Best and worst case scenarios for Bitcoin price in 2021 | Interview with trader Eric Krown

All right, we'd like to welcome Eric. He is a former New York Stock Exchange market maker who started his career at a very young age of 11 when he used to go down to the trading floor of the Pacific Stock Exchange with his father. From there he got sucked in and there was no looking back. Eric has a bachelor's in economics from the University of Oregon, feels that the opportunity and excitement of trading cryptocurrencies is unmatched by any other traditional venue of trading. Eric now uses his which he almost says 90k subs to help others with TA and trading strategies. How are you today, Eric?

Wow. You've definitely done your research. There is one, one correction, however. I did not trade on New York Stock Exchange. I traded on New York Stock Exchange. Arca. Small difference there, but just, just the other side of the coast. But. But yeah, man, it's a pleasure to be here. Thank you for inviting me and looking forward to this talk.

We are curious to pick your brain about all of the, the TA that you do and how you like to approach the markets. So I'm just kind of curious right now. What is your current sentiment? Where do you kind of see the market heading right now and what is the current state of things in crypto? Are you optimistic or pessimistic?

Right on. So it's interesting. It depends what time frame you're talking about. Right. So when it comes down to it, I imagine most people tuning into content like this, they're probably looking at more medium and long term stuff, you know, maybe a few weeks, months down the road. They want to know what's the big picture looking like. Right. Well, I would say with bitcoin right now, we're probably going to range around this low $40,000 region. And assuming that 42,000 holds or so actually would be looking at this potential reversal point right here. Now if that fails, if bitcoin trades back down below about 42,000 bucks again, I don't think that bitcoin is going to stop for a while after that. Probably goes all the way down to 32, 33, fills the CME gap from months ago and then we try again. And if that fails, well, it's probably not worth talking about this market for a while. But I actually am a little bit more on the optimistic side here. I do think that whether bitcoin has bottomed out right here and kind of spend some times just ranging here or whether it comes down to 32, 33, actually, do you think that end of year probably looks most likely fine.

What do you think about the whole evergreen situation. That's the big story of the week. Do you think it's going to affect long term the price action for bitcoin?

It's a really good question. So I'm actually a terrible person to ask about that. That's more of a fundamental sort of thing. But I can sort of relate my experience with these sort of, you know, these sort of events, I guess. And typically when these sort of events get split, spoken about like publicly, you know, they come on the news and you see it on CNBC all the time nowadays, it's usually coming to like the end of the effect of that. Usually that's like kind of a good signal that we're kind of, you know, nearing the end. Regardless of that though, I have been looking for a major top in traditional markets sometime October, November, maybe December at the latest for like a 15 to 20% correction. And could this lead into that? I think we're seeing the cracks right now. Absolutely. And that's I think the more actionable way of looking at something like that. But as far as the actual implications of it, I mean, these things get so damn complicated. It's, I think it's impossible for any one person to know. Obviously it's not a good thing. But I couldn't tell you like the, you know, the, the, the inside of what's going on there. I just know, you know, what it means from actual trading. It's.

So Eric, would you mind pulling up like a bitcoin chart in like kind of like technical analysis are you kind of looking at currently and what are some like indicators that to use when, when you look at the charts?

Yeah, let me just figure out how to share a screen here. He's a pro.

He has his own indicators, dude, he's not like us.

All right, there we go. Yeah, man. So basically, what was the question? Basically what am I looking at right now?

Yeah, what are kind of some of the indicators that you like to use when you're looking, you know, at a bitcoin chart and you know, I guess walk us through like, you know, what you're looking at and how you like to approach looking at charts.

Yeah, so actually my trading strategy right now is rather simple. I look at just a few different things. I look at my moving averages. Right here I have a bbwp which just a volatility based indicator in a statistical format and then a PMARP down here, which, you know, sounds complicated. It's not. It's just the distance that, you know, price action is Away from current. From a current moving average. I'm using of volume weighted moving average right now for anyone who, you know, happens to care. But. And then it ranks it in a. In its fiscal format as well, in a percentile, you know, format essentially. Anyways, all I'm doing is I'm essentially looking at these trends based off of the 21 and the 55 mediated by the. The 9 expansion average right here. And then I decide, you know, do I like the setup or not? And then kind of judge based off of volatility and based off the PMRP where those entries are. Of course, I have my own personal indicator right here with the jewelry. It's obviously not needed with this, although it certainly does help. But at the end of the day, you know, quite simple stuff. And that's, you know, kind of my main message for anyone who is looking to get into trading or looking at like what, trading at this, you know, or at least what I do is it's rather simple. I mean, just a few things on the board. Any entry should be extremely obvious. Any exit should be rather obvious as well. And anything more than that I have not really found too useful and more or less confusing in my. In my career.

Have you had a chance to look at, for example, other tokens like Ethereum or Solana, I guess what are your thoughts on potential ta? And looking at those tokens in particular.

