The 33 Rules of Millionaire Bitcoin Traders

Timeless Trading Principles for the Digital Age

(opening extracts)

In the early 1940s, the world record for running a mile was regularly broken. But after 1945, when Gunder Hägg of Sweden ran just 1.4 seconds off the four-minute mark, the years went by.

Experts had declared breaking four minutes to be physically impossible. Despite Hägg’s proximity, it remained as daunting as ever. Into the 1950s, both the record and four-minute barrier remained intact.

Countless athletes took aim and fell short. The global public was glued to the spectacle. Finally, in 1954, British athlete Roger Bannister ran faster than Hägg—the new record: 3.59.4. At long last, the fabled four-minute mark had fallen.

Just 46 days later, Bannister’s main rival ran even faster. The following year, three more broke the four-minute mark. All in the same race.

Why the sudden flurry across a barrier that had resisted so many for so long?

It seemed that once Bannister showed it was possible, others could believe too. The biggest barrier had been the psychological one.

Today, literally hundreds and hundreds around the world have run under four minutes. Even high school athletes.

So why mention this in a book about trading? Because it’s a great story about the power of belief. It shows its incredible capacity to both limit and liberate.

There are some who don’t believe you can make money trading bitcoin. But it’s just another limiting barrier. A barrier broken by a little knowledge rather than athletic application. In sharing these trading rules, I feel I’m showing you how to run the four-minute mile. Compared to that, it’s a walk in the park

– Trader X

 

Introduction

‘If only I had listened—to that advice, that hunch—and bought bitcoin ten years ago … five years ago … a year ago …’

It’s a common regret. And the conclusion? ‘I’ve missed the boat.’

Some decided they missed the boat when one bitcoin cost a dollar. Some decided when it broke the hundred mark. Another bunch decided in early 2017, when it hit a thousand dollars.

They decided it last year. They decided it this morning. They’ll decide it again when bitcoin makes the next high. And they’ll breathe a sigh of relief at the next big dip too and happily forget about bitcoin all over again. The rules in this book are not for those people.

These rules show you how to make money trading bitcoin. Here and now. Because there’s money to be made from those famed ups and downs, not just from the good luck of buying in early.

So if you’re kicking yourself for not listening earlier to the ‘hot tip’ about bitcoin, at least listen to what I’m telling you now. With these rules, you don’t need luck or a time machine. Because it’s never ever too late to trade something like bitcoin.

These rules represent a distillation of age-old trading wisdom that I’ve successfully employed in a career spanning three decades. I’ve employed these rules across a multitude of assets and markets, and I’ve employed them for bitcoin and other cryptocurrencies too. Prices, volatility, momentum—it’s all the same. These principles work, and you’ll see how just by reading about them, before you even put them to use.

This information is perfectly suited to those encountering bitcoin or investing and trading for the very first time. And it’s also suited to those already involved. It can, and should, make a trader out of even those bitcoin ‘HODLers’ who were fortunate enough to buy in years ago. Why not supercharge that luck with some expertise and make even more gains?

So for those already familiar with bitcoin, and with such things as electronic wallets and crypto exchanges, you’re ready to jump straight to the rules. For the others, read on.

 

What is Bitcoin?

The world’s first decentralized digital currency

Bitcoin is the most prominent and most desired of the new class of digital money known as cryptocurrencies. One major reason for bitcoin’s fame is that in the short time since it was created in 2009 it has created thousands of millionaires and even billionaires.

Bitcoin exists only in digital form as numbers stored on computers. But this is also true for the vast majority of traditional currency in the modern world. Coin and paper money represents an ever-shrinking and already small minority. The difference is that for bitcoin to exist, no central organizing body such as a bank or government is required. Instead, bitcoin exists and operates due to ingenious computer code known as blockchain technology. This technology enables a network of participating computers to play host to the currency as an automated electronic ledger that facilitates digital transactions.

The distributed and encrypted nature of this peer-to-peer database means it is highly secure. Should hackers tamper with the code to fraudulently award themselves bitcoins, the millions of other networked computers will simply not agree. These computers are rewarded for their participation with bitcoins, which are ‘mined’ into existence via the operations of the blockchain algorithm. No individual, bank, government, or any other body can create or destroy bitcoins nor change any transaction once recorded on the blockchain.

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.

– Satoshi Nakamoto, creator of Bitcoin.

While bitcoin is an entirely new innovation, it has arguably succeeded due to its similarity with traditional forms of value, such as gold. For most of recorded history, it was traditional, and wise, to trust a material such as gold in matters of exchange value, rather than to trust an individual or institution.

Due to convenience, the practice grew to vault gold with a trusted bank and to use as currency the paper banknotes issued against the gold. Over time, paper currencies became disconnected from gold, their value shifting from a trust in the value of gold to a trust in the third parties storing and guaranteeing it, such as banks and governments.

Bitcoin has pioneered the disruption of this model. With apt timing, it was launched in the wake of the 2008 financial crisis, a moment when the system’s shortcomings were all too apparent and trust in its institutions had plummeted. Bitcoin’s mysterious inventor, ‘Satoshi Nakamoto’, embedded into the very first transaction a newspaper headline from the time concerning a UK government bailout for stricken banks. This inclusion signaled a heroic origin story for bitcoin as an alternative store of value, independent of the traditional ‘middlemen’ authorities and institutions.

Time has proven the bitcoin concept which has seen its network of miners, users and advocates substantially grow along with its value. Being decentralized and censorship-resistant, bitcoin represents a philosophical alternative that could ultimately supplant centralized legacy financial systems. But although the global number of electronic bitcoin wallets has crossed the 100 million mark, this is still a relatively small number of users compared to traditional currencies like the dollar, euro and yuan.

Bitcoin, therefore, retains considerable potential for growth. This has resulted in its hoarding under the understandable expectation of continuing appreciation, and the attraction of a steadily growing band of investors and traders.

Such factors have made bitcoin’s value massively more volatile than established currencies, defining it more as commodity than currency. Even though there are now thousands of cryptocurrencies, bitcoin remains by far the most sought after, with its market capitalization twice as large as its closest rival, at the time of writing, and ten times larger than the next closest.

A maturing commodity

In 2017, bitcoin broke through the $1,000 barrier for the first time and, thanks to a wave of speculation, it astonishingly ended the year worth more than $19,000. During the first half of the following year, it promptly lost 50% of its value. Many new investors who had been attracted by the price surge and media interest were quickly shaken off by this violent dip.

However, experienced and knowledgeable traders remained, along with bitcoin’s passionate fans and advocates. In 2020, their faith was rewarded with a 300 percent increase in value, outperforming by a factor of 10 the combined gains of gold and the Dow Jones stock market. In just a three-week period culminating in early January 2021, its value more than doubled, breaking through the $40,000 mark.

Throughout bitcoin’s short history, opinions about its future have never been in short supply. During this last surge, one decidedly precise multi-year prediction captured more attention than most. According to analysts at JPMorgan, if bitcoin were to become as established as gold for large institutional investors, it could rally as high as $146,000.

According to this prediction, the asset’s wild price fluctuations would ultimately have to settle to a level similar to gold’s in order to establish a similarly attractive level of risk. However, until that time, it is exactly this volatility that ensures its continuing attraction to traders.

Democratized wealth

Despite large institutional players starting to buy in, bitcoin remains true to its foundational code and easily accessible to all. In fact, it’s never been easier for the casual investor or budding trader to enter the market. Getting started at a cryptocurrency merchant or exchange is similar to setting up a PayPal account. After linking a bank account, traditional currency can be electronically exchanged for bitcoin at the push of a button.

Though there will only ever be 21 million bitcoins created, it should be remembered that bitcoin is massively divisible, making a fraction of a bitcoin, or any cryptocurrency, affordable to all. It is predicted that a wider understanding of this fact, along with knowledge of how easy it is to buy and sell crypto, will attract many more investors in the next few years.

Thanks to the ubiquity of smartphone technology and internet connectivity, people in parts of the world lacking banking infrastructure and in nations threatened by economic crisis are already using bitcoin as a way to secure their wealth. Nigeria, Vietnam and Peru now rank above the US by percentage of population who have used bitcoin (see chart above). However, bitcoin’s roughly 100 million ‘users’ worldwide still equates to only just a little over 1% of the world population. It would seem that, whichever way you slice it, bitcoin is still just beginning.

 

 

About the Author

During almost three decades in traditional finance, Trader X has traded almost every significant financial asset. He entered early into crypto, trading bitcoin at $20, and was a beta tester and market-maker for Ripple.

While compiling trading wisdom to pass to his sons, he saw that the times suggested a wider appeal. With a faltering financial system and expanding gap between rich and poor, he has become evangelical about crypto as an unmissable opportunity for all.

His use of a ‘cryptonym’ is not due to humility but the discretion required for his continuing work for family offices, hedge funds and high-net-worth individuals. In combination with the opportunity afforded by crypto, he hopes this book will serve as an invitation to that same kind of usually exclusive wealth creation as enjoyed by his clients.

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