look at really that influence what the price of Bitcoin is on a given day or, you know, what interest rates are, the cycles that influence that are the business cycle.
So that is the business cycle has periods of expansion where businesses are taking on more debt or, you know, raising more cash and selling equity to expand, bring on employees, which reduces unemployment. You know, a lot of employment in the economy means people are earning money. And so the economy can grow.
And of course, the other side of that is the times when that business cycle kind of deflates a little bit. Maybe businesses are making people unemployed. That leads people to save a little bit more and pull back. And so you get kind of a dip within the economy.
So the business cycle for businesses, are they hiring or are they firing? Are they growing? Are they kind of pairing back? Right. So that’s a business cycle that will, of course, affect the price of assets, Bitcoin, housing, everything else. There is also a debt and refinancing cycle because most businesses use debt to fund growth. Governments use debt to fund growth.
And there is around a three to five year financing cycle. So the average maturity of debt is around three to five years. And so every three to five years, what do you do? Do you pay off the debt? Do you refinance the debt and try and get more growth? So that is going to influence things, right? The demand and supply for debt.
That is a market within itself. And the interest rate that is charged on that debt is going to massively affect the economy and therefore prices of everything we trade. There is also an election cycle, right? Because most governments are going to try to get elected. And how do you get elected? People have got to feel good about their situation, which means their assets are going up in value.
They have employment opportunities. And so you’re going to try and put political pressure on the central bank to try and raise or lower interest rates for your political gain. It’s definitely an influence on things. And then amongst all of this, we have the Bitcoin cycle, which is the cycle Bitcoin has every four years to halve the amount of new bitcoin coming into the supply we know that bitcoin has this in you know inflation schedule like this where eventually top out you know we’re somewhere here right now every block of bitcoin that is produced you get new
bitcoin that is made and paid out to miners as an incentive to carry out transactions. Every four years, the amount of new Bitcoin given to them is cut in half and therefore the supply changes. So you have the Bitcoin cycle as well. That happens every four years. This happens every four years.
This happens every four years. This just happens to coincide with debt and elections happens to be around four or five years. These are short term cycles. So that is very different to secular trends. So we’re going to look at this on charts right now for crypto assets because secular trends are entirely different to cyclical patterns within prices.
Election cycles, debt refinancing cycles, the central bank lowering or raising interest rates on the debt that we pay changes prices within the economy. These happen in cycles like this. However, what central banks cannot influence and governments cannot influence really long term are these long term secular trends. What is a secular trend? Technology is a secular trend. Computing is a secular trend. Internet adoption is a secular trend. Bitcoin and crypto adoption is a secular trend. AI technology, again, is a secular trend. Right. So what we can say is prices move in cycles based on what central banks and the business cycle are doing.
and the business cycle are doing. But over the longer term, secular trends will get moved by this, but eventually just go in the direction that they are destined to go in, which is growing. So you have something, an invention of something that starts small, solar panels, self-driving cars, AI, the internet.
And eventually that thing is just desirable by enough people that the thing just grows over time. But it doesn’t grow in a straight line, of course. It has cycles along with adoption. If there is a recession, that means people are doing less stuff and they’re demanding less stuff. And so the price goes down.
But when there is another expansion in the economy, then that will go up. The long term secular trend, though, is what investors look at. So if you have a time horizon of 5, 10, 15 years, which most people investing for their retirement or anything will have, then what they’re really looking at is secular trends. You don’t want to be trading cycles over and over again and trying to buy a sale, buy a sale.
You’re just looking at what things are growing in a secular trend over time. And I’ll be buying here and buying here, but that doesn’t matter because over time, you know, the trend is up. So that’s what we want to look at. There’s a big difference between cycles and secular trends. Secular trends can happen to the upside.
They can also happen to the downside. So you can get cycles within things that are actually getting worse or, you know, less desirable over time or just becoming less valuable. So we can obviously get caught out on both of these.
For example, we can get caught out in secular trends to the upside by buying here, the price falls down, we get upset, we sell here, and we’ve just traded the cycle the wrong way around. And we aren’t aware that what we’re doing is actually in a secular trend to the upside. So if we just kept it and dollar cost averaged, we would get higher at some point in the future, right? Secular trends happen to the downside as well, in that you can maybe get into something here.
It looks great and you think you’ve made money, but then the next trend down is lower, right? You can see this trend. So secular trends and price cycles happen, and that’s very important to be aware of. But what’s way more important is the secular trend of that thing. Because if you’re confident in the secular trend, you can invest in it. You can’t invest in cycles. This is an example of a secular trend. This is the purchasing power of the dollar.