In general, the market kind of moves together and altcoins, which they all kind of are, move in a more emotional fashion than Bitcoin. Now, Solana is a bit of a special case. It kind of did its own thing for the majority of summers, just going berserk for a while, which is really, really impressive. And whenever I see something like that, that's a sign, obviously. And so I was paying attention to that one. Solana obviously was leading the market during the summer. And if we bring it up right on over here, you can see that it's a little bit more mature within this consolidation right now. So I kind of look at Solana right now. It's like a general gauge of where we're at because I look at it as a little bit more advanced as to what Bitcoin and Ethereum are doing. And they're actually a little bit less obvious charts to me right now. So this one's been rather helpful as far as Ethereum goes. A little bit of different thing over here. This one certainly plays a lot more with bitcoin, although it did have a better rally on that last move, up to 4,000 bucks. Where Bitcoin couldn't get past, you know, the, the low 50s, but overall, right here doing the same thing as far as this correction goes as bitcoin. So I don't really see too much, personally speaking, for, you know, for me to be, you know, caring about something like this unless I actually want to trade it myself. But, you know, I generally view most all coins in that fashion. They're just mirroring bitcoin in a more, in a more emotional fashion, essentially.

Are there current.

Like, do you think bitcoin. Say that again.

Do you think bitcoin is going to get to $100,000 by the end of the year?

I think if this monthly, if this month, September closes above about 44,000 or 44,500, I think it's on the board. Yeah. Either end of this year or early next year, probably off the back of an ETF as well. I suppose I was going to say.

Do you think it'll take an ETF for some big regulation for that to happen?

I think it's rather likely, actually, that an ETF is coming. I think that's what all this is about with getting all of these, you know, wild, wild west crypto exchanges off the board. You can see that the SEC and the US is really going after a lot of these exchanges, you know, very heavily. We saw litigations against Bitmex, we've seen litigations against Binance, and I assume, you know, a few others are on the, are on the chopping block soon enough as well. And that to me is clearing the space for that. We also see the SEC chairman, Gary Gensler. He's come out and he's definitely made his presence known. Right. And it seems to me like when you see something like that, it's building up the infrastructure for, you know, for something more legitimate like that to come around because there's certainly interest for that now. There's a lot of big names trying to bring bring around ETFs. So I think it's a, you know, it's just a matter of time and personally speaking, I think probably within the next six months. Very, very likely, actually.

So let's get a little bit some insights about this potential regulation that's coming. What's the worst case that you see worst buyers? The bottom for Bitcoin and Ethereum over this year, for this year. What's the worst case and how do you get to that number?

Worst case is always zero. But I suppose you're looking for a more relevant, you know, more relevant number there. You know, what Do I think is the worst case? Okay, I think the worst case, honestly for bitcoin, we might have just seen it. If not 32 to 33,000 bucks. You know, actually I think it's rather unlikely for bitcoin to go below 30,000 bucks here. But hey, at the end of the day it's always a statistical game, of course. So, you know, if that were to happen, where do we go? Everyone's going to be looking at 20,000 bucks obviously for Ethereum, what would that mean? 2200. You know, if bitcoin were to come down to somewhere around 32 or 33. But I think it's actually very possible we might have just seen it right there. Maybe a few more tests around the low. It seems to me that there's some pretty obvious signals of accumulation going on. Especially when you look at like the underlying market dynamics. It does seem rather compelling.

Okay, so Eric, if I'm a beginner at ta, for example, besides moving average and relative strength index, the rsi, which other indicators do you recommend?

It always depends what you want to do. Right. You need a backwards engineer. But I think, you know, honestly, if you're new, if you're just coming into the game, what's the most important thing to learn? First and foremost, no indicators. Just avoid them like the plague. Look at trend. Higher highs, higher lows, that's an uptrend. Lower lows, lower highs, that's a downtrend. If you can do that, you can trade like that. It's not going to be the most sexy thing of all time. You're not going to make amazing gains, but you'll very likely be profitable. It's very tried and true and it's rather simple to learn if you can just get out of your way. I think most people can learn that within just a few weeks if they really put their mind to it. I've seen most people do it rather fast and very effective. Now if you do, if you do want like an actual indicator on top of that, I would say, you know, if you're going to go, okay, so if you're going to go with moving averages, rsi, of course you don't need those. But I'd say always, always, always in my plan, something needs to be representing volatility, something needs to be representing structure, AKA or trend and something, you know, a little bit icing on the cake. I like to use momentum oscillator as well. So for me it's kind of what you saw right there. Those moving averages, the BVWP for my volatility. And then, and then I was actually using the jewel for the momentum oscillators, which you could just use in RSI as well. It's all the, it's very, you know, it's going to give you about the same results depending upon, you know, exactly what you're focusing on, obviously.

So, Eric, for those that are watching today that are just completely new to trading, like, can you kind of unpackage and define what is trading in its most basic form and then what are some kind of strategies that you like to use when you're looking at the world markets?

Right, okay, so trading mechanically, trading in its basic form is just using some sort of edge, whether it be technical, fundamental, statistical, whatever, to have an advantage over time, a statistical advantage over time whilst fighting the internal battle against your own emotions. That's essentially what it is. And then what was the second part of that?

