Introduction
I have had many successes as well as failures in my multi-decades of trading stocks and options. Nothing compares however with the near misses I had with Bitcoin. Near-miss in this case means being oh-so-close to early entry, being around people whose opinions I trusted and who suggested I get into this new financial concept, some as early as 2010 and some who were banging the table I get in Bitcoin well before it first topped $1K almost a decade ago. What a difference that single failed embrace has made.
What follows is a little retrospective of what could have been, then, what lays ahead.
A Bit of History
My first introduction to Bitcoin was via Robert Prechter, long-time editor of The Elliott Wave Theorist who first recommended Bitcoin to me at about $0.01, YES, one-cent, in 2010. It was also about the time I started this newsletter. Imagine, $100 worth of Bitcoin, bought at the time of Prechter's initial suggestion, would be worth $1.54 billion today. Instead, I probably went on a date, took someone out to dinner, or maybe I had the BMW dealer change my oil on my then wheels a wonderful white X-5, instead of doing it myself, big shot that I was in those days. Newly transplanted to Arizona, life was good, and only in retrospect, I was stupid.
Having ignored that recommendation, my next close encounter and failed opportunity with Bitcoin was through an informal trading group, circa 2014-2016 that used to meet for Friday happy hours in Old Town Scottsdale. A few of these fellow traders were in transition, changing their trading allegiance from stock options to accumulating Bitcoin and other assorted crypto's. Amid cheap watered down drinks and totally unhealthy bar food appetizers, these meetings were increasingly filled with success stories and "the next big thing" in crypto speculations. Along the way and over the course of about two years, it seemed that everyone but me caught the crypto bug as even their budding six and in some cases seven-figure successes failed to motivate me to jump onto the Bitcoin bandwagon.
Fast-forward to 2020-2021 and about half of that trading group have quit their day jobs, retired, living that good life, funded entirely on their crypto investments. My friend D.W. is probably the greatest success story of the group. Retired well before sixty, he just spent six months in French Polynesia and is now about to embark on a cross country road trip in his new Sprinter van, escaping the hot desert summer for whatever adventures he can find across the great North American landscape.
Kudos to you all (and I know that many of you are still reading this weekly missive) for recognizing and seizing the wealth and opportunity inherent in crypto and especailly Bitcoin. I am disappointed in myself for having not listened, not acted and missing (for now) that crypto boat, but as I am being told over and over again, believe that there is still time. Consider what follows below as my formal foray into your Bitcoin club, but doing it my way, with what I know best: Options.
Merging Option Trading with Bitcoin
With the advent of BITO in late 2021, it is now feasible to trade the movements of Bitcoin with liquid options in stock brokerage accounts. We started trading thee call and puts in earnest this year in Blue Line Trading, adapting our pattern recognition and trend model trading signals to both short and medium term BITO options. So far in 2024 we are generating about one trade a month between the PRO and Premium Services. Results are in and have been on a level consistent with a long-term successful trading regimen. For our purposes today, lets examine the results solely for signals sent out in the Blue Line Trading System Premium Service, to get a sense of what is possible based upon real time, real money trades.
Bitcoin/BITO Option Trading Signals - Premium Service
Lets now take a look at the results assuming that half of the Best Returns were realized for each of the above trades, i.e., 50% trailing stops:
*Note: The BITO Mar 15 $23C went off the board at a profit of 615.83% having never even gotten close to a 50% trailing stop.
Results
I have the luxury of going back to previous years and "paper trading" the Bitcoin Buy/Sell signals that would have been tradable with options if options were then available, but prefer to rest my case on just the real time, real money examples set out above. These results pale in comparison to what would have been possible during Bitcoin 300% gain since 2022 (outperforming the S&P by 240%), a 2,000% gain between 2019-2021 and between 2016 and 2018 Bitcoin provided investors with a staggering 9,000% gain. So while our trade management systems returned an impressive average of 267% year-to-date, that has been in the face of a paltry 60% Bitcoin gain YTD. In other words our system is outperforming Bitcoin by about 5X, five-fold. Imagine the returns on the next mega Bitcoin move, whether up or down,
Conclusion
Although I have no intention to do so, it has occurred to me to drop every tradable EXCEPT Bitcoin and rely on the inherent volatility Bitcoin has provided over the past decade to generate all the returns we need to thrive trading options going forward. In fact, if you just wanted to take the Bitcoin/BITO trades going forward, I could hardly blame you. If nothing else, stamp this into your trading regimen: The next time you see a BITO trade in this service: TAKE IT - No questions asked. It may or may not be the next "Big one," but do not doubt for a moment that the our system will catch that next big move, it's by design and I should know: I designed it.
Bitcoin/BITO Charts
Bitcoin Long Term - Weekly
This longer term Weekly Signal works well as a filter to take only those Intermediate and Short-Term signals in the direction of the Weekly Signal. Note: It has been Long since early 2023 @ about $20,000.
Current BITO Trade
Our most recent BITO position was taken May 22nd, and is slightly underwater. Our trade management strategy is reserved for paid subscribers and is set out in the June 1st Weekend Update. As set out above, I missed this boat early on, and suggest anyone else who wants on board the crypto train, finally, and before the next major move, to join our service. Use code: GOPRO@50% for a half price first month.