Now, this is an example. Most other fiat currencies look exactly like this as well. Whereas the purchasing power over time in relation to a bunch of desirable assets has just gone down. This means that if you held dollars in 1971, they’re worth around 20% of what they were then.
So if you hold the same dollar, you can only buy 20% of the things that you could buy in the 1970s. There is a reduction in the purchasing power of the dollar. That just happens to coincide with the circulation of the dollar which has risen. So as more dollars have been printed by the central bank or the government by issuing debt, so it’s putting fresh new dollars into circulation, that has been printed at a faster rate than humans have printed resources through their efforts and their value and their labor or the fruits of those labors like goods and services.
More dollars are being printed over time and put into circulation then value has been created. This creates a debasement of the purchasing power of those dollars in relation to the goods and services produced. So there’s more circulation. That’s a secular trend, because we were looking over the long term.
A secular trend of more currency in circulation and less purchasing power. There are cycles within this, but the secular trend is very clear. All investors know when they start investing, when they realize this, is I need to get out of that fiat currency if I have savings that I want to protect from this currency debasement over the long term.
It’s not about making money in the markets. It’s not about trading. It’s about knowing the secular trend is that fiat currency has been losing its value. And so we need to escape that and put our value in things that do not debase at the speed and rate of this. This is a secular trend of the purchasing power of fiat currency going down in relation to desirable assets.
This is another secular trend, which is the Federal Reserve in America and the size of their balance sheet. We’re not going to get into how this works. We can just look at the secular trend in that it seems like the Federal Reserve, their balance sheet is getting larger over time. How does the Federal Reserve buy these assets? It prints money to buy them.
prints money to buy them. So the secular trend is that the central bank is printing money, increasing the supply of money to buy stuff. What that does is debase the purchasing power of everyone else’s money because there’s more currency in circulation over time. see in circulation over time. They are buying assets, printing money to do so. This is a secular trend with cycles in between. This is also a secular trend.
You can very clearly see that there are cycles here, but since the 1950s, with cycles in between, this is a secular trend to the upside. this would have been a great investment if we started down here we’ve made tons of money unfortunately what this is is inflation this is the price of desirable things in the economy over time the price of desirable things in the economy over time.
The price of desirable assets and things that we need to buy to stay alive like food and shelter are going up exponentially. This is not good for us because the things that we want to stay alive are becoming more and more expensive. Now, this alone doesn’t matter too much because as long as your wages are going up at the same rate, then things aren’t getting more expensive for you.
So you have to look at your wages and how they’re increasing in relation to the inflation of goods and services. And of course, wages may go up. Overall, they may not go up, and so inflation actually makes you poorer. But what we can get from this is that the price of stuff that we want never goes down, ever.
When it goes down, what happens is that the central banks step in and force the price of everything up again. It never goes down, it just goes up at a slower or faster rate. So these things are linked, right? You can see that the purchasing power of money goes down over time as the currency in circulation increases. That is also tied to the central bank which prints money to buy assets for itself to try and control things in the economy.
And inflation goes up seemingly in line with the fact that we have so much money creation for some reason that is pushing prices up. So these are secular trends that investors inherently know my dollars or fiat currency buys less stuff over time i don’t like that so i need to sell that for assets that go up at the same rate as the other things that are going up that i want to buy and in 20 years when i retire i will have saved the purchasing power of my money in those assets. So those are secular trends, but we can also look at cycles as well within parts of the economy.
So this is from GMI here. We have inflation, which, as you can see, moves in cycles up and below around about 2%. Central banks around the world, most of them have a target of 2% inflation. Don’t ask me why they have that. Nobody knows the reason. They just picked 2% as some number that if it happens at 2% a year, no one will really notice that the things they’re buying are going up in value.
And so what they try to do with their central bank policy is to keep this inflation rate around about 2%. What is the inflation rate? CPI, which is the consumer price index. It’s an index of the things that consumers can buy in the economy, meat, vegetables, Netflix subscriptions, everything like that. Now, CPI is just one metric of inflation, and really, they change it all the time.
So CPI can be changed by the indexer, the government, basically. They can take one thing out and put another thing in. And so CPI doesn’t really mean much, especially if you change it over time. Also, when you’re looking at consumer price inflation, a lot of things that we buy over time actually get cheaper because of technology. We produce more of them, we have economies of scale, or we digitize them to make them cheaper.
