BTC at $64K. Gravitas went short at $76K

I made the mistake of dropping into Reddit earlier this morning. Yeah, I know… why would I even do this to myself?

Officially it’s to gauge retail sentiment after a massive three-day drop in BTC… but honestly, I just love the smell of napalm in the morning 😉

Of course, the joke’s on me. Because the perennial idiocy exuding from the hallowed circlejerk of crypto bros makes my eyes glaze over every single time.

So, let me get this right: Bitcoin is getting hammered, dropped from roughly $85k a month ago to an overnight low near $62k. And what’s the response?

You guessed it. Buying MORE, of course. Because if BTC just lost a quarter of its value in a month, the obvious conclusion is to load up on even more while celebrating the discount.

That’s the prevailing mindset in a nutshell, and it’s a clear path toward financial ruin.

Some of those guys are buying every day, others every week. Some of the resident geniuses are even doubling down as prices fall, which isn’t dollar-cost averaging anymore.

It’s compulsive Martingale with a death wish.

Fueling this insanity is the dream of riches waiting at the end of the rainbow, sometime in the far-flung future, if they just keep stacking those sats. Nobody considers that the stack may be worth 25% less by Thanksgiving.

Look, there’s nothing wrong with slowly accumulating an asset over time. But there’s a difference between disciplined, strategic buying and shoveling money into a bonfire.

I’ve been trading since long before Bitcoin ever existed, and the one lesson that never changes is that markets don’t care about your convictions or beliefs. They don’t care what you paid, what you think it’s worth, where you think it should be, what should be happening, or how many laser eyes you draw on your crypto meme.

Yet here we are, watching a perfectly reasonable albeit volatile asset class turn into a religious ritual. Buy. HODL. Buy more. Pray. Lather. Repeat.

Well, enough of the bitching. Now let me show you what the opposite approach looks like.

In case you’ve been hiding under a rock: Gravitas is the trend-following system I run on BTC and ETH. It doesn’t predict anything, and it has no opinion about the future of money.

It reads the trend, and when the trend changes, it changes sides, even if it hurts, especially when it hurts. Long when the market goes up, short when it goes down. No diamond hands, no hopium, no venting tweets on X.

It’s not a backtest fantasy, either. It has been running since January 2020. Over that stretch, $1,000 following its whole-coin signals compounded to roughly $20,000 on BTC and roughly $40,500 on ETH. It loses small, and stays for the big moves.

Moves like this one.

Gravitas rode the last leg of the rally long and closed that trade on November 2nd for +12.6%. After a few days of chop, it flipped short on November 5th at $76,106.94.

So while r/Bitcoin was buying every dip on the way down, the system was on the other side of the trade. Someone who bought at $85,000 and kept averaging down is sitting on a roughly 25% loss on that first purchase. Gravitas is up 15.5% on the same decline.

Here’s the actual system report from a few hours ago. No hindsight, no commentary, just the numbers:

I’m not going to predict where Bitcoin goes next. It could bounce tomorrow. It could fall another 20%. I have no idea, and that’s exactly the point. Gravitas doesn’t need to know.

What I find hilarious is this.

People will drop $50,000 into a coin on the strength of a YouTube thumbnail, then haggle over a trading subscription like it’s a timeshare. They obsess over the cost of employing a time-tested strategy and ignore the cost of riding a 25% drawdown with their eyes closed.

And you didn’t even need to short to benefit. Simply stepping aside when Gravitas flipped would have spared you most of this selloff.

Sometimes the most expensive decision is the money you decided to save.

If you’d rather get these flips when they happen instead of reading about them afterwards, Crypto Alpha covers BTC and ETH. Check it out here.

But hey, if you disagree, keep stacking. Somebody has to take the other side of my trades.

Michael
Red Pill Quants