How did I make four million in seven months during a bear market?

How I Earned Four Million in Just Seven Months During a Bear Market

Author: Nakamoto Uikyou, Medium

Four Things I Did Right This Year.

• First, I went long on Bitcoin the day after Silicon Valley Bank went bankrupt and then automatically took profit and exited after a month;

• Second, around the end of June, I observed that the pullback was almost over, so I started going long on Bitcoin. When I realized that the price was unable to reach my target profit point, I exited just before panic selling;

• Third, starting from late June, I conducted research on macro liquidity and confirmed that the widely circulated “monetary tightening” is a false proposition. I then peacefully started my vacation because I wanted to wait for the short-term hype to settle down and fully immerse myself in the market;

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• Fourth, I returned to the market in late August, comparing the relationship between the 2021 Bitcoin bull cycle and the progress of the futures ETF application process. I also created my currency tracking list and investment plan, and then waited for the entry signal to appear. In early September, I went long on Bitcoin.

Of course, my investment plan also includes many other currencies. Some are duds, some are yesterday’s news, and some still have potential in the future. But I don’t plan to mention them because I don’t want to be like a bragging teacher.

Now, as I wait for the exit signal to appear, I’m planning to do something else on the side. I’m still flipping through those trading bibles that I never tire of reading. I really enjoy the narrative style of my favorite investment gurus, so I thought, why not imitate them and let everyone get to know me? I should be someone worth knowing.

What I want to record more is how I cultivated myself in trading. Although I believe these experiences will never disappear from my world, I now have a strong urge to share and express myself. I hope that one day my discoveries along the way will also be helpful to others, just like the help I received from the trading masters whose books I avidly read.

Of course, I will be very cautious to prevent sharing from turning into preaching.

People often treat received opinions as sacred inviolable dogmas

I usually don’t reveal what I’m doing to people, and I’m not very talkative in social situations. Most of the time, I listen to what people have to say first and then determine whether or not I should be open. From past experiences, whenever I am open, I am seen as a charlatan, a self-serving egotist, a boastful pyramid scheme leader, or a religious fanatic betraying the principles of Marxism-Leninism and embracing pseudoscience.

I took some time to figure out why my sincerity would be perceived as an offense.

This brings me to the first thing I want to say: about how people often treat the views they receive as sacred and inviolable dogma. These views are often picked up from the roadside, but people defend their current knowledge as if defending their lives.

I used to go through this stage as well, and back then I would often reflect on myself, wondering why I would subconsciously get into an unfounded debate and uncontrollably try to refute the other party.

As a result, I uncovered the deep-rooted desire to “prove myself right” within me. Proving myself right would mean proving that I am superior and more brilliant than others.

The clash of opinions might seem like a pursuit of truth, but it is actually a pursuit of the cheapest self-satisfaction and superiority. This behavior is also the greatest loss to oneself. The pursuit of truth never leads to becoming easily angered, irritable, disliking others, or becoming aggressive. It is only when one’s beliefs are challenged and one’s self-esteem is damaged. (The nature of seeking expansion of beliefs is even more than capital)

And I realized that self-esteem is the least necessary thing for me, especially when I participate in the market. It is more important to do things right than to prove myself right. Pursuing self-esteem makes people stubborn, causing them to completely view things and treat others according to their own wishes and beliefs, and to completely view the market based on their own desires and expectations.

But the market will definitely not follow individual will

I started to learn to distinguish clearly: what is my or others’ thinking inertia, what are the facts. I especially examine the source of each of my beliefs, knowledge, and conclusions. And I have learned to act based on factual truth, not on the arguments people firmly believe in, my own thinking inertia, or subjective desires.

I slowly dismantled the walls in my thinking, and the market began to present itself to me in very simple images. This description may be exaggerated, but I often feel that I can resonate with its breath and heartbeat.

Why I was able to go against the market and make 4 million

Now, I need to look back on why I bet on the rise when almost everyone was bearish and waiting for the “final crash”.

Actually, it’s very simple. I only looked at three indicators: macro liquidity, the relationship between the 2021 ETF application process and the Bitcoin price cycle, and the trend chart of Bitcoin.

I wrote an article in July, analyzing in detail how much global central banks, especially the Federal Reserve, have reduced liquidity due to their interest rate hikes and balance sheet reduction.

The conclusion is that after more than ten months of frequent and aggressive interest rate hikes, the total money supply in the United States is still maintained near its peak, and the money supply in the euro area has even returned to its highest level in a decade. Comparing the scale of the Federal Reserve’s balance sheet reduction to its massive $8 trillion asset base, as well as the newly issued $1 trillion+ US Treasury bonds by the US Department of the Treasury, it’s just not enough to worry about.

And the current liquidity in the cryptocurrency market is much higher than the liquidity in the Bitcoin market at the same price level in 2020.

I debunked the argument of liquidity tightening and found a relatively reasonable explanation for the first half-year rise in the European and American stock markets and the cryptocurrency market.

