Bitcoin Risk Metric

Hey everyone and thanks for jumping back Into the crypto RSE today we're going to Talk about Bitcoin and we're going to be Discussing the risk metric if you guys Like the content make sure you subscribe To the channel give the video a thumbs Up and also check out the sale on into The cryptoverse premium at intothe Cryptoverse Docomo where of course you can get Access to this rist metric let's go Ahead and jump in so the risk metric for Bitcoin is something that we've been Talking about since 2019 and it has been tested many times But so far price has never deviated Outside of what the risk metric Suggested was theoretically possible in The short term so it was created it was Created over here shortly after creating It we did have the the pandemic drop Where the risk went all the way down to About 0.13 so pretty low level on the Risk metric and in fact the the the .13 Risk level was the last blue you these Were the last blue dots we saw you know For the next several years okay but you Can see the general idea is that risk Goes from zero to one and the closer to Zero you are historically lower risk Right the closer to one historically High risk now this again only looks at The price of Bitcoin it does not concern Itself with the onchain data does not

Concern ourselves with the social Statistics it doesn't concern it itself With with you know the macro side of Things or anything like that right all It concerns itself with is the price and Also an understanding that there will Likely be diminished volatility over Time last cycle you know I was of the Opinion that Bitcoin would not go to 300K right and one of the reasons was Because of diminishing returns but also When we were up you know in that 60k Level Risk was in the 0. N to1 risb right it Was a pretty high risk level at the time And and so it was more prudent at the Time to take profits right and last Cycle the first Peak is where I took the Majority of my profits the second Peak Was a lot harder to navigate um and Honestly it took me a couple of extra Months uh to sort of recognize that it Would not go back up into the higher Risk band again you can see in 2013 we Went to the higher risk bands a couple Of times but in all these other Cycles We basically just went into it one time And then then that was it for the for The duration of that Cycle now after that you can see that we We came back down risk went to low risk Levels and now it has been trending Higher again so the one thing I need to Make clear is that my strategy is and

Has been as I have said in every rist Metric video that we've done on this Channel since 2019 my strategy is to DCA into Bitcoin based on the risk levels that is My strategy nothing more nothing less Right late in 2022 I you know I was asked somewhat Frequently like am I buying anything and The only thing I would say is well I'm Buying Bitcoin and people say well why Aren't you buying altcoins because you Know the altcoin market is is going to Explode to the upside and my my response Was well you know bitcoin's at a low Risk level so I'll buy that but I also Know that in preh having years the Bitcoin dominance goes up right so I'll Just stick with Bitcoin now I will say That as we get into the having year I'm Going to have to soften up my stance on The altcoin market and I will say you Know if you want to Hedge against the Bitcoin dominance not Going higher or a recession not Occurring you're always free to take on Whatever risk you want in the altcoin Market right I would encourage you to Figure out what sort of risk appetite You want to take on as we go into the Having year you know what the risks are If the risks don't materialize you know What the reward is okay but for me in Prehab years I focus on bitcoin and the

Reason I focus on it is because the Bitcoin dominance goes higher and so far This year that seems to have been the Correct play so late last year I picked Up some Bitcoin okay but now the risk Level is in the mid .5 to 6 right you Know .5 62 now for some people right Depending on what your risk tolerance is This might be an okay level for those People to DCA into Bitcoin right for Other people it might be too high risk Right they might just say you know what They're happy to DCA below a certain Risk level but above a certain risk Level they're going to let other people Take on that risk Okay so I just want to Explain one of the ways you can use this This is the same chart except you're Taking the color code out of it and You're just plotting the risk on the Secondary y AIS you can see that again It historically goes from 0 to one right And you know last last cycle you can see It topped out in you know in early 2021 In the preh having year risk topped out You know right around 645 or So I think it would a little higher than That if you include Wix but if you're Just at Daily closes right it just has The daily close at like 13k I think it Did go slightly higher than that on a Wick so the risk would have gone Slightly higher I mean I think our Remember back then seeing it it was like

At 68 or something um but regardless Right now the risk is 0554 and so what some people do is they They pick a risk level and they say all Right well below that risk level I'm Going to DCA above that risk level I Won't what I do what I typically do is I Pick a risk level let's say it's 0.5 it Could be4 6 right whatever you want it To be and below that you can DCA if it's let's say you pick 0. five If it's between 0.5 and 6 like for Instance now and it's above your risk Tolerance then you could just hold off On DCA and then DCA if it goes back into The point4 to 0.5 risk level it's sort Of like earlier this year like when it Popped up into this risk level you know Into the 0.5 risk level 0.5 to point6 You could have just held off waited for It to come back down to 04 to 0.5 gotten A little more it went back up same thing Again right and you can just repeat this Process how you see fit now some people Don't like DCA at at 0 five or between The0 four to 05 risk band they would Prefer to DCA only up to 0 four risk or Only up to three or only up to 0 2 right Some people might say they they really Want to see 0.1 but the point is is There's not a right answer right it just It's what you want it to be it's how Much risk are you willing to take on not How much risk I'm willing to take on or

