Not long ago, Bitcoin trading above $100,000 was a crazy prediction…
But that soon changed after Donald Trump’s win.
The president claims to be a keen supporter of Bitcoin and the digital economy. He wants the U.S. to be the global leader in digital finance.
That’s why Bitcoin rallied strongly from a close of around $69,380 on election day. It hit $100,000 for the first time just a month later on December 5.
But after hitting another new high in the middle of December (around $108,388), Bitcoin rolled over and tracked lower…
Then a surge last month saw Bitcoin come within a whisker of hitting $110,000. That move ultimately faded out and reversed with Bitcoin reaching $109,358.
And lately, Bitcoin has fallen lower and was recently trading around $93,000. You can see that sharp pullback in the chart below…
Bitcoin/USD Spot Price
Source: TradingView
If you own Bitcoin, these kinds of whipsaws can be stressful… Without nerves of steel, you might not be able to stick through the ups and downs.
There might be eye-watering profits on offer. But for many, there are just too many risks involved.
That’s why some folks might simply leave Bitcoin alone.
But I think that’s a mistake…
The problem isn’t Bitcoin itself. You just need a better strategy to take advantage of all that back-and-forth action.
That’s why I trade Bitcoin differently than most.
My strategy puts a clear cap on risk. And it even lets you take advantage of Bitcoin’s falls.
Let me explain…
Risk Management Is Key
Risk management shouldn’t be an afterthought for traders. Understanding that put me on track to success…
Over my career, I had 20 winning years in a row, and Barron’s ranked my hedge fund in its top 1% globally.
That led to Jack Schwager featuring me in his Hedge Fund Market Wizards book along with some of the all-time most successful traders like Ray Dalio and Joel Greenblatt.
And risk management plays a big role in the way I trade Bitcoin. Simply, I don’t trade Bitcoin directly…
Instead, I trade stocks that give me exposure to the Bitcoin price. That means I can effectively trade Bitcoin without ever having to own it.
And that’s an important distinction…
By owning Bitcoin outright, I’d risk storing my holdings in a digital wallet or with a crypto exchange.
If I forget my passcode, then my money evaporates into thin air.
Plus, we’ve seen enough heartache in the news about crypto fraud – not to mention exchanges being hacked or collapsing.
For me, it’s simply too much risk to take on. That’s why I developed a better way…
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Profit in Both Directions
Rather than owning Bitcoin directly, I trade it through an ETF such as the iShares Bitcoin Trust ETF (IBIT). That means I can access it through a regular brokerage account.
And vitally, as we discussed last Friday, I trade Bitcoin using options.
As we saw, IBIT options enabled us to generate a blended 47% gain when Bitcoin fell earlier this year. We then snared a 42.0% gain when Bitcoin rallied just a day later.
We made outsized profits in a short time – and by trading IBIT in both directions.
Last year, we traded another Bitcoin ETF, the ProShares Bitcoin Strategy ETF (BITO), for more profits in both directions…
One was an 87% gain in just five days when Bitcoin itself only gained 13.5%. Another time, my subscribers had the chance to earn 72.3% when Bitcoin fell 18.7%.
And last September, we closed out a Bitcoin trade for a 100.0% gain.
Of course, like any strategy, we don’t win all the time. But with my strategy, we know exactly what our maximum loss is before we place any trade…
That’s simply the money we paid for the option.
So next time you think Bitcoin could be readying itself for a big move, remember that you don’t have to trade it directly.
And you don’t have to worry about the next Bitcoin crash either.
Instead, you can use my Bitcoin strategy to profit while capping your risk.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict