Ryan Wilday runs Crypto Waves and today he discusses how he invests and trades in crypto markets. (2:00) Chart set-ups, Elliott Wave perspectives (8:15). Using AI and algos in trading, (11:00) Bitcoin miners are either going to get religion or not (14:00). Coinbase positives and negatives (21:45) Market structure necessary for understanding crypto markets (34:00) Bitcoin ETFs and Ryan’s long-term target (37:00).
Rena Sherbill: Ryan, welcome to — well, kind of welcome back to Investing Experts, but our first legit conversation on this platform. Welcome to the show.
Ryan Wilday: Thank you.
RS: We stole one of your episodes from James Foord, the Pragmatic Investor. That’s what I’m referring to. But it’s great to have you on talking crypto. You run an investing group service on Seeking Alpha called Crypto Waves. You discuss Elliott Wave trading and a lot of people in our audience are super interested in that.
If you want to kind of synthesize how you look at the crypto markets, and how — maybe the markets in general even?
RW: Yeah. I mean, when you talked about crypto, I like to divide the market into a few areas, and we cover crypto equities too. That’s an important component as well as coins. First, what in crypto is, what we call investment grade from our standpoint and from that, if you’re — say, you want to come into the market as a HODLer, as we say, or long-term holder we really push people to focus on Bitcoin and Ether.
If you look at, bullish and bear cycles over, I’ve been in this since 2012, professionally as an analyst trader since 2017. And through all of these cycles it’s pretty clear that Altcoins by and large, they’re very experimental projects. They are questionable from a fundamental basis, that could be debated. And they — but I can tell you with nearly 100% probability, most of them don’t last from one bull cycle to the next other than Bitcoin and Ether. So basically on the track record of what has been proven, we push people towards Bitcoin and Ether, if they want to be HODLer, so to speak.
And then when you get into Altcoins, both Jason and I run the service with me as well. We are both sort of, well bred swing traders, and we find Altcoins really great. I mean, Altcoins are great for swing trading when the time is right and Altcoins can fall into that. We can get pretty amazing risk reward when everyone knows the volatility of crypto and we try to capture that with as little a risk as possible. I think some people will very probably be surprised knowing me how little my bets on Altcoins are. Like they’re very much for me a tool for high return with very little at risk. So, I would put that, so that’s that part of the market.
And last we have crypto equities and it’s classically been Bitcoin miners. I think these companies are pretty poorly run. If there’s any CEOs watching, they can give me a call, or whatever, and debate the validity of that statement. I’m talking mainly in general of the whole group.
And that’s because they’ve largely financed their operations by buying miners at the tops of Bitcoin, leveraged up with that Bitcoin, and then bought equipment at the top. They’re in an arms race against the network cash rate, which is basically the rate at which they can produce Bitcoin and with that they sort of get their cash cost of mining.
And so I give it to them. It’s a tough business because I came from the product business, my last corporate job was Samsung, and Samsung would love to have its product go up and — the product that it produces go up in price. And these miners have that benefit, right? I mean Samsung’s phones always, they’re going to go down, usually not up. And Bitcoin — what these miners produce, goes up in price. The problem is their cost to produce goes up along with price and that’s something Samsung would never experience because they’re constantly bringing their costs down.
So I like to differentiate a classical product business to what these miners face and it’s a tough business that, you know, okay, price is going up, but so is your cost and you’re always trying to outrun that often with financing. And it’s just tough. And so I think the only way to manage that is to learn how to hedge, sell top. So we cover them. I do, again, don’t think they’re investments because of that reason. We get some great swing trades out of it.
A lot of other interesting stocks starting to show up like Coinbase (NASDAQ:COIN). It’s not yet said, okay, I’m ready for a long-term uptrend. But it’s pretty interesting. They had some interesting news this morning from a fundamental basis. It gets more and more interesting.
And then another topic we cover closely, (APLD), which is sort of a data service for the mining industry as I understand it. And, again I’m a very technical trader. Sometimes I don’t even know what these companies do, but that’s my understanding. And it’s forming to be a pretty good chart. So we’ll find plays like that in the industry as well. And then — so that’s kind of my breakdown again. The Bitcoins, Bitcoin Ether, Altcoins and then, sort of the crypto equities, but even within, we got some good groups and bad groups.
RS: So it’s interesting. You said that you’re a technical trader, and so you’re looking at the charts and a lot of times you’re not even interested in the fundamental. It sounds like sometimes even the basic fundamentals of a company.
RW: Yeah. No, I wouldn’t say that. I have an MBA from my product side. So, I know, I’m versed in corporate finance. I wouldn’t say no, but what I don’t look for is a fundamental reason for a chart to start rallying. I don’t trade the news. A good chart is a good chart, but lots – I would say it’s fairly fair to say that companies are in poor fundamental basis, those uptrends don’t last.