So what are some basic strategies that you're deploying when you look at, for example, like a Bitcoin or Ethereum, is it certain percent ups? Like, what does that kind of look like when you like to enter in certain trades?

You know, again, it goes back to the chart that I just showed right there. But it always, always, always boils down to in some way or form, trend. You know, where are we at with the trend? Trend tells me what I want to be doing. If we're in an uptrend, I'm looking for a place to buy. If we're in a downtrend, I'm looking for a place to sell. And then, you know, those places to buy or sell and also the exits. And that's where you start to employ some other techniques perhaps as well. Maybe you just use simple, draw the lines on the charts. That's very popular nowadays. Effective. Good enough. Of course, I like to trade divergences on RSI a lot of the time. That usually kind of tells me where those lower highs or higher lows are going to be within the context of those trends. That can be rather helpful. But again, when it boils down to it, I feel like this is the answer that probably people don't want to hear. It's something very simple, just looking at trend that is where you can have a, you know, pretty easy edge. And then anything on top of that is, you know, just icing on the cake really.

And do you have any tips to kind of control the emotional aspect of trading? Or is it just stick to the rules, Stick to your rules.

Wyckoff before bed. Okay, so, you know, good, good rules to stick to your trading. Keeping a trading journal, obviously, you know, being very stringent with that and having the ever and ongoing process of being reminded very nastily by the market. My girlfriend thinks that's funny. Being reminded by the market that anytime that you do deviate from your strategy, it typically does not end up too well. And why is that? Because as we just spoke about before, when it comes to trading, you are essentially just using some sort of edge that gives you a statistical advantage. And if you understand that and if you've actually back tested this and you've actually gone through the whole rigmarole of doing that, then you know that, okay, my strategy has a, you know, 69% win rate because that's great. And that would actually be a great strategy by the way. And so when you take a win or when you get a win or get a loss, does it make sense to be emotionally compelled by those? Well, I would argue no, because it's just a matter of time before, just evens out over time and you come into that statistical narrative. So it means that trading really is a game of getting out of your own way. If you can just understand the basics of having that plan and then following that plan, emotions will come and go. And that's what trading can actually, you know, really teach you about yourself. I think meditation and sauna are like very, very useful for that Also, you know, going for walks and gym, all good things that I think, you know, probably benefit anyone to be honest with you. But you know, whatever it takes to kind of just let your emotions be assuaged and you'll learn through trading that you can feel, you can feel terrible, but you can still do the right actions. You can feel, you can feel great and you take the wrong actions. But what matters at the end of the day is just following the plan regardless of how you feel. And that's where you become into, you know, emotional maturity, I suppose. And that's, I, at least what I think is very, very important to become a trader. I mean, you know, anytime that I find myself getting emotional and it starts to affect my trades, well, I can just write that day off. You know, in fact, I'll just stop, I'll just go play some video games or something.

And so from your perspective, is emotional intelligence or that emotional maturity one of the most important skills you can have as a trader?

You know, people, people focus on the emotional aspect a lot and for good reason. That is typically where most people get hung up. Absolutely. Because most people can logically understand a trading plan. Like I said, most people can learn how to trade a trend relatively quickly with just a couple weeks of just concerted learning. So what gets in your way at that point? It's the emotions kind of deviating you from your path. So, yeah, absolutely, it's important. Um, and you know, where do I want to go with that question? There's so many ways, you know, it's really a game of, of coming in alignment with your emotions and not letting them affect your actions and just realizing that you can feel some way but still take the right action. And that's, that's, that's everything.

Awesome. Now, is there any, any other secrets that makes a great trader? What are the characteristics that, that you typically find yourself like, oh man, I'm glad I'm this way, or I'm glad I kind of behave like this.

Is there any secrets? To be honest with you, there's no secrets. It's very, very difficult. It's very, very hard. Most people probably shouldn't do it. You're going to lose all your money, blah, blah, blah, blah. Okay, I've scared enough people away now. Look, you can definitely do, you can definitely learn trading. Absolutely. But the thing is, is that in today's day and age, like, it goes so far against, you know, what we're kind of taught and how we're socialized in the Western world especially. So I grew up in California, you know, went to school there and everything. And, and, and everything that you kind of go through in school is always kind of set you up, setting you up to, you know, feel good if you get the right answer. And that just is not going to serve you well in trading because you're naturally going to be wrong sometimes. You're naturally going to lose money sometimes. Again, even if you have a 99 spot 9% win, win rate on your strategy, there's going to be some losses there. So if you, you know, if you get tipped off by that, then that's really the secret. It's, it's being able to get around that and just, and just be in alignment with, you know, with just being, I suppose, you know, not to be some Buddha over here, but that is rather important. And that, that would be the only secret that I think is, is honestly relevant. Anything that can put you into a state of presence where you are not associated with, you know, what your mind is telling you and, and you can just follow the plan. That is where you can actually be successful.

Excellent. Eric, we greatly appreciate you joining and giving your insights about trading in the markets overall we would love to have you back on the show. Everyone, this is Eric Crown. Thanks for joining us today.

Absolutely. Thank you for having. Thank you for having me. And wish everyone well. It.