The Mindset That Wins in Crypto - Part 1

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When Financial Markets are soaring, everyone loves to chase the trend, hopefully make a quick-buck (or two..) and maybe even enjoy the profits, but when the market provides the rare glimpse of exceptional discounts - why do some participants shy away and let generational opportunity slip by? The answer is one word; Psychology.

Crypto follows retail-driven hype and mania better than almost any other market available. This is why in our industry, eye-watering gains are up for grabs to those that hold their nerve over a long period of time, whilst folks looking to get-rich-quick can find themselves sitting through drawdowns perhaps longer than anticipated.

As previously mentioned in our DCA vs Lump Sum strategic Morning Note a few days ago, ultimately it’s smart positioning either way and nerves of steel bound in true conviction that takes the cake for the winning strategy in the long run. These same nerves must also be present when the markets are roaring green, day after day, week after week and so on…

Many investors assume that identifying market bottoms is the greatest challenge. In practice, managing exposure during periods of strong appreciation can be equally demanding. When sentiment is overwhelmingly positive and prices are rising rapidly, it becomes psychologically difficult to reassess position sizing, rebalance portfolios, or revisit original investment objectives.

This is not necessarily about attempting to call a precise market top. Rather, it is about understanding your strategy in advance. Investors who define their allocation targets, liquidity requirements, and long-term goals before entering a position are better equipped to make measured decisions during both euphoric and corrective phases.

Market cycles inevitably test discipline on both ends. In strong uptrends, there can be a natural temptation to increase risk beyond intended levels. During corrections, there can be equal pressure to reduce exposure at precisely the wrong time. A clearly articulated strategy helps remove emotion from these decisions.

The 2017 to 2018 Bitcoin cycle provides a useful example. Following its peak near $20,000, Bitcoin experienced a prolonged decline, eventually reaching levels around $3,200. Along the way, there were periods of temporary recoveries before further downside followed. Investors who had predefined allocation bands or staged exit and re-entry frameworks were better positioned to navigate this volatility than those reacting solely to price movements.

The key lesson is not about exiting at the exact top or re-entering at the precise bottom. Very few participants consistently achieve that outcome. Instead, it is about ensuring that capital deployment and risk management decisions are aligned with a broader investment thesis. Over multi-year time horizons, disciplined strategy has historically mattered far more than short-term precision.

Ultimately, successful participation in volatile asset classes requires clarity of purpose. When investment decisions are anchored to defined objectives rather than market noise, both bull markets and bear markets become environments to manage thoughtfully rather than react to emotionally.

Source:https://www.tradingview.com/x/OhCda6uu/

When you’re buying steep discounts that are closer to bottoms than tops, even if you don’t catch the exact bottom, it’s a minuscule difference over time when BTC goes on to make another all time high 3-4 years later as it’s always done. Participants with too much greed on either the upside or downside of trend, tend to find themselves missing out on all the value in-between, such as in times like now.

So many investors today would do almost anything to have entries back at these prices, whether it was around $3,200 or even at $16,000. Those are all generational entries in the bigger picture when zoomed out to see where Bitcoin has gone in the years since. All of a sudden today’s price at $66,000 doesn’t look so bad. But to seize this opportunity, yes you had to have conviction and patience; all things we’ve previously discussed, however without a strong self-awareness of your very own individual psychology as an investor and a deep understanding of why you’re buying or selling - you’ll be at the mercy of the storms of emotions that come with Cryptocurrency volatility.

For those that are having strategic conversations this week with our seasoned brokers at Stormrake, you may find in-time that you pass through this deluge of volatility, coming out the other side seeing it as a blessing rather than a curse. Imagine getting a Black Friday discount (and then some…) on an asset that has only known one long-term direction - Up and to the right. Just remember; Bear markets are where the millionaires are made, you just don’t see it until a few years later.

All the day to day emotions are washed away in time, as is to be expected in this current paradigm shift of global currency debasement. Turning on the printing press and debasing the underlying dollar all sovereign wealth assets are priced in is simply just a failed economists way of kicking the can down the road. The financial markets, just like the banks of 2008 are now reaching the point of “They’re too big to allow to fail”. All roads lead to one convergence point - but to be on the winning side of this trade you must remain steadfast in your investor psychology. Nothing goes up in a straight line forever…nor does it to the downside too…more to come tomorrow. - stay tuned.

Stormrake Spotlight: Pax Gold (PAXG) ($4,991)

Source:https://www.tradingview.com/x/ESERy7lY/

PAXG is still holding on with a 2.5% bounce higher on the day. Whilst trend still remains pointed to the downside, and more likely to sweep below $4,600 before making another meaningful push higher, the market is providing short-term relief bounces along the way.

BTC/USD Key Levels and Price Action:

Source:https://www.tradingview.com/x/WGjyXQMr/

Bitcoin has lost another 2.2% over the last 24 hours as price momentum continues lower. Bears have successfully broken the $66.8K support as we now look to sweep back into the low-$60K range. This is proving to be yet another excellent buying opportunity for those that might’ve missed out on the full extent of the Feb 6th capitulation.

BTC Total ETF Flows for 18 Feb: (data not available at the time of writing)

(ETF flow data is sourced from https://farside.co.uk/btc/ and reflects figures at the time of writing.)

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*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis and James Ryan

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