Now from a trader perspective, I say they’re not lasting when support starts breaking, a very classical technical thinking. And most of my supports are Elliott wave based depending. I trade some other styles at times. So I have no problem trading an up-trending crappy company, you know, as long as it plays out — it’s playing out, and then all of my trades are very tightly managed from a risk perspective.
Now when I talk about my investment portfolio, it was like those long-term holds because I don’t – it’s not like my entire portfolio is like day trading every day, right? Or even swing trading. We’ve got a lot of things that I manage. And most of it’s ETFs, but from that perspective I look at interesting opportunities from a fundamental basis. But my level of aggression with respect to those investments definitely still has technicals in mind.
So I wouldn’t call myself as someone who ignores fundamentals, but when something’s sort of falling into trading, like, this company APLD, which is like, what are they doing? I think they’re a data center. Again, I’ve been doing well trading it technically and I never stopped to ask myself whether it’s a long-term hold yet because the chart doesn’t say that. So if it became a long-term hold for me, I want to understand the business a little bit more personally.
RS: And what does the chart set-up look like when you start looking at it for a long-term hold?
RW: So in this, APLD for instance, it’s very specific to, like different structures that we see. But APLD from an Elliott perspective is trying to form what we call leading diagonal off it’s low. Lot of leading diagonals of all-time lows fail. So, it’s a long ways. But if it does hold, it forms 5 waves. And I think it’s, God, I can’t remember the final target to fill in 5 waves. I think it’s in the three figures. And right now, we’re trading it at $7.
So it’s got a crazy volatility characteristic to it. We’ve been trading it since it was in the 3s, I think. And now it’s in the 7s, and this thing moves like 5% to 10% a day. So if it moves up to, again through somewhere in three figures, then we have, we mark what’s called the Wave 2, which is always retraces all of those 5 waves or most of it, sometimes three-quarters of it.
And if that holds and it breaks out over the top of the previous then that’s a really good sign that a company’s got some runway. From at least technicals are hinting. And then, yes, that’s when I start looking at balance sheets and cash flows and stuff and say, like, am I going to put this in my portfolio, which again is mostly ETFs and stuff like that? So for a stock to graduate for me personally to my portfolio and investment portfolio, it’s got to be very interesting to me, from both a technical and the fundamental basis.
RS: No. Sorry. Go ahead.
RW: I was saying, again, most of it is ETFs. So I have to babysit. Yeah.
RS: Right. ETFs built in babysitters.
RW: Yeah. Exactly. Yeah. I hire babysitters in ETFs. To a degree. I still watch them.
RS: Yeah. That’s actually a pretty good synonym for ETFs. You mentioned that Elliott Wave, sometimes it’s not the only strategy you use. What are some of the other strategies and when would you implement them?
RW: I have — so like I was trying to think. So, like, sometimes I’ll use volume profile to day trade. That’s mostly honestly in Forex. Crypto, I would say Elliott Wave works really well because it spends so much time not moving. Like day trading crypto is not fun. So when I say, I use like volume profile and liquidity zones, I’m talking about day trading Forex. Sometimes futures, like S&P 500 futures. And then the other thing I have is, I use a machine-learning platform to do some algo work. And I do, in the service we are running, a couple algos.
Actually the one we’re running in Crypto Waves is not machine-learning based right now. But I do a lot of quantitative. What are some signals, technically speaking, that have played out with some statistical bearing, and then with validity basically, and sometimes machine-learning comes into the construction of those signals. And so again, it’s not just on crypto, I use it on equities and whatnot. In my own trading. I have some auto trading going on in some of these algos.
And basically the designs of these algos is something I would never come up with. Like I would, they have weird calculations and whatnot, that the computer suggests after doing some tests. Sometimes they play out. Sometimes I have to turn them off. Like they’re not really not working like the results suggested they would. But it’s something I do in terms of my trading. I like to have as much automatic as possible, but yeah, not always. Don’t always have enough time to do all that.
RS: Yeah. Using all those tools, does it ever make you think about AI? The AI sector and kind of what makes sense over there?
RW: Yeah. I’m curious whether they’re going to make easy AI tools. There are a lot of places that have claimed AI. I wonder if they are going to make tools for regular investors sign up for subscriptions and whatnot. And at the same time, I wonder if that’s going to really work because a lot of times when you find an edge, if there’s an edge being broadcast out to a bunch of subscribers, to a tool set, it may dilute the actual results.
Because no matter what, whether it be a human, or an AI, you’re still looking at past history, right? And then you’re trying to move it forward in kind of a predictive basis. And to call that actually predictive, I think is a misterm, right? You’re really saying that this past result could potentially carry on to the future, right? And like we say, like, past results are not a guarantee of future results, right. It’s that old thing in investing and AI is no different. It doesn’t matter.
Whether — if I’m using machine-learning platform, that’s not per se AI. It’s just sort of a brute force machine-learning, like looking at things that I can’t look at fast enough and trying different things. And again, it’s just finding past results, right? And then as you move forward in time, it may prove to be reductive or not.
