Interview with Mr. European, about crypto trading techniques & Bitcoin

In the world of virtual currency (crypto asset) trading, there are many prominent traders who are actively publishing information. One of the most famous of these is Mr. European, client of bitFlyer Japan. We asked Mr. European about his past achievements, trading techniques, important indicators, and future prospects.

bitFlyer: When did you begin investing?

Mr. European: It was in 2011 when I was in university. I used money I earned from my part-time job for Japanese stocks and Forex.

That was around the Great East Japan Earthquake, the Nikkei average was quite low, and it was about 80 JPY/USD. I was a beginner at the time. Looking back, I feel that I made good choices. It was almost profitable. Thanks to the market at the time, I got a good start.

Once my career started, I had more money and I wanted to take on more investments.

bF: Please tell us about your experience in virtual currency (crypto asset) trading.

M.E: I was introduced to Bitcoin in the summer of 2014. I bought it on another exchange. That was when 1 BTC was about 28,000 JPY (around 200 eur).

I started using bitFlyer in the fall of 2015. This was the first time I bought a fair amount of Bitcoin. I invested about a total of 5.3 million JPY in Bitcoin at that time.

In 2016, the price approached 100,000 JPY/BTC, and in September 2017, it exceeded 100 million JPY. I didn't sell it every time, so I don't really know the maximum potential amount of assets. I sold at the end of the bubble in 2017, though. I paid about 500 million JPY in taxes and got about 600 million in cash. So, you could say I had at least 1.2 billion JPY in profit.

bF: Wow! What brought you to bitFlyer?

M.E: Because bitFlyer has an overwhelming amount of Bitcoin spot liquidity in Japan. There haven’t been any leaks so I think the security is good.

So, liquidity and security. Also, having used it since 2015, I’ve grown attached.

bF: Please tell us about your virtual currency (crypto asset) trading techniques. What are the indicators that you use when looking at market prices?

M.E: There’s a lot, but I focus on 3:

・GBTC chart
・200 day average movement line
・Hashrate

GBTC is a foreign Bitcoin investment trust called Grayscale that lets you closely watch trade volume trends.

GBTC has a premium (divergence rate), which makes GBTC more expensive than actual Bitcoin.

Regulations prevent purchasing actual Bitcoin, but if institutional investors buy GBTC, this will show a strong trend. However, you have to consider your position when the premium is too high. That’s when you look at GBTC.

I picked up on the 200-day average movements because many people use it. The concept comes from stocks. It is 200 days because that is about the number of days we can trade in a year.

Virtual currencies (crypto assets) move 365 days a year, so maybe we should use a 365-day line, but since many people are looking at the 200-day version, I also use it.

If you consider where mining becomes profitable, you can use the current hashrates to see if they are gaining profits or taking losses.

M.E: Do you mean a method that uses foreign funding rates that anyone can use and get good results? I think this is still a simple category.

You can get a feeling of when it is overheating by looking at the funding rates of foreign derivative exchanges. When it is overbought or oversold, do the opposite. It isn’t that difficult, so I think it's easy.

bF: Do you have any concerns about the recent price movements of Bitcoin?

M.E: I’m concerned that they are too slow.

I’m also very concerned that stock indexes such as the Dow are getting connected. This wasn’t a tendency in the past.

Bitcoin may have been put into large-fund portfolios with other assets like stocks and other assets. When a stock is sold, the value of the stock in the portfolio goes down and the value of Bitcoin goes up relatively, and vice versa. If there is a lot of fund rebalancing like this, drops in stocks could see Bitcoin to drop as well.

It may just be my imagination, but I think that the price of Bitcoin correlates with stocks. That’s what I’ve seen.

bF: How has COVID-19 affected trading?

M.E: It has not only affected virtual currencies (cryptographic assets) but stocks, too. I think a lot of pockets are getting lighter. Including mine.

Restaurants and tourism have taken a hit. Profits have dropped in most industries, and they won’t recover for some time. This means that money is flowing out of some industries and into others instead. So, some may think that the current stock price is higher than the actual price.

Bitcoin isn't particularly compatible with a pandemic, but other financial assets are lowering in price, so some may choose it as their investment avenue.

bF: What do you think is the potential of Bitcoin?

M.E: A big feature of Bitcoin is that it is not run by any particular nation.

Compared to gold, Bitcoin is more portable. Currently, Bitcoin is not subject to departure tax* and is relatively free from governments.

While we in Japan may not have thought about it, people who live in a country that are worried about their domestic currency may buy it to secure the value of their assets. Also, I think the world is seeing Bitcoin in a different light.

In the midst of COVID-19, there was news of an increase in the number of people starting to invest in virtual currencies (crypto assets) among baby boomers (born between 1946 and 1964) in the US. It seems that people who have never shown interest in virtual currency are beginning to change their opinion.

There was also news that the country would issue digital currencies. For example, the “Digital USD” derived from the US dollar is not a virtual currency (crypto asset), but I think it will serve as a tailwind for Bitcoin once people become comfortable with digital currencies.

I doubt that the digitization will be undone. We won’t go back to the analog form.

bF: Finally, please tell us your outlook on the future of Bitcoin.

M.E: I personally think that it will flatten out or decrease for a short period.

I wonder if it will flatten out in the midsummer JPY appreciation period at around 1 million JPY or perhaps fall a little.

If we assume that JPY will weaken in late fall and the corona stagnation calms down by the end of the year, if the world economic situation recovers, I expect it to be a bit stronger.

There are projections of reaching 6 million JPY in 2025, and 15 million JPY in 2030. Those are some bold expectations!

Did you enjoy our interview with Mr. European?

We hope you continue to read the views and techniques of traders who have been watching Bitcoin for many years.

Disclaimers:

* Departure tax exemption: Japanese residents migrating out of Japan (migrating abroad) are subject to tax exemptions (exit tax) if they meet certain requirements.

** Market forecasts and impressions are the views of the individual and are not guaranteed by bitFlyer. In addition, the trade techniques introduced do not guarantee profits, so please trade at your own risk. bitFlyer and quoted individuals are not liable for any losses arising from this content. This interview should not be considered as an investment advice. For an investment advice customers should turn to a registered independent investment adviser.