Later, I studied whether ETFs really have an impact on the cryptocurrency market. Although it was just a rough comparison, I found some interesting things – Bitcoin had three vertical stretches in 2021, each corresponding to institutions collectively applying for Bitcoin futures ETFs, news of ETFs about to pass spreading, and ProShares’ ETF being listed on the NYSE (Bitcoin prices soared that month).

Finally, I observed the long-term trend of Bitcoin and the volume and price data told me that it is currently in an upward cycle; then, I found in the short-term trend chart that Bitcoin, despite frequent downward tests, the short-term support keeps increasing, and the actual supply keeps shrinking, based on experience, this is usually the main force shaking the market. So I started to long Bitcoin in Antpool. When I found that my position was making small but steady profits, and it was easier for the price to go up than to go down, I increased my position and leverage, and went all-in for long.

The lessons I learned from the market

If there is one more thing I’d like to add, it is that I firmly believe that wealth stays on the side that most people don’t expect, more precisely, failure lies on the side that most people consider common sense (quoted from the Wall Street Ghost).

The quieter the market has been in the past two months, and the less people discuss and pay attention to it, the more convinced I am that opportunities are on the way.

It’s not that I love going against the crowd, but after a long period of self-reflection, I can easily identify those concepts, common sense, and ideas that are of no use to people pursuing a better life or those worldly conventions that everyone loves. People always treat certain ideas as an unchangeable reality.

For example, people always like to use bull and bear markets to describe the market, but in reality, bull and bear markets are definitions, perspectives, and views, not facts. Such definitions tend to make people believe that the market will always operate in a “bull” or “bear” manner for a very long time, but in reality, I often find many good investment opportunities in so-called “bear markets”.

That’s the wonder of it, to notice the beliefs you hold true, to examine your beliefs, and once beliefs change, our options will increase.

My path to growth was not smooth and not happy. But I am glad that I found myself now.

I have learned a lot in the process of figuring out how to face the hardships of life and interpret the market.

One is to always maintain a sense of order in life (let goals be helpful when necessary).

I was in a daze from October 2021 until the whole of 2022, and that’s when the most wrong investments and market operations in my life happened. At that time, I was hit one after another and thought my life would never get better again. But one day, at five o’clock in the morning, I inexplicably got up from bed and did 60 minutes of HIIT training.

After sweating all over and reaching my heart rate peak, I turned on the music, stretched and relaxed leisurely, took a hot shower, and applied thick body lotion. I made myself a cup of coffee and sat down at my desk to start working on the tasks I had been procrastinating for two weeks.

In that moment, all the gloom disappeared, and my good mood told me that I was ready to face all difficulties and tribulations.

Since then, I have understood that it is emotions and feelings that trap people, never the things themselves. Now I have maintained this kind of life order for a whole year, and my life has never been as relaxed, joyful, and happy as it is now.

The other is to never stop learning as if one is starving for knowledge in the pursuit of goals.

When I mastered the basic knowledge of economics, learned technical analysis, as well as various ideas, theories, strategies, and risk management methods in trading, I realized that there are many people in this market who hold professional positions and play professional roles but are not professional at all. They generally lack common sense when participating in the market, but this knowledge is extremely important. Without them, we cannot understand every signal in the market or think like the main players.

At the same time, I realized that most goals can be achieved by starting with asking the right questions, and most problems can be solved through learning, practicing, and correcting goals based on feedback. Of course, this closed loop is useful in trading and learning English. I don’t know if it works in other fields, but I am prepared to experiment with things I’m not good at.

Finally, learn to understand one’s own brain, understand the roots of thinking inertia and desires, and never be trapped by them.

Anyone who has immersed themselves in trading will understand that the biggest enemy of any trader is definitely not the market or the big players, but themselves. More accurately, it is the trader’s personal mental activity, emotions, and feelings.

Being inspired by delusions, plagued by fear, driven by impulse, burdened by inertia. Mistakes in operation also come from these.

But it seems like I only do this occasionally when I first started trading.

Trading is my training ground

It helped me discover my greed, my fear, my complacency, all my deeply rooted beliefs and desires, and then I removed them one by one. Interestingly, after quieting my mind, I became a very calm person emotionally. This has given me an edge in participating in the secondary market. I don’t understand how it happened, but I learned to do the right thing at the right time.

Being able to make four million in a bear market when everyone else is pessimistic is attributed to understanding my own brain.

Of course, four million is a small number for many people. Compared to the money I made in the market in 2020 and 2021 when I was still naive, it is insignificant in terms of performance. But compared to back then, I prefer the money I made this time. It helped validate some things for me. The market is like a laboratory, it proves that my assumptions can become rules, and I now have a completely valid set of guidelines.

In the raging bull market of 2020, I didn’t know how I made a lot of money. I often worried that if I left certain environments and information sources, I would never be able to make a profit again.

But this time, I am extremely clear about the methodology I used to leverage the world with a small amount of capital.

I understand the reasons behind every decision I make, and I also understand how I found those reasons. More importantly, if I need to make any future decisions, I know exactly where to find the reasons.

This means I can learn anything I want to learn with them, achieve every goal I set, and overcome every future low point.

I may completely lose this four million in a future investment, or even all my savings, but I have gained something more important than profits.

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