So it’s not that easy. It’s not like — I don’t expect AI – AI is already being used in the investment space, and I don’t expect it to be so revolutionary. But I’m interested in it. I’ve used ChatGPT to rewrite code because I’m not a great coder. Like, I’ve been trying to learn a few languages to get by. I don’t have the time to be super devoted to it. Unfortunately the platform I use has some code writing itself, it has some skills, and then I have to learn how to edit it.
So ChatGPT has been cool in that regard. And then yeah, I hope to expand the use of it personally in trading. But yeah, it’s just time to play with these things and like running this service. Honestly I’m working 80 hours a week on the service. It’s just making the best I can personally I want that. That’s my primary goal.
RS: Yeah. Talking earlier about the Bitcoin miners, how do you see that area of the crypto space developing? Do you see it, kind of, the issues that you have with them, do you see them staying that way?
RW: I think either somebody is going to get religion or not and it may be one of the existing companies or it may be an opportunity for an existing company to come along and do it right. I think they’re also vulnerable to companies that can do it well, do it well as a kind of side business like an energy company. We haven’t seen energy companies pick up mining wholesale, but the whole game of mining is cheap energy. I mean, it’s not all of it because you have to continually upgrade your equipment.
But if a company is producing energy and they’ve got waste energy, like if I was running an energy company, I’d be mining Bitcoin with any waste energy I have because it’s sort of free at that point. It’s like, I mean they are going to burn this energy off, or I’m going to sell it. If I can find the last buyer or mine Bitcoin.
And so I think that’s how it’s going to evolve I think in regards to what I meant by getting religion. I mean, stop financing equipment at the top of the Bitcoin market when euphoria is high and learn to finance at the bottom. And I’d like to see a company — I’d be interested in a company that started a hedging department that was hedging their cost forward, learning from gold mining companies and they have to survive an asset that runs in large ranges over a period of time.
They’ve learned a lot about how to self forward and to manage costs and keep their financing out of control. So, even a miner, my eyes would perk up if a Bitcoin miner hired a gold mining company CEO, or COO or something like that. That would be a company I would watch. And it’s old school stuff that is so basic in the commodity space that these guys are trying.
I know what they’re doing. They’re just trying to build their balance sheet with a bunch of Bitcoin, and that Bitcoin looks bad on the balance sheet because it gets accounting impaired. I think that they, gets impaired in terms of accounting once it goes down in value and cannot be repaired, so to speak. I don’t know if that’s an accounting term, but it can’t be pushed back up on the balance sheet value. So they have — I don’t know if they — that changed. I think I got word that that had changed.
So I understand that they have a mission to really build the Bitcoin on the balance sheet. They don’t necessarily care whether that balance sheet is impaired by the Bitcoin. But I look at their cash flow statements and the way they’re diluting shareholders.
A lot of them are releasing shares to dilute shareholders, so they can pay for more equipment. Some of them are financing and getting indebted. Less of that has occurred in the last year. There have been a lot of dilution and I’m just not interested in being a long-term shareholder in something that is a tough business where I’m getting constantly diluted. And the long-term charts reflect it. They do not look great.
RS: I’m just curious because we had a couple analysts on a few months ago talking about Iris Energy (IREN). Do you have any thoughts on that specific Bitcoin rumor?
RW: Is that IREN?
RS: Yeah. It is.
RW: Yeah. I don’t like the chart again from the long-term basis. We’ve been – I’ve been trading it personally, but I’ve been posting it for subscribers, and we’ve caught some good terms in it. Again, I don’t — I haven’t had a position myself, but it doesn’t look good. It’s going to be interesting to see how it reacts to Bitcoin.
Bitcoin is a really nice swing position forming. We talked a lot about that extensively with James recently. We talked about it here, but Bitcoin’s in a good spot to run as long as it can break out of this region, get out of its malaise. So it’ll be interesting how Iris and other miners react to that. I’m sure they’ll have some sort of reaction.
But largely in the last week, we’ve seen a lot of decay in all of these charts. And this — it makes sense as Bitcoin is kind of wandering down, but a lot of them have broken what we call, we consider support or we will say morph their pattern, meaning the Elliott wave pattern is no longer clear or it’s gone to one of our alternate counts. That’s not really a good sign like when things out as a sector are all doing that. And again so the question is, I think we use this term tortured chart. I think that over the next 8 months, we’ll have some nice runs in miners, but that “tortured charts” will be very difficult for us to find support targets.
It will make the trades challenging in terms of parameters. I mean, one of the things we pride ourselves on, very clear parameters on trade. This is where you stop out. This is where you take profit. And again, we will take out decent amount of stops.
That’s part of the business because these things are volatile, and we really want to get out safely. And so, because we’re not always right. And unfortunately with a lot of these miner charts, it’s become very difficult in that regard and it’s just some charts are just unclear.
