How Do You Know When Bitcoin’s Ready For Blast Off?

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In the eyes of Mati Greenspan, a trader from birth, crypto is about financial literacy. It’s about putting the power of money back into the hands of the people. The more people familiar with basic financial concepts, the better off we’re all going to be, he says.

Greenspan has traded paper gold, silver, and copper since the age of 12 and 13. Over the years, the biggest adjustment he’s had to make has been the jump from paper trading in the newspaper to trading online. 

“The internet is the real revolution here,” he told me. “After that, online brokers paved the way for everything that we’re seeing in the crypto space.” The best tools are charts and social media, he says. 

“It’s really about how you get your news, and how you get information,” he said. “Social media has helped, because the financial markets are traditionally a very closed door industry. People speak about Wall Street in the 70s and 80s as a pack of wolves. All of the traders run together as a pack. And then, if there’s some poor schlub who comes in with his $10,000, they eat him alive.”

The internet gives people some of that power back. “Even somebody who is an absolute novice in the financial markets can come in, join a group, or even copy somebody with a copy trader activity, and do quite well in the markets. Even with no prior knowledge, they can come in, and in several hours learn enough that they actually stand a chance in the market.” 

Greenspan spends a lot of time on Twitter and on LinkedIn pruning his feeds, ensuring that he gets the relevant information. He follows people whose opinion he respects about the markets.

He cites Twitter and Reddit as two platforms where one can customize the amount of information they receive. “A lot of people, who don’t spend the time get put off quite quickly, because they get a lot of garbage in their feed,” said Greenspan. “But, if you go through and see who you are following on Twitter, or which subjects you’re following on Reddit, you’re actually going to get a lot of very useful information.” 

Useful information includes anything from different types of analysis to deep dives on the news or technical aspects. He supports his social media use with search engines. He uses Twitter as a listening tool, monitoring the digital conversations to understand what people are saying about a particular asset. 

“I would see who was into the financial markets and had a large following. Those were the people that I would start following immediately,” he said. “I would also see people on TV, for example, or people who are in the news, and think, ‘Okay, I want to know what this person has to say’. So, I go look them up and see which social accounts they’re active on. I still do that to this day. If I see an analyst or even a world leader, who I want to be in touch with, I’ll go ahead and look them up on social media.” 

In part, that’s why social media is so helpful when studying cryptocurrencies. “If people think that it’s a bit overvalued at the moment, or if people think that it’s going to go down, then you might want to reduce the amount that you’re investing. Whereas, if people are very bullish, and they think that it’s going to go up, that’s when you can increase your exposure.”

At the same, when using social media for analysis, it is important to be cautious. 

“You don’t want to rely on social media too much,” said Greenspan. “There are a lot of nefarious players out there who tend to know how to manipulate social media.” 

He uses the tools and charts of trading differently, depending on if he is trading long-term or short-term. “If I’m thinking about a specific company’s stock that I want to invest in, for example, I’m going to use long term analysis, because that’s not a trade that I want to jump in and jump out of. I want to say, ‘Okay, this company has room to grow, it has potential.’ I’m going to use it as a long term investment. If I’m trading more short term, then I’m going to be looking at breaking news, for example, to see how it’s going to impact the market.” 

When looking at the news for trading signals, you’ll want to see the news, look at how markets react, and then make your move. “In the crypto market, that is a bit less relevant, because crypto doesn’t react to the news as much as traditional markets,” said Greenspan. “Traditional markets, for example, have regular news events.” He cites the U.S. jobs report in the United States as one. 

“It’s huge.” 

It happens on the first Friday of every month at 8:30am Eastern Time. “And, when it happens, everybody knows it’s going to happen,” said Greenspan. “Everybody’s in front of their computers waiting for the results. As soon as the results are published, everybody’s trading immediately.”

That leads to a lot of volatility. “You can see huge movements in the market,” said Greenspan. Crypto doesn’t really have news announcements for which everybody’s waiting—not all too often, at least.

“Momentum is going to be a much more powerful way for you to trade crypto, simply because you can tell when something is moving, when it’s moving fast, and in which direction it’s going. If you can gauge the direction and speed of the markets by looking at the charts or other platforms or looking at social media sentiment, that’s going to be the best way to trade in the crypto markets, especially high risk crypto currencies on a short term basis.”

Google Trends is one of Greenspan’s favorite analysis tools. “It shows the fundamentals of the market, and how many people around the world are thinking about it at any given moment. The more people who are thinking about it, the better off it is. Cryptocurrencies by nature are networks. Even Dogecoin. It may be a joke, but it’s a network at the end of the day, and it’s the people that contribute to the network that help it.”

Greenspan suggests studying one hour charts, for example, in which each candlestick represents one hour. “This gives you an idea of the performance over the last 24 hours of a specific coin that you’re trading on this overall market. That’s a great way to gauge momentum.” Greenspan notes Coin360.io for its clear week, day, and hour charts.

“If things are green over the last hour, two hours, and three hours, it is very likely that they’ll continue to go that direction, at least until you see them slowing down or starting to reverse,” said Greenspan, who is the founder of QuantumEconomics.io. “That’s even just looking at the numbers and being exposed to it, you’re going to get more and more experienced with it.”

During 2017, as the Bitcoin price increased to an all-time high of nearly $20,000, Greenspan thought the party might be over when he saw a very large, sudden drop on the chart. It was time to start taking profits.“That was a good indication it’s time to take some of that risk off the table,” said Greenspan. He held a webinar in December 2017 about how to take profits and redistribute them into other markets. Greenspan began buying stocks and commodities to get away from crypto. 

“You’ll see [the signals] first in the momentum once things start to turn red,” said Greenspan. “Second of all, you’ll see it in the sentiment on social media.” 

Looking back, Greenspan recalls how the Bitcoin network had become congested. Too many transactions had led to long confirmation times. “Bitcoin was overflowing with activity, and I felt at the time that it might be a good idea to reduce the exposure.” He sold out of Bitcoin at $10,000 per coin. Within about two weeks, it went up to nearly $20,000. During that time, Greenspan felt some ‘Fear of Missing Out’ or ‘FOMO’ for short.

“In retrospect, selling was the right thing to do, because 2018 was not such a great year for price,” he reflects.

What’s Greenspan seeing today? 

“All over the social media analysis and social media analysis websites, you can see the halving event is quite prevalent on people’s minds,” he said, referring to the reduction of Bitcoin’s block reward, which transpires about every four years. “Anybody writing an article about Bitcoin price is very likely talking about the halving as being a main driver.”  

As the US government announces plans for a $6,000,000,000,000 bailout, the halving event becomes all the more significant. “The halving event is a stark reminder of the concept of digital scarcity on which Bitcoin was created,” said Greenspan. “You can have something that is digital and also strictly limited in supply. The halving event is basically a big reminder of it, especially with everybody talking about it all at once.” 

 How is it going to affect the price in the long term?

 “As far as the network is concerned, you’ve got to factor in what the miners are doing, what the full nodes are doing, what the ‘hodlers’ are doing, and what the exchanges are doing. What we can see at the moment is that the halving is one of the driving factors of the market.”

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