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Chris Coney:
Hi there, guys. This is Chris Coney speaking, and welcome to this edition of the Weiss Crypto Sunday Special.
Now today, I want to share with you a trade recommendation with tenfold potential. Now I shouldn’t have to say this, but I do: This isn’t financial advice, and it’s not an instruction for you to take action.
Rather, this is a trade setup that I recommend that you look at, and then make an individual decision whether you take it or not. I don’t know your individual circumstances. So with that said then, I’ll start at the end and then work backward.
The asset that I'm talking about here is Filecoin (FIL, Tech/Adoption Grade “E+”). Now Filecoin trades across a wide range of different exchanges. The most liquid one being Binance, where it trades directly against the Tether (USDT, Stablecoin).
Now, the first reason that I’m recommending this is that it’s been on my watch list since before I even started trading on Binance, way back in October 2020. I’ve been watching Filecoin for a long time.
The reason it’s been on my watch list since then is because the fundamentals behind this project are one of the strongest that I’ve ever seen for a cryptocurrency project, period.
The idea for Filecoin didn’t just come out of thin air. It was devised by the team at Protocol Labs, the inventors of IPFS. Now, IPFS stands for InterPlanetary File System. It’s a protocol that radically improves the way data is stored online.
So instead of giant, publicly traded corporations with a few massive data centers around the world providing the storage services for much of the world’s data, IPFS creates the ability for anyone to offer online file storage in an encrypted fashion. And that means you could provide storage from your tiny laptop hard drive. You could provide storage from a mini file server at home. You could set up a garage full of file servers. It doesn't really matter ...
Anyone can participate and be part of the IPFS network. IPFS is much closer to how the internet was intended in the first place.
The problem with IPFS, though, was that there was no incentive structure, right? People — including me — would just indiscriminately upload files to IPFS for free. And then the storage providers would have to bear the expense of that hardware and bandwidth. Not sustainable, obviously.
The thing Is though, IPFS was invented and launched before cryptocurrencies existed, but once cryptocurrencies did exist, the way to monetize IPFS was obvious: Filecoin.
So Filecoin was created at that point to acts as the currency to pay for storage on the IPFS network. And it's a way for storage providers to earn money for the services that they provide.
But there was one other issue: The user experience for IPFS used to be absolutely awful, imply because everything was offered on a best-effort basis. I tried running a node at one point. It was no good. But now, all the storage providers are competing to provide the best possible service and increase their profitability because there's a financial incentive to do so by earning Filecoin.
Now I said Filecoin started trading on Binance in October 2020. We're now in 2022. So we have more than a year’s worth of trading data. That's a good thing. With all that trading data, the moment I have been personally waiting for has finally arrived: The opportunity to actually take a position and trade Filecoin for a potential tenfold return.
That's 900% … and you get your principle back!
So, the key question is: Why now? Well, that is where I would take you over to the charts to show you how I spotted this opportunity, and how I would trade it. So, let's do that right now. Pop over to the charts. Here we go.
So here is Filecoin trading against Tether on Binance. What I see here is a 100% Fibonacci retracement, which is extraordinary.
Now, if you don't know what Fibonacci retracement is, it’s one of the major trading indicators that I use as a core part of my analysis. By the way, if technical analysis like this interests you, I recommend taking a look at my decentralized finance (DeFi) course, where I teach this kind of thing.
But back to the charts: Normally, I'd get interested in buying into something when it pulls back here, to the 61.8% level. For Filecoin, that'd be around $47.99.
But Filecoin has come from its all-time high all the way back down by over 100%. It actually overshot that 61.8% level with a more than 100% retracement.
So, that means the big run-up I'm anticipating based on the Fibonacci retracement — a massive run-up from roughly $20 to about $190 — has now been completely canceled out.
That’s fantastic.
Huh? Why would I say an 89% crash in the price is fantastic? For four reasons:
- I know the fundamentals of this project to be solid.