It’s true of the entire sector. It’s just – it’s nuts. I don’t — so I’m very cautious about it, and we’ll see how that all plays out. Does not bode well for the long-term. When charts look like this, on a, such a grand scale, which is basically the entire move from top — the bottom in 2002 to now, it looks kind of tortured, it’s not really good. It’s not a good sign when that’s — much of the chart is looking so bad. So tough. So anyway.
RS: Is there a point when you get out completely?
RW: Yeah, every chart’s a little different, but in general, if a chart retraces, let’s say you have a strong rally, let’s say an Altcoin for instance, I’m going to use that for instance because miners are very special, but if you have what we call an impulsive rally say in a Bitcoin cycle like 2021, a lot of Altcoins did. It’s very classic for Altcoins to retrace more than 76.4 of its entire impulsive rally.
That means that impulsive rally is very clear to invalidation, and we have to get out by then. We also want to take profit at the end of that impulsive rally and any buying we’re doing into the downtrend is going to be really, really tiny. So we should be stopping out with very little pain. That’s number one.
We have a whole process around that and a lot of times we just wait till it shows signs of a role reversal before we add. So the 76.4 retrace of its entire lifetime rally so to speak is the no go, below that it’s not tradable. It’s not long. It’s not longable, it might be shortable, but it’s not longable.
And then when you talk about miners, some of them have done that, broken that. And some have not. Iris blew through previous all-time lows and is now working off a fresh new all-time low for November 22 and is corrective off of that low. That’s not a chart I actually even go in long, and that’s why I have no position. Some of my subscribers do.
Again, I don’t handhold the subscribers. I give them, this is what I’m trading and this is why this is my analysis. I’m not their advisors. So some of my subscribers who are very — some of them like to take shots on charts like that more than I do. They have been in Iris.
But the problem with miners is that this is what I just said about Iris, they’ll rally off of the all-time low at or the low, not an all-time low for all charts, but the November 22nd low is all across the board corrective as we call it. There’s no impulse. And so all of my miner positions, if I have them, are small. I’m starting from there. They’re just really not healthy.
And so, yeah, now if that that rally from the 2022 lows, again, retrace 764, I will not be in at all. I will be totally out. That’ll be case by case because, yeah, every miner will kind of do it someday.
RS: Got you. And you mentioned Coinbase. I’m curious what you like about them? And maybe what you don’t like about them? Or what investors maybe, should be cautious of there?
RW: From a chart perspective, well – let me talk about from a customer’s perspective, and this is where I’m a little bit negative there. I trade most of my — I do most of my trading on Kraken, which is an U.S. exchange without any — they’ve had some — also had some SEC run-ins. But they’ve settled and they’ve moved on. I’ve been trading with them since 2012. Most of my trading is there. The fees are lower. Their customer service is more responsive than Coinbase.
I have an account at Coinbase. I hardly ever – I use it every once in a while. So if there’s that side – the other side of it is from a fundamental perspective, Coinbase has always been a little bit easier for people to onboard and really in the United States right now, they’re only place you really can onboard if you’re interested in trading crypto or interested in, to making your first investments. There’s some apps and there’s — but they have done a good job of being sort of, it’s like approachable from a UI perspective.
And if you’re not an active trader, it’s pretty good. So if you think of how many people are going to become active crypto traders, my judgment about why to hardly use them is more my needs. I think from a lot of other people’s perspective, they’re a go to and really the only one — they’re the last one standing.
I mean, after FTX went down, again there’s some apps here and there, not all user friendly. If you get into self-custody, wallets, people kind of have to graduate to that from their first crypto, before they start building their own wallets and managing them. So, Coinbase is a good alternative and also Coinbase has now created their own chain and wallet in a Web 3 perspective, so they can onboard – they can do a good job of educating customers to jump into that as well.
So I think they’re a very, very, sort of, approachable educational space for crypto users in the United States who have never done it before. I even – when I do a lot of teaching for people that have never touched a crypto, whether it be in my personal life or at conferences, and I always point that Coinbase is sort of the easiest on board.
And so from that perspective, I like them. They obviously have enough money to fight the SEC, which I think is a good sign. I hopefully don’t burn themselves down. And then they have an interesting chart which — even this morning actually they just got approved by the CFTC to trade futures Bitcoin which I have to look into the product but they’re offering. So they’re making some headway from the regulatory standpoint as well.
And from a chart perspective, it sort of looks a little promising from a reversal of the all-time low. It’s not there yet. If it holds 37 and reverses before then, so it’s now kind of pulling back out of the 80s. It’s pulling towards our main, main support around 37. If it doesn’t touch that area or it hits that area and reverses, that’ll be a very good sign that this one could turn into a long-term hold.
I actually have taken a shot and put some of it into my long-term portfolio. It may not stay there below 37, it won’t. But I’ve taken a shot in kind of building a longer term position. We’ll see. We’ll see. Again, few stocks go in my portfolio versus ETFs, but I’m taking a shot on that one.
RS: You mentioned Altcoins is one of the lanes that you’re focused on. And you wrote an article, I guess a few months ago about 3 altcoins specifically on Seeking Alpha. Are those the 3 that you focus on? Are there others? Do you dip in and dip out?