How much risk your friend down the Street or the random person you know That you know sort of make makes fun of You for buying something you know buying A cryptocurrency right it's not what Their risk is it's what is your risk Tolerance what are you willing to take On and then you own that right you don't Blame someone else if you buy and the Price goes down and and if the price Goes up then great right you took on a Risk and it either paid off or it didn't With Bitcoin a DCA strategy tends to pay Off over a long enough period of time Right you can go through periods where It doesn't right like if you think about Like 2022 2018 2014 you know if you're DCA during those years it pretty much Sucks the entire year even in the back Half of 2019 going through the pandemic Drop right like it wasn't really a fun Time to DCA because the price was Generally trending down but eventually You know we went back to loer monetary Policy and and and and Bitcoin went on An absolutely crazy Bull Run To You know To almost $70,000 So the DCA strategy is how I navigate it Now you can break it down beyond that You can do something what I call Dynamic DCA which is where you put more in the Lower the risk level right so like if The risk level hits 0 to 0.1 you know

You're you're potentially doing some Type of lump s if you if you wanted to Do like a dynamic DCA if it's between 04 To.5 and you DCA up to a 0.5 risk level It could mean that you're you're DCA but You're not putting nearly as much in as You would have say if it were between 02 To3 risk the reason you can do something Like that or the reason why I like to Dynamic DCA is because it allows you to Wait your buys heavier at lower risk Levels rather than to weight them all Equally okay You can't do a dynamic DCA strategy if You don't have a cash position to draw From if you have 0% cash and you're just Throwing all your money in the market on Every single paycheck then you know it Could work out right I mean like there's Certainly periods where that would have Worked out that would have been a great Strategy there's other periods where Having some cash on hand would have been Great right I mean like you know think About think about the the pandemic drop Right think about the drop in late 20 15 There's other times where it would have Been nice to have some cash on hand so If you do the dynamic DCA strategy you Have to make sure you have cash on hand Um otherwise how are you going to wait Buys at lower risk levels a lot heavier Than at the current risk level if you're Just always throwing in all your money

Uh every single week into into the Market right you're not really hedging Yourself against any other potential Outcome so I know I just sort of segue a Little bit one of the things I I talk About a lot is I talk about downside Risk a lot some people tell I talk about It too much and I should talk about the Upside potential more and and maybe That's true right maybe that's true but I think it's important as investors to Always consider what the downside risk Is right I think it's silly to go into An investment not thinking about what is The downside risk another thing too is If you buy something you can still think It's going to go down but buy it anyways Because you're hedging against being Wrong Right or you hedging against it going Down but you not having the courage to Buy it even if it does go down so again You can have an opinion on the market You could still DCA or you could not my Strategy is to DCA below my own risk Tolerance okay again right now risk Level is at 0.556 going back to the Color coded this is what it looks like So I mean you know there there's all Sorts of potential outcomes here right I Mean last cycle you can see it went up It went from the dark blue to the yellow And then came back down into the Pandemic drop here it's gone from the

Dark blue um I don't think it's gone as Quite as low as it last cycle I mean you Can see over it here it went down to Like 0.1 or so and then had another drop Down to about 0.13 it did get pretty low Right here in June but we know that the Price went lower in November just by a Small amount um you know from 175 down To 154 risk was still within the 0.1 to Point to risk ban okay so again the way You can navigate it if you want right is You DCA below a certain risk level if it Goes above that it doesn't mean you have To immediately sell because I mean you Know if you do that strategy which I Have done before one of the issues with That strategy is like you know one day Risk will be let's say your your Thresholds 0. five so your your dcing Below 0.5 the next day goes to 0.51 then You sell then what happens if the next Day goes back to 049 right it's kind of Silly to just sort of go back and forth Every single day so what often tends to Be a better strategy in my opinion is to DCA up to a certain risk level above That risk level up to another risk level Is sort of a gray region where you Neither buy nor sell right and then Above that level that's where you might Start to sell and it could also be an Idea in a dynamic DCA way as well where Like let's say it goes up to the0 6 to Point 7 risk level that might mean you

Want to take some profits but you don't Want to sell everything because well What happens if it goes up to the 0. N To1 Wristband you can clearly see two Examples where you know doing you know One potential solution was much better In 2019 if you had decided to take profits Between the 6 to 7 risk level you would Have basically sold the top right I Actually sold some in in in mid 2019 um But it wasn't because of this metric at The time I was using a different one um I don't even think I was talking about Bitco I mean I don't even know if I was Making videos at this point but I was Using a different one at the time um but Then we published this one later on in In in 2019 but but one thing to consider is That you know had you sold some in mid 2019 it would have worked out really Well right I mean like price collapsed Like 70% after that before then going Back up again but had you sold Everything at the6 to 7 wristband in Late 2020 you would have sold just Before another 3x move right so the way That I navigate that dilemma because There's no way we can possibly know the Future right like we we can't know Possibly if it's going to look more like This or like this or something in

