Investing: Crypto

Status: Scaffolded - Content pending Last Updated: 2025-12-11

How Crypto Investing Works

Crypto investing uses the full indicator suite with 2 years of daily data. Time stops don't apply — you hold until price action dictates exit.

Data Collection

Data Type	What We Get
Current Price	Real-time snapshot
Historical Bars	730 days (2 years) of daily candles
Bars to AI	60 most recent daily bars (~3 months)
Indicators	RSI(14), EMA(9,20), SMA(50,100,200), MACD
Market Context	SPY, QQQ + ES Futures

ES Correlation for Long-Term Crypto

For investment timeframes, the ES correlation is less significant:

• Intraday: Strong BTC-ES correlation
• Multi-week/month: BTC can decouple from equities
• Crypto has its own cycles (halving, adoption, etc.)

Bottom Line: ES correlation is noted but carries minimal weight for investment decisions.

Analysis Flow

1. Data Collection (2 years, daily bars)
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2. Technical Agent analyzes:
   - Major trend (200 SMA)
   - Multi-month support/resistance
   - All-time high/low context
   - Cycle position (halving cycle for BTC)
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3. Macro Agent checks:
   - Crypto market cycle
   - BTC dominance trend
   - Overall risk environment
   - Institutional adoption
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4. Wild Card Agent checks:
   - Regulatory developments
   - Exchange solvency
   - Protocol upgrades
   - Major hacks/exploits
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5. Supervisor synthesizes:
   - Entry zone
   - Stop loss (ATR-based)
   - Targets
   - Position size
   - NO time stop

Position Sizing (ATR-Based)

Crypto is highly volatile — ATR-based stops are essential:

ATR = Average True Range (14-day on daily bars)
Stop Distance = 1.5 to 2x ATR
Risk Amount = Account Size × Risk Percent
Position = Risk Amount ÷ Stop Distance

Example (BTC):
- Account: $100,000
- Risk: 1% = $1,000
- BTC price: $100,000
- Daily ATR: $3,000
- Stop: 2x ATR = $6,000 below entry
- Position: $1,000 ÷ $6,000 = 0.167 BTC

In dollars: 0.167 × $100,000 = $16,700 position

Note: Crypto's high volatility means smaller position sizes relative to stocks.

Exit Rules

Condition	Action
Price hits Target 1	Exit 50% of position
Price hits Target 2	Exit remaining 50%
Price hits Stop Loss	Exit 100%
NO TIME STOP	Hold until price dictates

Key Levels for Crypto Investment

Level	Significance
200 SMA	Bull/bear market divider
Previous ATH	Major psychological resistance
Cycle Low	Historically good accumulation zone
Halving	Major supply event (BTC-specific)

The Bitcoin 4-Year Cycle

For BTC specifically, the halving cycle matters:

Cycle Phase	Characteristics
Post-Halving Year 1	Typically sideways/accumulation
Post-Halving Year 2	Bull run, new ATH
Post-Halving Year 3	Peak and correction
Post-Halving Year 4	Bear market, accumulation

Note: The algorithm doesn't explicitly model this, but it's context for your analysis.

What the Trade Plan Looks Like

Direction: LONG
Asset: BTC-USD
Entry Zone: $92,000 - $95,000 (100 SMA support + prior breakout level)
Stop Loss: $85,000 - $88,000 (~$7,000 below = 2x ATR)
Target 1: $115,000 - $120,000 (50% of position)
Target 2: $140,000+ (remaining 50%, new ATH territory)
Time Stop: NONE (hold until price action dictates)
Position Size: 0.15 BTC
Max Risk: $1,000 (1% of account)
ATR (14-day): $3,500

Note: BTC above 200 SMA indicates bullish long-term trend.
Next halving: April 2028 (current cycle context).

Crypto Investment Risks

Risk	Description	Mitigation
Volatility	30-50% drawdowns are normal	Size positions for ATR
Exchange Risk	Multi-month exposure to exchange	Consider cold storage
Regulatory	Government actions	Diversify jurisdictions
Protocol Risk	Code bugs, exploits	Major chains only (BTC, ETH)
Cycle Risk	Multi-year bear markets	Accept long holding periods

Crypto vs Stock Investment

Factor	Stock Investment	Crypto Investment
Volatility	10-20% annual range	50-100%+ annual range
Position Size	Larger (lower ATR)	Smaller (higher ATR)
Drawdown Tolerance	10-20%	30-50%
Cycle Length	Business cycles	Halving cycles (4 years)
Income	Dividends possible	No income