Ivan on Tech analyzes Bitcoin's position at the 200-week moving average and covers major crypto market developments
Ivan on Tech presents a live market analysis covering Bitcoin's current price zone, quantum security developments, regulatory news, and broader crypto market trends.
Summary
Ivan on Tech delivers a wide-ranging market update centered on Bitcoin trading near the 200-week moving average, which he identifies as a historically significant buy zone. He argues that investors should hold positions in both bullish and bearish scenarios simultaneously — what he calls "quantum thinking" — rather than attempting to time an exact bottom. A major focus is Michael Saylor's reversal on quantum computing security, with Ivan noting that Saylor had recently dismissed quantum as "an imaginary computer" before joining a new industry-wide security consortium including BlackRock, Blockstream, Coinbase, Fidelity Digital Assets, Galaxy, and Strategy. Ivan also covers Charles Hoskinson's comparison of Cardano to Anthropic, the Senate Clarity Act and Elizabeth Warren's opposition to it, the Netherlands' proposed 36% unrealized capital gains tax, the rotation of talent and capital from AI into crypto, and the Near Intents privacy milestone of $2 billion in Zcash flows. He also conducts an extended comparison of capital gains and VAT regimes across countries including Australia, Hungary, Monaco, Dubai, China, and Kazakhstan, arguing that high-tax jurisdictions are increasingly uncompetitive for crypto investors.
Key Takeaways
FULL TRANSCRIPT
Bitcoin at the 200-Week Moving Average — Fear vs. Opportunity
Ivan: Welcome to another episode. As you can see right now, Bitcoin is currently still at around the 200-week moving average, and maybe people here are a bit scared. I see it sometimes when I say that I'm accumulating in the buy zone. I see it when I say that likely we will have a bottom within the coming months. There is still a lot of fear — just like back in Q4 when we turned bearish and we told everyone on October 8th, time to be cautious, time to be careful. People said, "Ivan, we will never go down. We'll just keep going up and up and up and up." The same thing is happening now. Yes, there is still downward risk. I'm totally upfront with you that there is still downward risk. We have a lower high, lower high, lower high, lower high. But Bitcoin is so cheap at around the 200-week moving average. Should we go lower, it is a fantastic discount. And it's actually very important to be part of both scenarios here.
The reason why most people are scared is because they have what I call a plebe brain that wrecks them each and every cycle — cycle in, cycle out. Why? Because their plebe brain tells them that they have to buy the very bottom. They have zero patience, zero courage to buy slightly into a position, because they want to buy right at the bottom and then sell right at the top, which no one ever does. They get wrecked anyway. That's the plebe mindset you have to get rid of as soon as possible.
Instead, you need to be thinking in quantum. Do you guys know quantum? Everything is possible. It's Schrödinger's law — Schrödinger's cat is dead and alive — and the market is both bullish and bearish at the same time. Can you think in quantum? If not, that's why unfortunately the results for you may look like they do, because you cannot be thinking in quantum, meaning that the market is both bullish and bearish and you have to decide where you're tilting more.
So for me personally, yes, it is possible that we go down lower. Absolutely. That's why we just put between 10 and 15% in with DCA here in the buy zone — as a hedge against the scenario where we just explode up from here, which is very, very possible as well, because we are at the 200-week moving average. Historically, Bitcoin finds a bottom around the 200-week moving average. So we need to have two thoughts in the brain at the same time: that we are now creating a small position, so we're part of the upward Valhalla in case it happens, because no one can be certain here about anything.
Back in Q4, we could be quite certain because we just had a massive bull run, then the daily money flip started to collapse. Here, no one can be certain about anything. So ensure that you have both cases covered, both scenarios covered, and you are good no matter what. Don't try to time it. You're not going to buy the very bottom. Instead, we're going to be rising and rising and rising this bull to Valhalla.