RW: I don’t even remember what the article was. It was probably a while ago, so you can feel free to remind me.
RS: Well, let me tell you. Three altcoins to consider in May of this year, ImmutableX, GMX, and Rocket Pool.
RW: Yeah. So GMX broke our support. it may have been in that article. So I have gotten out, but I still like a lower support in the 30 region. So I’m watching to see if it’ll reverse there. I like the overall chart. I actually also like the fundamentals because this is a coin that is basically a decentralized exchange and they share fees with users.
So it actually takes in fees and gives it back to the token holders which is sort of — and this is external money. It’s not like they’re printing fake money in the form of Altcoins and giving it users. They’re actually taking in fees for trading and then giving it out to the token holders which — that’s some real fundamentals versus that’s almost like a dividend, right?
So I like it from that perspective, which again, most Altcoins, I don’t have a good fundamental view. They’re just sort of hot air or experimental. And again, if there’s no real economics, then it should be questioned. So again, I’m interested in it if it comes, finds lower support, but I had to get out of the way for a little bit.
IMX is trying to find support. So I still have a position. It looks promising still. If it starts to break 60, I’m concerned, $0.60. See Rocket Pool broke high, high level support. I don’t remember how I listed that in the report — in the article. I still have a position. It’s still — I still like a long-term chart, but it’s going a little bit lower and I can’t remember where the support level is.
So I mean, honestly the mixed view of those altcoins, and these are some of the better ones, it really shows how the Altcoin market is. It really isn’t finding a footing yet in this recent downturn. Again it’s — some of them have held November lows, November last year or not, those that have held lows, those are more promising.
And then now the question is whether they’re going to hold more of a local support level. Bitcoin’s got, Bitcoin has a great setup as long as it holds 21.3. That will tell a story for a lot of the Altcoins as well. So if Bitcoin can hold its support level and then you start to see it take off and then Altcoins start to follow, that will be a good sort of understanding.
In terms of your first question, which is what do I follow? When it comes to Seeking Alpha, I will release tidbits that I think are interesting, most particularly interesting, but I have probably a dozen altcoins on a weekly report I give to my service subscribers. And they can be at all different levels of, okay, nearing support, active setup, maybe wait a long time for this one.
But it’s just, it’s sort of culling – I have to go through, I probably have looked at a 1000s, 2000 to 3000 charts over the last 5 years doing this. And that weekly report is trying to take it down to like what I personally would trade. I mean, I just call it that. It’s just me personally because it really, that whole report came from a question from subscribers, what are the best setups you see? And so, okay, this is the ones that I’m willing to personally trade.
All of them, again my Altcoin positions are always small. And then even inside that, you’ve got some bigger positions than others.
RS: I’m curious, just in terms of the constellation of being involved with Avi Gilburt. How did you guys get hooked up in the first place?
RW: So, all of Avi’s staff have been members of the service, of Elliott Wave Trader. And I was, again I came from the product world. At the time, I worked at Samsung. 2015, I became a member. I was personally interested in trading since my design career. I started in 2000. So I’ve been kind of trading nearly — more than 20 years now, at different levels of success and different sort of sophistication levels. And then, again, I mean it’s learning how to trade with Avi and other members of the service.
And they basically — Avi watched my work. I started getting interested. Well, I was interested in Elliott Wave Theory long before. I had read the book which is Elliott Wave Principle by Prechter. And that’s the kind of quintessential Bible of Elliott Wave thinking. And, so I’ve – but never been able to practice it. Avi has a very practical way of deploying it, not just from an analyst perspective, it’s not intellectual, but from a trading perspective. And all of us has sort of adopted that approach for our specific asset classes.
And then so Avi goes through the process when someone’s — when he got interested in having crypto on the service he started looking amongst the members that are covering crypto and then saw my work and then other staff members evaluated me, and it’s sort of a trial by fire, I guess. And then he asked me to join staff and then basically we grew enough to have Jason added to the service as well.
RS: Very cool. I love that organic communal approach to building.
RS: Yeah. Very cool. So you really pivoted in your career. You had a huge pivot.
RW: Yeah. I had a design career for, man, from 2000. I got out of design school. I actually got out of school ‘99, started Heavy in 2000, and then left the whole field in 2018. So it was a good 18, 20 years. before I was, said I was done.
RS: Do you feel like you, I mean, I don’t know, maybe it’s a bit abstract. But is there something that you take from that world into this world?
RW: I mean, I think that, again like, I’m no young buck. I’m approaching 50 and I think that I wouldn’t be in crypto had I been so in, you know, so involved in technology. My last year in Samsung I was dealing with voice recognition and my team had to focus on concepts that were like 5 years out. So I wouldn’t be so interested in technology if I was not in that world.
