I realized you can't. Let's say you know for a fact that bitcoin price right now in Nov 2021 is $56k and you were time travelled back to its inception in 2009/2010 when it sold for say $0.06 at the start. What will be the best strategy? Let's say you do not know how it moves up and down, just that it will be $56k today. How would you trade it, or just buy and hold? To me, I view trading as a defensive strategy. If you knew for certain the price now back then, just buy and hold while DCA-ing monthly seems like the best strategy. If you trade it, it means placing stop losses and selling at a loss and it would be silly to say sell at $8 to buyback at $5 or $35 to buy back at $28 when you know it's going to $56k. If you place a stop loss it could hit and go up higher so it's not for certain that you can always buyback cheaper too. Discuss.
Dumbest question in the world. Can you beat someone who won the lottery? Nobody knew back then that useless made-up digital tokens would develop into the biggest ponzi scheme / pyramid scheme ever.
Well, don't be salty. There is a certain element of luck involved but don't discredit someone who is incredibly visionary and placed a bet of a lifetime.
I don't understand the thought that you need to "beat" an investor when trading. No you are not going to beat an investor that got in at the beginning. A trader is looking to take advantage of volatility to profit. I don't care about someone that bought at 16 cents and is now blessed with a value of 58k; good for Him/Her. I am looking for price movement I can take advantage of. I do not trade bitcoin since the futures margins are quite high and there are better opportunities in my opinion. I wonder why you view trading as a "defensive" strategy?
As in the case above you said so yourself that there is no way to beat a buy and hold investor that got in from the start. You can make money from trading bitcoin from the start, but it definitely won't be more than an early investor due to the exponential returns he has. What the investor is playing is an offensive strategy. He is buying a chance that bitcoin succeeds, but if it fails in another timeline he loses everything. While trading is a defensive strategy in a sense that if bitcoin fails you cut your losses and get out. Always protecting your capital and placing safe bets with risk management.
So 12 years ago, let's call Bitcoin price as free. 12 years later it's 56K using your number. Did I make 56K, about 5K or more per YEAR, in trading profits over the last 12 years? Silly question. YOU suffer from lump-sum bias... Evidence of lump sum bias United States academic Dan Goldstein conducted an experiment where participants were asked to rate their satisfaction with either a $100,000 lump sum or monthly payments of $300, $500 or $900 for life. For a 65-year-old, such a lump sum is roughly equivalent to $500 a month for life. Respondents had clear preference for the lump sum, even compared to the much more actuarially valuable $900 monthly payments. In fact, Goldstein calculated that the ‘indifference point’ (ie where people would take either) between monthly payments and a $100,000 lump sum was $1,065 a month, nearly twice what it should have been.
I would think if you threw up a weekly chart and bought or sold when the trend changed you would be ahead as a trader.
Lets put bitcoin staring value at $0.1 for simplicity sake. At bitcoins current value at $56k. You made 560000x returns on investment not just $5k per annum. That's where the crazy exponential returns kick in. $1k invested would be $560 million now.
That is based on hindsight and retro fitted data. There are also lots of ranging months so you would be prone to whipsaws.