Between right we don't know the way that You can navigate it or the way that I do Is if it gets up to a high enough risk Level you could take some profits but That doesn't necessarily mean you have To sell everything right that way if There is a substantial pullback hey you Took some profits congratulations right Like you didn't let the 2019 Bull Run go To waste just to watch price drop 70% But you also wouldn't want to Necessarily sell everything just in case You're wrong so that's the way I use the Risk metric right it's it's basically Like at low risk levels I DCA in at high Risk levels I DCA out we talk about the Macroverse on here we talk about Bitcoin Dominance we talk about all all sorts of Things but when it comes to buying Bitcoin when it comes to buying Bitcoin All I do is if it's below a certain risk Level I buy if it's above it up to Another risk level I don't do anything And then above an even higher risk level That's where I start to sell there's not A right answer right I think everyone Wants to know what's the right answer Like where do you buy where do you sell There's not a right answer what's right For you is probably know what's right For me what's right for me is not going To be what's right for someone else what Someone in their early 20s might want to Do is going to be different than what

Someone in their mid6 60s would want to Do right so it all depends on on you Know what your own risk tolerance is now You know I just want to say again my Focus in the prehab year is Bitcoin and And you know I'm not I'm not going to Apologize for that I think a lot of People think that you know I should talk More about about the altcoin market um In in prehab years and I can understand Why uh some people might say that and I Can kind of empathize with it But I go I go back to historical Outcomes with altcoins with respect to Bitcoin and you know you have two Potential outcomes right Bitcoin goes Parabolic the Bitcoin dominance goes Higher right having Bitcoin is a good Thing Bitcoin crashes alts Get Wrecked More than Bitcoin right so that's kind Of has has been my strategy now I will Say going into the having year I'm going To have to soften up my stance on the Altcoin market that doesn't mean that They're going to be done bleeding back To bitcoin they might not be they could It could take several more months but You know with that said I I don't think It you know I don't think it make sense To completely ignore that side of the Market forever it's just that as I said Two years ago that altcoins collectively Will bleed back to bitcoin you know for The next two to two and a half years

Right that's what we said back then it's Now been about two years it could go on For another six months or so Um but you know we'll have to see so in The having year we'll see where normally It's somewhere in the having year where Altcoins start to durably outperform Bitcoin but in the in the in the preh Having year you know Bitcoin Bitcoin Tends to to reain Supreme okay and I I Don't really think that this this prehab Year has been any different I mean we've Seen dominance of Bitcoin go up for the The entire year okay so remember the Reason we talk about Bitcoin dominance Is to understand your risk adjusted Returns right some people look at it and They just stay 100% cash no matter what Right but again the reason why you talk About Bitcoin dominance is because it Tells you if you believe in the theory Of dominance right it tells you where You want your Capital allocated if You're putting it in the cryptoverse That doesn't mean you should put all Your money the cryptoverse it just means If you're putting your money into the Cryptoverse and you think the Dominus is Going to go higher then Bitcoin is where You would want to allocate most of that Capital but on the otherand if we get to The point or if you get to the point Where you're looking at the Bitcoin Dominance chart and you think that it's

Topped out then the altcoin market Starts to become worth the risk relative To bitcoin that doesn't mean that alts Can't go down I mean if Bitcoin crashes On its USD PA it'll take altcoins with It it's just that you'll reach a point Eventually where whatever altcoins are Going to survive Will have bottomed out against Bitcoin And then they'll just sort of move more Or less in tandem with Bitcoin rather Than just constantly bleeding back to it Okay so that's sort of the point that I Want to make but again you know going Back to the risk stuff between 0 to 0.1 Is is where this risk metric oscillates Between right now it's sort of in the Middle between 0.5 to 6 risk going back To the colorcoded risk you can see where It currently is right I mean it's gone From from dark blue to Yellow this year Kind of similar in fact to to 2019 right There's no guarantee that we're going to Get anything like this this cycle but There's always a chance that something Like that unfolds as we get closer to The having or maybe even sometime around Then or even after it I I don't know um And it's in my opinion it's worthwhile To be prepared for as many outcomes as You can be by being hedged right by Being hedged it's like saying you know If you think that something's going to Happen it doesn't mean that you know it