In any case, that CPI is still going up. And is it the things that are getting more expensive? Or is there just simply more currency chasing the same amount of stuff, hence pushing the price up? In any case, inflation moves in these cycles. So sometimes it goes above 2%, sometimes it goes below like this, right? But we know that even though these cycles are taking place and they will be changing the price of assets and the supply and demand and everything like that, we know that the actual secular trend
is just positive. All of this mostly is positive in terms of there is more inflation, right, in CPI. So CPI moves in cycles and inflation will inhibit a response from the central bank. If inflation gets too high, central banks will try and reduce activity within the economy, maybe an economic slowdown.
If inflation gets too low, they’ll try and stimulate the economy by lowering interest rates to get it around this 2%. That’s what central banks want to do. That’s their official remit is to keep inflation around 2% by stimulating the economy or drawing it back. You can see here that this is the official interest rate for US treasuries, which are the benchmark for what debt trades at.
So you have US treasuries, which will trade at a certain percentage, let’s say 3%. Everything else is priced off that. If you’re a company, you’re a lot more risky than the American government. And so maybe you have to pay 10%, which would be, you know, this plus seven, and that would make 10% as your spread as a company. So all interest rates are really set off of this.
Now what we can see here is cycles within a secular trend. You can see the cycles here, they move. These are the cycles, but the secular trend is the interest rates have been coming down over time. So things move in cycles, but we can’t get caught out by those because we need to look at the longer term secular trends. But we can also maybe take advantage by those because we need to look at the longer term secular trends.
But we can also maybe take advantage of those shorter term cycles as well if we’re confident in the secular trend of something. Right. If trends are topping out and you know that there’s a secular trend to the downside, maybe you can trade to actually make some profits around these changes in the cyclical patterns alongside the secular trend that you think that’s happening. This is global liquidity.
This is a measure of how much money is flowing around central bank systems because they try to manipulate prices and economic activity by sloshing around money. They pour it in, they take it out. They want everything to be moving at 2%. We can see that this is cyclical as well. So you get drawdowns and you get points where liquidity is higher.
This seems to move in cycles. So liquidity moves in cycles, which is an attempt from central banks to manipulate prices in cycles. However, cyclical trends rely on fundamentals like demographics, how many people are being born, how much value is being created, is something in demand and going to be in demand over a 20-year period, more and more and more. We know the difference.
So what do we want to do? We want to watch out for cyclical trends to invest in, right? Because we’ve got this money that we’re earning and we need to save some of it. That’s why you’re here, right? You’re looking to invest or trade crypto and you’re looking to save you know purchasing power of your money over time you’re looking to make dollar price gains or fiat currency price gains in assets that go up over time so we know what we what we need to know is is something in a secular trend and if it is how can we take advantage of price cycles to get the absolute best prices, right? Investors,
if you’ve got a 20-year time horizon, you just want to invest in secular trends. Invest, invest, invest for a long time, wait an even longer time, the trend will have carried the price and the value up. So what you can see here is this is the Bitcoin price, and we can very clearly see that it is one really volatile but it also has traded in a couple of different cycles so you can see an expansion cycle here you can see a destruction cycle you can see an expansion cycle destruction it looks like we’re
going in expansion so it seems like the price moves alongside cycles within the macro economy like this. So what we have here is liquidity moving up and down and Bitcoin moving up and down. So what we’re going to do is press indicators. Like I said, TradingView that I’m using now is completely free.
Definitely recommend an account. They’ll be linked below in the description. You just need an email address. Sign up and you can use this. We’re going to look at global net liquidity, which is a measure of the liquidity from central banks. So are they pouring money in to stimulate or are they taking money out to try and calm down growth? There is seemingly a correlation here we have an expansion in monetary policy we have expansion in liquidity that just happens to coincide with Bitcoin going up in price as money is drawn out you can see
that just so happens to inside with a Bitcoin bear market and the price going down we have another massive expansion in liquidity here. That just happens to coincide with a big price expansion in Bitcoin. We have liquidity coming down here and we can see the Bitcoin price going into a bear market where the price goes down.
These things have a very high correlation. So what we can understand from this is that it seems like the amount of money in circulation from central banks affects asset prices in cycles. When there is an expansion of liquidity in central banks, what they’re doing is increasing the supply of money. And conversely, things that have a fixed supply or a supply that can’t change as quick as that have to go up in value.
So if you have the same amount of stuff like Bitcoin or gold or a stock and you have more dollars chasing that, then the price has to move. The price moves in cycles along with this. So this is very, very clear. So we can see that price moves along in cycles for BTC. So the other thing we can see is a secular trend.