And so it was actually a Samsung employee that, we were talking about investing. And he said, hey have you ever looked at Bitcoin? I was like, what is Bitcoin? And this was 2012. It had already been around since, I think it was 2009 was the first block. And I think I’ve got that right. Maybe 2010. Anyway it’s been around for few years, and it went through its first bubble where it rose from like $30 to $1200 within no time flat.
And I looked at it and I thought, man, this is really interesting concept, but I don’t know how anyone invested in this. It could easily go from $1200 to $30 again. But I started observing it. I started mining a little bit to figure it out. Well, I can pay a $1000 for a mining machine and make some, see what happens. That didn’t make any money on that at the end of the day, but I started to get familiar with the asset class. So, I would, actually the whole reason I’m here is because of that world.
I think I’m an option trader also by sort of, just kind of at Osmosis over 20 years. I’ve traded them very early, like 2021 — sorry, 2001. I started trading options. So long time in options market and again and it comes down with a sort of mathematical mind, design engineering. I think that all plays in how I see charts, I see patterns in — when I was in design, I was also a user research person.
So I was a hand designer. I would do sketches on it, but I also had a research role and you see societal patterns, you see things, you see themes, you see trends, and you apply that to the product world. Well, it’s same. You see those sort of — crypto is a trend, right? It’s developing. I can see how 2021 the market is about X. The 2023 the market will be about Y. And so understanding these sort of trends that happen in the investing world also plays into what I learned in the design world.
RS: So interesting. I love an interesting path, but really it’s just interesting about life. We pick up different things along the way and they snowball into something else…
RS: Yeah. It’s cool. So I also wanted to ask you in terms of focusing. Well, you mentioned at the beginning of our conversation that you’re trying to maintain patience. And I’m curious how you would advise investors kind of wading through the crypto markets in the present day. How would you reassure or encourage them through that?
RW: Well, I don’t know how you do that if you don’t have a view of market structure. And I mean that’s Jason and my role is to give people a very objective view of market structure. We hold this area as bullish. It’s in the most crassest sense, you hold this area as bullish, you break this area as bearish.
But also more importantly these are — this is a region or price area where we are interested in trade. I don’t think if you, and I don’t want to sound boastful at all, but we have a little bit of a track record in doing that. And by that, I know a lot of my subscribers have told me that that very statement and understanding about the market structure has caused them to avoid doing a lot of stupid things.
And as one, if I’m look — if I’ve got a support level, a lot of subscribers learn that I’m going to pare back until we get closer to that because the risk is lowest if we’re closer to support level, right? Like, if you have your stop here, you want to have your buy here, you don’t want to have your buy up here, or at least most of, you know, I scaled in as kind of a pyramid, but we get our positions bigger when our stop outs here, well our risk is hardly anything.
And that gives a lot of, you know, if you teach someone that they can take a risk on this market with that little bit of money in play, that’s reassuring versus, okay I watched crypto traders all time. Dogecoin is breaking out. It’s going to — and they’re listening to Twitter saying it’s going to run to $10 or something crazy. I don’t — and again, who are these Twitter people?
They’re just avatars on a like, I’m a real person. I sit down with real people. You know where I’m at. If you have issues with me, you can talk to me like I don’t know how these people follow that sort of emotional advice. And at the same time, if you look at all of that advice, it’s usually telling people to buy at these highs versus we’re usually in the market when no one wants it.
Like that’s the nature actually the nature of Elliott Wave that teaches you is to buy when no one wants it, kind of the old, a Buffet adage, right. Buy when everyone is fearful. And in Elliott Wave we see that.
Right now, Bitcoin’s been doing nothing, but it’s wild to me how if you listen to podcasts and Twitter and all that, how negative people are. No, this is consolidation before a move as long as it holds support. Again, I’m not saying it is a 100% likely that it’s going to break up to – 50,000 is our target. I can’t say that 100%, but it looks like a pretty good set up to me. And as long as 21,300 holds, we’re expecting 50. So just relax. Wait for it to decide that it’s going to react to it.
RS: Yeah. The signal to noise ratios are hard to suss out I think these days…
RS: …in many respects. In terms of ETFs and stocks, is there a certain division that you have between them?
RW: In crypto we only really have the (BITO), the ProShares Bitcoin Strategy. I mean, (OTC:GBTC) as well is, you know, it’s not really an ETF. It’s a trust fund or whatnot. I mean, it’s a closed end fund right?
I mean it’s a difficult one because it’s premium discount. It’s fluctuating and which means that sometimes it correlates to Bitcoin and sometimes it doesn’t. It’s a weird animal and the charts are really unique as compared to Bitcoin. They’re sort of similar in structure, but sometimes we have to veer our accounts because it’s not really correlating properly.
And then of late, it’s been trying to close that discount and it’s been running harder than Bitcoin. And so sometimes its moving when Bitcoin was not. And so it’s a bit of a mess. We do get great trades out of it. I hold it.
And then again, the other one is BITO, ProShares Bitcoin Strategy, which we cover as well. It’s interesting because it has to — every time it has a profit on the rolling futures, it holds Bitcoin futures. Every time it has a profit on, it pays dividend. With the strong uptrend, Bitcoin in 2023, the dividends are massive. Like 50% of the fund is getting paid out in dividends.
