Chronic underperformance…

[Dom Sargeant]

So, with 2020 nearly closed out, BTC gains are circa 220% and the crypto ml bot has only returned a poultry 66% YTD… Big question is why trade like this?

Everyone is looking for BTC to hit 100k next year and I’m deeply concerned that this system will massively underperform again and hurt my potential gains Vs just a simple buy and hold with much less risk…

[Justin]

Hi Dom-

I can provide some insights into why people would trade in a market like this.

As a bit of context, I personally have two account types:
1. A buy-and-hold account
2. A trading account

Here’s why-

Yes, if you believe BTC will hit 100K next year, then it’s probably best to buy and hold. It will be near impossible for any bot to outperform a full bull run.

That said, the challenges with buy-and-hold are several:

– 2020 buy and hold has been amazing, but did you buy all in on Jan 1 (or during the COVID drop)?
– When do you realize your gains?
– Now that we’re sitting at 27K, do you buy in? Or are we potentially at the peak?
– If the market does drop (remember it was as low as 3K this year), what do you do?
– If some regulatory or security issue hits and BTC appears to permanently drop, what do you do?
– If it keeps going up, do you buy more? Or is it too late?

The point is, in the midst of a bull run, it’s easy to say buy-and-hold has outperformed. But that’s looking backward.

Markets typically ebb and flow. They experience both bull and bear cycles. So it’s also not a good assumption to say the market will just keep going–it may, but odds are not in that favor.

When it comes to trading, here are the advantages over buy-and-hold (even in bull markets):

– You can trade regardless of price. It doesn’t matter if BTC is $3K or $27K. You can move in and out without worrying if it’s too late.
– If there are bull and bear cycles, you can win over time. Crypto-ML has been good at capturing a portion of bull runs and avoiding most of bear times. As a result, we beat buy-and-hold in the long term.
– With a highly bullish asset, trades should be solid and provide a relatively safe (albeit speculative) way of consistently building your portfolio over time. If the market crashes, you won’t lose all of your gains.

I hope that helps provide some context and why people trade.

[Author]

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