- The market has already determined for us the boundaries of the trading range, right? The all-time high and the low.
- We, therefore, know roughly what overvalued and undervalued looks like.
- I don't currently own any Filecoin. So a price reduction of 89% to me simply means it's on sale at a huge discount.
Now, the fact that we have this all-time high established here at $190, and the fact that Filecoin has only achieved a fraction of its potential adoption means the probability of Filecoin returning to its all-time high at some point is very, very high. I'd say 90% probability. It's just a matter of time.
So, I know this took about 320 days to fall 89.3%, and then stabilize in the way you just saw. So that sort of sets my expectations as to how long it might take to get back there.
Now, a year might sound like a lot, but not to me. Not when there's an opportunity to increase my initial investment 10 times. I mean, we're talking here about a big potential opportunity. Say I put in $1,000. That means, if my predictions are true, I’d get back $10,000. If I put in $100,000, I’d get back $1 million.
I also like this one because it's not a trade that will require much active management. I mean, it's a very long-term investment, this one. Well, in crypto terms, at least. I was going to enter around $20, and fortunately I did yesterday. But in that time, it’s moved up since I wrote this script to $21.70.
My recommended entry range was between $20 and $21. But the upside is still so huge. You still might choose to take this depending on what the price is when you look at the chart.
Now that I’m in, I’ll just leave the project to gradually gain more adoption and let the price follow up until it hits my profit target. So that's part one.
Part two are profit targets and when to exit. I personally would like the full hog here, meaning I'll ride this all the way back up to the $190 area, which I'm guessing will take about a year.
But, like I always say, risk and reward go hand in hand: I'm willing to take the most risk for the most reward. You may wish to narrow those parameters down, so you take less risk and are happy with less reward. So, if you want to limit risk and are happy with a threefold return, then your profit target could be in the $60 area.
Obviously, this is going to come sooner. And it’s slightly more certain, as you can see on the chart above from the trading candles. More candles mean more trading activity at that level.
What I would normally do is buy at the market, and then place a limit order to automatically sell at my desired price. That way, I can literally forget about it. And then even if I'm not around or whatever, there's no discipline required.
Once I've set the sell order — at $190 for me — I’ll forget about it. Until one day I glance at the chart, see that it’s hit $190 and that I’ve been taken out. So there’s no emotion involved — I've decided what to do, set it up and forgotten about it.
Ironically, I can't actually do that because the exchange I'm using only lets you set a sell order at a certain percentage above the current market price. And my profit targets are way above that. So I'm just going to have to keep checking in every so often to see how it's going. And then when the current price gets within range of their allowances, then I'll be able to put my sell limit in, so I’ll be taken out automatically when it gets there.
One final note then, part three, is regarding trade size — i.e., how much to put in.
So far, I've put in 0.14% of my entire crypto portfolio, or 0.5% of my altcoin portfolio. I hold quite a lot of Bitcoin (BTC, Tech/Adoption Grade “A-”) in my portfolio, roughly two-thirds is in Bitcoin with the remaining third in altcoins. So I'm saying that of my entire portfolio, my Filecoin position is now 0.14%, though if you just take my altcoin portfolio, then it's more like 0.5%.
As you can see, I’m still being cautious. My advice then is don't be greedy. I don't think in terms of big wins. Instead, I think in terms of lots of wins. There's always another trade … and another and another. So there's no need to let the risk get out of control and cause you to slip into the world of gambling. Even the returns you might consider small in crypto are still way in excess of what you can expect from traditional equity investing.
So that's my 2 cents on that. I mean, you don't need that many trades — even a threefold return, if that’s what you decide to target — is still a pretty decent return on a trade. So let that be enough and that'll save you well.
So there we go, that is going to do it for this edition of the Weiss Crypto Sunday Special. Keep a close eye on your inbox for the next episode, but until then, it's me, Chris Coney saying bye for now.
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