So it really mucks with the chart as well. I actually have a dividend adjusted chart because it’s been giving me better counts and better targets. But yeah, so other than those two, what I do like about BITO is you get to play options. Like, I’ll do a lot of options selling on it to enter it and then options call selling to exit it. And I call those, I tell people what I’m doing that, so they understand what I’m doing, and I teach on the options topic. So I like it from that perspective.
But other than that, I mean, we have a (RIGZ). It’s a Bitcoin mining ETF. It has never had a good chart. I like the miners, I don’t trade it. So that’s about it. We have a very limited world. I imagine with SEC, the lawsuits, and all that stuff, I assume that whole area is going to grow over the next few years. I look forward to that.
RS: So, how are you looking at Bitcoin these days?
RW: It’s got — so I’ve had a long target of 125K and we got out when it was clear we were going to miss that in 2021. I wouldn’t say we got out because I never get out of Bitcoin 100%. It’s part of my long-term portfolio, but in the service wise to say, we’re in a downtrend, some people might want to cut back or whatever. And I certainly cut back my position and I was no longer trading in aggressively long because it didn’t make any sense. Sometimes we’re shorting it with futures.
But after let’s see, I was skeptical about the bottom in November, November 2022, but Ether actually, I’m going to have an article come out in the next two days, hopefully on an Ether setup. It had a higher low when Bitcoin was putting a lower low in November 2022. That was actually the first hint that we’re going to go into bull cycle. And now both of those coins have been up nearly 100% off of those lows. So, off of their all-time lows, sorry, the 2022 lows.
So, I call this a bullish cycle. That is the case and Bitcoin in my view as long as 18K holds. Ether, I can’t remember the level. It’s 15 something. But more importantly, Ether has a bullish setup with a support at 1700. And Bitcoin has a setup, a bullish setup, as long as it holds over 26,130. You can call it 26K if you like to give it a little more room. I probably would in my own trading.
That setup, I can’t see Ether should take it to 32,100 or can’t take it as high as. And then Bitcoin 54K, I think, is my nominal target. And so that’s a great setup. I mean, it’s a great setup too. I’m going to probably trade futures in that one. Again, when I have signs that has reversed, and that should continue this uptrend from the 2022 lows, which may, again, there’s a lot of different ways I can view structure.
I’m going to have some other articles come out, talk about the grand structure of Bitcoin. But it may take it to 125K. There may be some wandering into kind of the halving space that may take a long time, but this may be the beginning of that final move that finally get — to finally get that move to 125K. Which I’ve been waiting for for a while.
RS: What else do you think investors should be watching for, or paying attention to in the crypto space?
RW: I don’t get too tied into the political space, but I think if you care about the space, I think we’ve had multiple opportunities to write our congressman about issues. Elizabeth Warren has tried to ban. And I don’t know anything I say here, I don’t want to even reveal, like, what party do I vote for and take a political stance. I will — and when it comes to crypto, I will get on both sides case, because neither has been great.
But Elizabeth Warren has attacked holding, private — she’s attacked the crypto market in general, but the one that feared, gave me the most fear was the ability to hold my own wallet. And she’s wanted to move all wallets into services where you pay and pay fees and all of that, which is ridiculous. To me that defeats the entire purpose of crypto, which is having an asset that you can transact without any intermediary. That’s one of the great gifts of crypto, if really the crap hit the fan, I want to be able to transact.
Gold is little tough. Good luck trying to pay for gas with gold or even doing any barter transactions with gold or silver. And then on top of it again, the attack on Coinbase. I don’t necessarily disagree that some of these cryptos are unregistered securities. I really don’t disagree with it, but, I don’t –I disagree with Gary Gensler’s approach to the market in terms of enforce first versus actually having open discussions with companies and actually cooperating with the industry and helping industry flourish in the United States. So again, those are a lot — I think any crypto investors can watch that as well.
And then again, if you are that person, I said this in the beginning, you’re that person that just wants to come and have an exposure, just keep it simple and have some Bitcoin, get that Bitcoin into — learn how to use a private wallet, get it into there, and then not worry about it or add to it occasionally when things dip and just try not to get emotional about it.
Because a lot of people want to just have some exposure to the crypto, but they don’t want to watch it like I do every day and I would take a very different tact than what I have which is just get some, get 5% of your portfolio or something like that into a private wallet and just let it be and then add to it when it makes sense.
RS: And any thoughts on the broader market that you’d care to share with listeners?
RW: It looks to me like a bear set up. It is happening in place. We’ll see if that’s the case. Yeah. So I’m not making drastic changes to my portfolio, but it looks to me like starting to form a bearish situation. I mean, classically when rates start to flatten out and start to get the beginnings of a bearish move, a lot of people will think that, we need to get the rates down to get the market going.
