Introduction
There are many ways to make monies off Bitcoin in the US, even with IBKR (I am not paid by them, I am just sharing what I use).
The range of options available is so many, you are literally either confused, or just spoilt for choice that you will never want to consider returning to Malaysia Bursa to trade ...
Which Instruments am I trading?
I have traded all 16 above and more if you include miners like MARA, CLSK, etc..
How many do you need to trade?
My favorite is actually MSTX, because of its price level (double digit) plus it is 2X MSTR (which already have 1-3X Bitcoin volatility) and I like MSTX Options which gives even more leverage and compare to S&P500, the net leverage is very nice.
The way I structure with very high leverage (easily 10X more than S&P500) is to structure them to try to have a dynamic limited downside and very high upside. But they are not done the traditional way of buying Call options when you are bullish which is static and suffers from time-decay. The gains are not optimal - in fact, I have never bought MSTX Calls at all, due to the fat premiums.
However, my core position is in #2 IBIT. The time horizon for IBIT is longer term. In January:
- #2 IBIT stock (buy and hold) makes up 11% of total January profits. (Nice, and 89% comes from elsewhere).
- #3 IBIT options contributed ~ 7% of total January Profits. (trading the Options around the ETFs help enhance the profits).
- #6 and #7 MSTX shares and Options collectively also contributed ~ 18% of January profits, similar to the sum of #2+#3.
One may well ask - why am I trading so many?
Short answer = I am still in "discovery" mode, trying to find what fits me the best, amongst so many choices.
Here's my experience so far:
- For Buy and hold positions, I like IBIT stocks as it has the smallest leverage (still 4X S&P500) and I really am not bothered at all during the high volatility ...
- IBIT also provide a decent and liquid Options Chain (weekly, good liquidity) - the size of the Option market is very decent here.
- For Selling a Cash Secured Puts, I like MSTX, notwitstanding the recent scare with the $14 special dividend that came out of nowhere to cause for a day or two inability to trade and big price drops. However, because we have strong hands, we didn't panic and after the panic subsided, and MSTR recovered, we came out ahead to be similar profit size as IBIT but using much less capital than IBIT.
- For small accounts risking $500 in credit spreads, one can use either MSTR or MSTX for even fatter premiums. But must not oversized. MSTR options feels more liquid than MSTX but not a big difference. MSTR options market is as large / larger than the MSTR market cap.
The rest are not worth describing as they are just my experimentation and are small.
In short, I think we only need to trade 2 stocks (IBIT and MSTX, and maybe MSTR) and if you are an options trader, you can definitely enhance the core returns without adding too much capital as you already have the stocks ... However, big moves can cause the Options value to collapsed (or when we are short, explodes). It is extremely high volatility.
Bitcoin and related Volatility - Reminder - you need big Balls of Steel
It is important to remember that Markets never make it easy for you to make the Big monies without undergoing the biggest volatility.
If you think you want to make monies off Bitcoin, never underestimate Bitcoin Volatility and then when you 10X that, your balls better be made of the strongest steel.
Just analyze the past 7 years price action.
I show one set of numbers below, but note that Bitcoin price depends on which Exchange you get the figures from, as they can vary slightly. This one comes from Bitstamp - a random selection, as I wanted a clean chart.
Note how many times Bitcoin experienced:
- Crashes (defined as more than 20% fall)
- Big Crashes (defined as more than 50% fall)
- Bulls and
- Super Bulls (defined as more than 100% returns).
- This table below is constructed based on quick peek - it doesn't have to be super precise - it just need to send the right messages.
Observations
- Disclaimer first - Bitcoin's past is not its future. What you've seen in terms of the past prices, were mainly dominated by small niche retailers. It's future is going to be defined by new types of players. Larger players like sovereign states and nations, institutions, pension funds, miners, HODLers like Micro Strategy who just buys and never sells, Bitcoin ETFs (that continues to sprouts and sold more), etc. etc.
- Its past was incredibly volatile to super volatile. In just a 7 year period, we've seen 5 Super Crashes where one is -56% and the other 4 is 70%-80% crash! It is safe to say that Bitcoin likes to crash big!
- Bitcoin likes to crash often! Out of 7 years, I see at least 8 crashes, 4 super big ones, 1 big one and 3 ordinary ones, excluding smaller Corrections. It is possible for volatility to reduce going forward, with more ETFs, more MSTR HODLing, with nation states and Bitcoin Strategic Reserves, and other big whales to just buy when price falls down too much.
- To me - All these Crashes and Corrections are Opportunities to buy cheap! DCA works well to make you a stronger hand if you have a disciplined and sound way of entering, size correctly and the act of buying more when price goes down can put you in the right mindset if you plan appropriately. You have to change the way you look at price crash for Bitcoin only.
- Bitcoin keeps making new all time highs after crashing, so, why would anyone panic! DCA works well if you can't tolerate pain for too long, but at least, wait until price goes above your highest entry price. Then, you will enjoy the ride up very much. Don't take profits too soon. Just take a tiny amount to release but make sure the market value after profit take is still larger than your buy price. For me, I will never profit take below 1 BTC - 1BTC is my absolute minimum. I want to own a full 1 BTC all the time, now that I have owned more.
- Bitcoin makes new all time highs regularly ... tahan the pain for a year or two and it makes new all time highs again!
- Bitcoin likes to make Bull Market and Super Bulls that exceeds 100%returns. I count 10 times in last 7 years! This is traders heaven! So many opportunities!
- If you use data from another exchange, your figures might be different than mine as there are so many exchanges around the world that trades Bitcoin.
- You don't need to monitor and you don't need to trade. E.g. those who bought in 2018 at say $4k, keep it in the drawer, is now sitting on 25 bagger despite going through all that massive ups and massive downs. This is what I plan to do with my IBIT shares which is now a 6 digit USD figure. Sad to say, that only buys me a bit more than 1 BTC! But thankful that compared to Malaysians, I'm probably not doing too badly to own a full Bitcoin. I hope God and the Universe gives me the strength to ride all that massive move up and down in that order of magnitudes ... and be the strong hands.
- As for the rest of the instruments - they are literally for trading. Right now, they are looking very good, contributed massively to January profits.
Summary and Conclusion
I know this article might confuse many of the readers here in Bursa, but it is only 3 weeks into January and January profits already run to 6 months active salary income, and we are just starting 2025 ...
I like to anchor myself on Basics ... the Basics will ensure we have the right fundamentals and then everything else we do will be sound and stand on the right foundation.
It has been the right and best decision to break away from KLCI in Q3/2024.
All the best for 2025!
As Cynthia Lummis said ... things are about to get crazy!
Disclaimer: Not financial advise. Just a random guy on the Internet. You are always responsible for your investing and trading decisions.