This newsletter is sponsored by PHEMEX, the world's best crypto exchange for both spot and leverage. Sign up with the link above and get some free Bitcoin - up to $3600 worth. Linear relationships are simple and intuitive, but don’t always tell the whole story. Crypto and investing are games of exponential thinking and possibilities.Let's look at three examples: losses, market capitalizations and price appreciation.There is a vast difference between recovering your investment in an asset that has dropped 90% vs. 95% vs. 99%. Surprisingly, the journey back from 99% is 11x harder than from 90%. Let’s take a $100 coin for example. If the $100 coin fell to the respective amounts above, it would be worth $10, $5, and $1. The positions of their bottoms may not seem far apart, but their roads to recovery are vastly different, with each subsequent one being exponentially harder. For the coin that dropped to $10 to recover its lost value, it needs a 900% gain. For the $5 and $1 they need a 1,900% and 9,900% gain respectively. Bitcoin’s move from ≈$69,600 to ≈$39,500 constituted about a 42% drop. But a 42% move upwards won’t bring Bitcoin back to its all-time high - it actually needs about a 74% increase from the low. You can now see how some of the alts that recently lost 60%, 70%, or +80% of their value have a much steeper hill to climb. Now that we have the scary example out of the way, let's look at growth. As you probably already know, the further down the list of market caps you look, the more likely a coin is to rise or fall exponentially. Bitcoin needs billions of inflow or outflow to move the price in a significant way - it has a current market cap of $789B. Coin number 500 has a market cap of $71M. It is prone to massive swings because any one investor can push price easily in either direction, and the slightest hint of retail FOMO can move the market.The largest percentage of the total cryptocurrency market cap skews heavily towards the top few projects. Bitcoin alone consumes 40% of the market and Ethereum combined with it accounts for nearly 60%. When you add in the next top 8 altcoins, you have roughly 80% of all of the money in the market. What this tells us is that market caps exponentially decrease down the line and exponentially increase on the way up.Prices generally will behave more linearly amongst the top coins and more exponentially amongst the smaller coins. Hence the bigger gains and bigger losses in small caps and smaller gains and smaller losses in large caps. If you want your portfolio to move exponentially (riskier), move further down the list. If you want it to move linearly, move further up the list. As far as the safety of your investment goes, it generally decreases exponentially further down the list and increases exponentially further up the list. Bitcoin cannot go to 0, but the 1000th coin by market cap can.It is important to think exponentially about both your potential losses and gains, as well as when you structure your portfolio.Chart Request Live Stream at 1:30 PM EST. Please follow the rules. I cannot take requests at any other time, so if you send them during a different window they may not get charted. Remember, no more email requests.1 chart per person, per weekSubmit your request between now and 12:30 PM EST.You can only submit your request through the link below.If it is not on TradingView, there is a chance I will not able to chart it.REMINDER: I can only do so many charts on the livestream. My assistant picks 25 random requests from everyone’s submissions and those are the coins I chart.Chart Request FormIf you are a new member, please refer to THIS BLOG for instructions on how to make my charts your own.In This Issue:Exponential ThinkingEthereum On-Chain Hopium - IntoTheBlockBitcoin Thoughts And AnalysisIntel Is Creating A Bitcoin MinerPresident Bukele Doesn't Give A F***USDC Flips USDTMy Recommended Platforms And ToolsIF YOU HAVE ANY ISSUE WITH THE NEWSLETTER OR YOUR SUBSCRIPTION, PLEASE CONTACT: PREMIUMSUPPORT@GETREVUE.CO
The Wolf Den #417 - Exponential Thinking
The Wolf Den #417 - Exponential Thinking
The Wolf Den #417 - Exponential Thinking
This newsletter is sponsored by PHEMEX, the world's best crypto exchange for both spot and leverage. Sign up with the link above and get some free Bitcoin - up to $3600 worth. Linear relationships are simple and intuitive, but don’t always tell the whole story. Crypto and investing are games of exponential thinking and possibilities.Let's look at three examples: losses, market capitalizations and price appreciation.There is a vast difference between recovering your investment in an asset that has dropped 90% vs. 95% vs. 99%. Surprisingly, the journey back from 99% is 11x harder than from 90%. Let’s take a $100 coin for example. If the $100 coin fell to the respective amounts above, it would be worth $10, $5, and $1. The positions of their bottoms may not seem far apart, but their roads to recovery are vastly different, with each subsequent one being exponentially harder. For the coin that dropped to $10 to recover its lost value, it needs a 900% gain. For the $5 and $1 they need a 1,900% and 9,900% gain respectively. Bitcoin’s move from ≈$69,600 to ≈$39,500 constituted about a 42% drop. But a 42% move upwards won’t bring Bitcoin back to its all-time high - it actually needs about a 74% increase from the low. You can now see how some of the alts that recently lost 60%, 70%, or +80% of their value have a much steeper hill to climb. Now that we have the scary example out of the way, let's look at growth. As you probably already know, the further down the list of market caps you look, the more likely a coin is to rise or fall exponentially. Bitcoin needs billions of inflow or outflow to move the price in a significant way - it has a current market cap of $789B. Coin number 500 has a market cap of $71M. It is prone to massive swings because any one investor can push price easily in either direction, and the slightest hint of retail FOMO can move the market.The largest percentage of the total cryptocurrency market cap skews heavily towards the top few projects. Bitcoin alone consumes 40% of the market and Ethereum combined with it accounts for nearly 60%. When you add in the next top 8 altcoins, you have roughly 80% of all of the money in the market. What this tells us is that market caps exponentially decrease down the line and exponentially increase on the way up.Prices generally will behave more linearly amongst the top coins and more exponentially amongst the smaller coins. Hence the bigger gains and bigger losses in small caps and smaller gains and smaller losses in large caps. If you want your portfolio to move exponentially (riskier), move further down the list. If you want it to move linearly, move further up the list. As far as the safety of your investment goes, it generally decreases exponentially further down the list and increases exponentially further up the list. Bitcoin cannot go to 0, but the 1000th coin by market cap can.It is important to think exponentially about both your potential losses and gains, as well as when you structure your portfolio.Chart Request Live Stream at 1:30 PM EST. Please follow the rules. I cannot take requests at any other time, so if you send them during a different window they may not get charted. Remember, no more email requests.1 chart per person, per weekSubmit your request between now and 12:30 PM EST.You can only submit your request through the link below.If it is not on TradingView, there is a chance I will not able to chart it.REMINDER: I can only do so many charts on the livestream. My assistant picks 25 random requests from everyone’s submissions and those are the coins I chart.Chart Request FormIf you are a new member, please refer to THIS BLOG for instructions on how to make my charts your own.In This Issue:Exponential ThinkingEthereum On-Chain Hopium - IntoTheBlockBitcoin Thoughts And AnalysisIntel Is Creating A Bitcoin MinerPresident Bukele Doesn't Give A F***USDC Flips USDTMy Recommended Platforms And ToolsIF YOU HAVE ANY ISSUE WITH THE NEWSLETTER OR YOUR SUBSCRIPTION, PLEASE CONTACT: PREMIUMSUPPORT@GETREVUE.CO