re: Official CryptoTalk Thread

Strange price action on btc. It seems to be breaking out of the descending wedge but there just isn’t enough volume to do anything.

Money is still acting scared. Too much uncertainty in the market.

What do you guys think of selling covered calls on my IBIT?

I really don't see much risk here unless I am missing something.

Let's say I have 10,000 shares of IBIT.

I can sell a covered call for $75 (btc price 130,000) for a 2 month strike price and get $3,500 the largest loss I can take is making 30% on my IBIT.

So your 10,000 IBIT shares are currently worth $553,300.00 and you will use that to make $3500.00 in two months from selling covered calls. Your biggest risk is If Bitcoin goes parabolic and above $130K in two months, your gains stop above that point. That's not bad at all.

Don't take my advice, as I am a risk taker. As long as your IBIT shares are invested in an IRA, 401K and/or HSA, I would convert your $553,300.00 to 24,460 BITO shares (at current share price) which should earn approximately a $1 per share dividend per month. I would immediately loan the shares and currently earning 3% interest. I would also take the BITO dividend in cash for 4 months earning about $100K in cash dividends over 4 months, and then reinvest the dividends going forward.

I would then consider the $100K in cash dividends as my new "trading cash", and start volatility trading Bitcoin price swings between this cash and BITX. All gains would be reinvested in BITO shares. Every 6 months or so I would take a month in BITO cash dividends to create a larger "trading cash" base and just keep growing the strategy.

Obviously, whether you just hold IBIT shares and sell covered calls or do some other strategy like mine, you would want to be cognizant of whether or not Bitcoin will experience its normal 4 year cycle (which possibly is no longer valid or significantly muted now).

Good stuff 98, I am looking at a drip calculator for BITO v IBIT and I was surprised to see that BITO doesn’t generally outperform IBIT in choppy markets which I would have thought would have been the draw. I guess this is not a covered call strategy like MSTY is to MSTR. It aims to emulate bitcoins performance directly similar to IBIT.

That’s a long way of prefacing my question which is, why the preference for BITO w/DRIP over IBIT? It looks like IBIT has outperformed by a decent amount over the last year. There’s enough volume in BITO to suggest you’re not the only one that sees the value so I’m curious what I’m missing.

I did find a period or two where BITO outperformed but it looked like it was becoming less common.

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You can still follow my strategy using Cash, BITX and IBIT (or any Spot Bitcoin ETF). When I sometimes take the BITO monthly dividend in cash to increase my "trading cash", I could just as easily sell some IBIT shares, or just keep my BITX to cash gains in cash, waiting on the next pullback.

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I thought this conversion to cash in a tax advantaged account and working that in to various trading strategies was part of your logic and that makes sense. Truthfully, I'm a better investor than I am a trader. I am constantly looking to restrict the amount of moves available to me with excess cash unless they exist in very narrow, disciplined strategies. I will overthink and overtrade 10 times out of 10 unless I have my playbook defined in advance.

Yes, I have been looking at it and BITO seems to underperform. It has to be due to futures contract decay that doesn't occur in the Spot ETFs. Even then when I was checking earlier in 2024, my calculations were showing BITO slightly outperformed the Spot ETFs.

So I made two mistakes in 2024. I was volatility trading between BITO and BITX, before realizing I could double my gains trading between cash and BITX. Now I realize I should accumulate a Spot ETF with my volatility trading instead of BITO. I'll fix that tomorrow. Even then I am very happy with what I made with my strategy since early 2024. If I make 5% or 10% off a trade set in just days or sometimes same day, I can't really complain. I timed one trade not too long ago and sold my BITX at just under a 20% gain in just 2 days. After you stack numerous trades with even 5% gains it adds up significantly. I've been trading recently when Bitcoin gets down to approximately $95K and reversing the trades when Bitcoin hits approximately $97K or higher. Bitcoin has been bouncing around the mid to upper 90s, and I have been capitalizing.

Also, before I transition my BITO to a Spot ETF, I need to also consider the money I make from loaning my BITO shares. Whenever I add more BITO shares, they are almost all immediately loaned out. Whenever I held Spot ETFs, they never got loaned out.

My trades are very simple and are based only on Bitcoin's current price. I don't look at charts and pretty much disregard reacting to news. I also only trade in our Roth IRAs, traditional IRA and HSA accounts.

I look for even a small perceived pullback in Bitcoin. For example, if Bitcoin pulls back to $95K, I will buy BITX with about 10% of my trading cash. If Bitcoin drops another $2K, I will buy another BITX stack with about 10% of my trading cash. I keep buying if Bitcoin keeps falling. When any of my trades recovers to Bitcoin being approximately $2K or more above when I bought BITX, I sell the BITX, recover my trading cash and put the gains in BITO.

So Bitcoin is sitting at approximately $96K. If Bitcoin gets to $97K tomorrow, I will sell an existing BITX trade set. If Bitcoin instead falls to under $95K, I will buy another BITX trade set. Whatever Bitcoin wants to do, I will methodically just buy or sell BITX. If I have 3 or 4 open trade sets, I sell them in reverse order as Bitcoin recovers. Once I got the hang of it, I just trade like a robot, unemotionally. I am just enjoying my early retirement and pay attention to and react to Bitcoin's price. Sometimes I am not available to trade and I miss opportunities. I also never try to time tops and bottoms. I just trade on the trends. My goal is to open and close as many trade sets as I can.

Sometimes you get stuck trade sets. I still have two BITX trade sets since mid December where I purchased BITX when Bitcoin was approximately $105K. That BITX in my accounts is currently at a significant unrealized loss. Do I care? Not at all. Before long, I expect Bitcoin to get to $110K or above and I will reverse those two trade sets at a 5% or more profit. Note that BITX will lose about 2.5% per month held in futures contract decay. Even then, in my mind, I can always count on Bitcoin to recover and it never let me down last year in spite of my still open mid December trades. I will never sell my trade sets at a loss. I just patiently wait until they make money and in the meantime I make money on new trade sets.

What I do is very simple. It does take discipline and patience and is not for everyone. Most people can't handle following my strategy and Bitcoin drops $10K or more. It is like buying into a falling knife. My strategy is risky if Bitcoin falls very significantly, you could theoretically lose everything you have in BITX.

There was almost zero appetite for btc at 97-98k. Volume was crypto-winter levels of low.

BTC now below 94k. I would not be surprised to see a sweep of the liquidity at 88-91k.

Not sure where it goes from there. Some people are saying btc needs to sweep 88k before going up and that would be healthy. Guess we will find out.

Ya’ll should check out Josh Mandell on Twitter. He’s been saying since at least December that bitcoin would hit 84k in mid March before it made its next leg up. He also predicted 400k in 2025.

Normally I’d say, yeah well who cares but the guy is a former professional options market maker who has publicly documented himself turning a $3M MSTR stack into a $20M stack since September. He has 50K shares and has calls written against ~80k shares. Incredibly interesting follow.

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It’s just so hard to read this market.

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Bitcoiners are accumulating and tourists are bailing until the next ATH.