Has to play out in that specific way one Of the things I said coming into this Year was that Bitcoin you know I thought Bitcoin would would go as high as 35k I was wrong right like I was wrong And you know every single day I mean I I Feel like I get blasted by people saying Well like when are you going to admit You were wrong about that it's like well You know I've admitted it 10 times on YouTube and on Twitter and I don't know How many more times I can say it right I Thought that 35k would be the high this Year and we went above it right so my View on that was wrong Okay it just simply was but because I Thought that it could go up in 2023 Right that's why I kept my crypto Portfolio Bitcoin heavy right that's why I kept it Bitcoin heavy and not altcoin Heavy because I thought Bitcoin would Outperform the altcoin market just Trying to be honest right and there have Been some altcoins that have done great This year and you know I knew going into This year that that would happen right Like I knew that there would be some That would absolutely outperform Bitcoin And that you know sort of these use Would would sort of be blasted as well But that was always the point right There was always going to be some Altcoins that were going to outperform Bitcoin there always are and there

Probably always will be on shorter time Frames in prehab years this just Collectively Bitcoin tends to outperform The colle you know the altcoin market as A whole even though you can find Individual altcoins that Outperform okay so again you know if you Want a hedge right if you want a hedge Against dominance topping out which I Don't I mean I don't really think Dominance is topped out is my my base View but if you want to hedge against That right I mean you could have alt Coins in your portfolio um and again the Closer you know the closer you get to You know to QE and all that stuff I mean You know it makes it would make more and More sense but who knows who knows What's going to happen between now and Then so that's a decision that you have To make again I am going to soften up my Stance on the altcoin market as we get Into the having year as we get into 2024 Um but I I I would say that dominance Has has more or less gone the way we Thought it would this year Bitcoin USD Uh has you know has sort of gone above My expectations this year because it's You know right now it's sitting at Around $37,000 and my high-end Target was $35,000 so it's exceeded my Expectations um which you know just goes To show you why ignoring everything

Coming up with the strategy based on a Risk metric is useful right and look Guys I mean if you like the end of the Crypto premium stuff is is is is my Website but you know you don't have to Get a subscription that I mean you can Make up any type of risk metric you want There's all sorts of risk metrics that You could create um you know with Bitcoin right so you know I don't want I Don't want to make you think that like This is the only possible solution like There's so many different things you can Look at um for for Bitcoin you could Look at at extensions from you know from Certain key levels that you're following Uh you could look at at some of the Logarithmic regression stuff right which There's plenty of that published um on The internet um you can look at all Sorts of things for you know for for Bitcoin and and how you would want to Navigate that this is just what I use Right this is what I use but you are You're free to use whatever you want Right obviously you're free to use Whatever you want I just want to sort of Explain what I use and what's Interesting is if you if you only look At sort of the high ends right like this Is the the 08 to 0.9 wristban right you Can see where those Occur if you look at the 0 to point1 Wristban you can see that we've hit it

Over here right I mean if you if you Sort of combine them into zero to 0.2 You can see that we've hit it a few Times right over here right here right Here here again here in the pandemic Drop and then you know a little bit over Here in late 2022 right so those are the times that We've hit it Last cycle we didn't even hit the 0 to Point1 rband We Came pretty close we Like hit like 0.1 or like 0. 105 risk or Something like that we we came pretty And and probably on a on a wick we Actually did go below 0.1 but by the Daily close it was it was around 0.1 but Again if you if you just sort of look at The the lows and the highs that's what It looks Like you can see that like you know this Cycle we had a lot of blue right a lot Of blue and it lasted from like September until July until June it was Basically almost a year of being in the Lower wristbands last cycle it was very Short and then we had a macro higher low In 2020 here it was maybe even shorter I Mean like this was we had a few blue Dots in here but they were also sort of Sporadic right they weren't all together Like they had been over here right over Here they seem they were more or less All together and even in this case we Eventually did come back down and and

Really test people's resolve before Going back into uh a phase of expansion Into into new highs so that's where we Currently are maybe we'll also add on The 0.5 to 6 right so that's where we Are like you know if you add on the 0.5 To 6 Wristband so you can kind of see like Where we are now here it is last cycle Like last cycle we went up to around These risk levels sort of faded for a Bit but then eventually got back into These risk Levels by the end of the Having year the cycle before that you Can see we never really went back down To those lower risk levels Right you know crypto can be super Stressful right super stressful because You're always wondering what way the Price is going to go I think the best Strategy is to just have a plan and Stick to it no matter what so like it's Not it's not what way is the price going To go it's if price goes up too quickly To a high enough risk level then I might Take profits if price goes down to a low Enough risk level then I'll buy and if Price just stays you know where it is Right now that I might just sit on my Hands and and wait for it to make that Move anyways we'll wrap it up there Hopefully you guys enjoy the content Make sure you subscribe to the channel Give the video thumbs up and again check

Out the sale on into the cryptoverse Premium at intothe I'll see You guys next time bye


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