And sometimes that actually — the first strike of — when rates first come down, usually the markets are starting to roll over, looks to me like that maybe beginning, but yeah, we’ll see. I’m not – Avi, that’s Avi’s department. And so I look at his counts. I’ve got some other things I look at with markets from technical perspective.
And then I also trade SPX, like, really short term. Like, I do a lot of day trading in it. And in that respect, I don’t really care what direction it goes to. I wake up in the morning and my bias will be one way or another, or the bias to avoid it because it’s messy.
RS: What’s your time allotment between trading and investing?
RW: They are concurrent within my day because I’m trading every day. And then with respect to my investments, I keep spreadsheets on my cost. So when I want to own something long-term, a lot of times I’m just taking a glance at it and going I’ve made some nice profit on this. I’m going to cut it back.
Like for instance, (XLE) is a, you know, I was using example, as an example to trade. We are analysts, expected it to go lower. I want to have some energy exposure. I have, like, I have a small bit of the ETF. We expect lower, so I’m just waiting for it to go lower, and I’ll just add a little bit. I’ll just be doing little buys at a time, almost dollar cost averaging.
So I kind of use a, it’s sort of Elliott Wave oriented, but also I sort of target DCA around where we — I put my greatest risk on when we expect we’re near lows versus — but at the same time, if I say I have a cash cost of 80, okay, now we’re at 75. Okay, I’ll add it. I’ll add 5 shares, 10 shares. Very small, but level buy, it’s just a dollar cost average and a little bit.
So that’s — I can’t even tell you how much because that activity, I have my spreadsheets, I got so many spreadsheets up on my — I got my charts, my spreadsheets, and I’m kind of glancing when things slow down on the services. I take glances at my spreadsheets and go, is there anything I should be doing here? A lot of days, I do nothing. And so it’s just very chill, it’s chillaxed to me, so to speak. It’s relaxed. just, you know, it’s sort of, just looking at where I’m at.
And then I always, I also like to have a lot of cash in my portfolio and I go, well, how much cash do I have right now? Because if you don’t have cash, you can’t take, make use of opportunities. And if that’s uncomfortably small, then I may be looking for – I’ll be scouring for where I can take some profit off the table, a place where it makes sense. Is it near an Elliott Wave target? Is it at risk. And I’ve got, like, I’m trying to think of a recent one.
(AMD), like, AMD, a great example. I had a large holding of AMD. And I just — and I think we were near our targets, and I don’t even know where it is today. And I took all of it off except for 5 shares to raise cash. And I think it’s just gone higher, right?
Okay. Well, that’s fine. I still have my 5 shares, and they’re continuing to make money for me. But I’m not going to add it until it’s below my current average. Or at least the last place, and I’m not greedy, I’m not distracted by, that I’m losing that opportunity cost, this is just why I played. Like I got my cash out. I’m comfortable with having my cash, and I’m just going to look for something else that’s on that bargain, that’s near a support level that I can add to.
And so I’ll just be scanning my spreadsheets. So, yeah, it’s a very, like, it’s methodical. It’s, you know I don’t have time to be emotional about anything.
RS: I’m going to make that my motto. I don’t have time to be emotional about anything. It’s a good motto. Ryan, thanks so much for sharing so much with us.
I’m happy for you to share any kind of final thoughts or words with the audience, and if you want to let them know where they can find you aside from Crypto Waves on Seeking Alpha.
RW: Yeah. I would say, other than Crypto Waves at Seeking Alpha, which is the marketplace on the site, I would — if you want to get a taste of the service at a very rudimentary level I am holding a weekly or monthly webinar every month, 3rd Saturday at 11:30. I post the registration link a few days ahead. And this is the same webinar that I hold weekly with Crypto Waves subscribers. So they’ll get a good solid taste of what we offer in the service.
Again, only a small piece of it. I do, I create some boundaries because I don’t just to keep value for subscribers, I only post the video for them. So you really do need to sort of show up and listen if you want to get a taste of it.
RS: Perfect timing.
RW: Yeah. Great timing.
RS: We’ll put it up. Yeah.
RW: Yeah. But it’ll be up there on my profile for a few days.
RW: And then so join up at that. And follow me on Twitter, @rwilday. And then, watch my articles on Seeking Alpha, and then you kind of get a taste and then check it out. I think, if I recall, we have a free trial period on Seeking Alpha as well.
RS: 14-day free trial.
RW: Yeah, there you go.
RS: Good synergies. Great stuff. Ryan, I really appreciate it. Thanks for sharing so much with us, and I hope to have you back on soon.
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Ryan Wilday runs Crypto Waves and today he discusses how he invests and trades in crypto markets. (2:00) Chart set-ups, Elliott Wave perspectives (8:15). Using AI and algos in trading, (11:00) Bitcoin miners are either going to get religion or not (14:00). Coinbase positives and negatives (21:45) Market structure necessary for understanding crypto markets (34:00) Bitcoin ETFs and Ryan’s long-term target (37:00).