Michael Saylor's Quantum Reversal and the Bitcoin Security Consortium
Ivan: Guys, I cannot believe my eyes right now. It seems that we have been yelling into the universe something very important — that Bitcoin has to get quantum protection. Please confirm that you've heard that I've been yelling and yelling and yelling, because I told you that Bitcoin cannot compete with gold. Bitcoin is not even in the same class as gold without quantum, because gold is okay for generations, for centuries ahead. Bitcoin, without quantum, you simply don't have that. And the arrogance of some of the Bitcoin maxis made me extremely cautious and worried for the long-term future of Bitcoin. Obviously quantum will not matter in the next bull market, but for the long, long term it's very important.
And you know, when you wish for something, the universe adapts — the universe gives you what you want if you really focus your energy on it. Now Saylor yesterday came out and said that they are creating a security consortium. This is many different companies — this is BlackRock, Blockstream, Coinbase, everyone coming together. Everyone coming together because their business hangs on it. I mean, BlackRock — their biggest ETF, which is Bitcoin — is one of the biggest growing. We have Blockstream, Coinbase, Fidelity Digital Assets, Galaxy, Strategy. Everyone is coming together and starting a working group, a consortium on security. And the number one security issue is quantum.
So this is going to be super important. I'm also happy that Saylor changed his mind. I mean, now they literally write "quantum" here — quantum, quantum, quantum, quantum question, large-scale quantum, preparing post-quantum, quantum-resistant global financial infrastructure. Love it. I love it. Why? Because just a few weeks ago, Saylor in an interview said that quantum is an imaginary computer — it's like the tooth fairy. Okay, that's what he said just a few weeks ago. And that was very concerning, because if the biggest holder of Bitcoin besides Satoshi does not understand the importance of quantum, we are in trouble for the long term. If the biggest holders live in la-la land and don't listen to tech people like yours truly, we're going to be cooked. But now that you actually have the change, it's very, very nice.
In fact, it's one of these things that is now in place for the next bull market to really start in the coming months. If they can get quantum as the number one thing on the agenda for Bitcoin, it's very important. So guys, this cycle, I'm very excited. There are many things coming together — the privacy narrative obviously with Zcash and everything else, the tokenized stock narrative with Robin Hood, with memes being paired with stocks. All of this DeFi stuff is now coming back very nicely. Coinbase, everyone is trying to bring stocks on-chain.
AI Overinvestment and the Rotation into Crypto
Ivan: You also have the AI rotation, which will take place. Where is the money going to come from? It is mainly going to come from the AI investments that institutions made — and also retail made — which they are likely going to reverse soon. Why? Because the numbers are not looking good.
Look here — Google reports the first quarter of negative cash flow in its history, due to AI overinvestments. It's insane. Google is willing to risk the entire company to win the AI race. These guys are playing Russian roulette with all of these data centers. Who knows if you really need all of them? Who knows how AI is going to work in the future? For sure, AI is going to be big — we're not against AI. Just a reminder, if sometimes people are confused: I love AI. I use AI every day. But the way that they are going all in on the existing versions, on the existing understanding of AI, on the existing infrastructure, which may or may not be needed in the future — who the hell knows how AI works? Maybe we all run AI on our phones. Apple is investing a lot in local AI inference, where you just pull up your phone and it runs on the phone — full privacy, you run the model. Maybe that's how it's going to be. Do you need all the data centers? Who the hell knows?
But we look at the trends, and many AI stocks have indeed started to flip bearish. That money is going to flow somewhere. It's going to flow into crypto. So guys, new cycle is upon us. Please write in the comment section: "new cycle is upon us," so I know that you heard it. No one can come back saying, "Ivan, why didn't you warn us about the new cycle?" I told you — new cycle is upon us.
Could we go a bit lower in Bitcoin? Yes, it's okay. You can buy more. Should you buy altcoins now? No, not yet. Because should Bitcoin go to the 50s or 40s, Bitcoin is okay — we're just putting a bit in now and we can buy even more there. But altcoins can still drop a lot — 50-plus percent. They can still drop. So: Bitcoin yes, altcoins no. Write in the comment section also: "Bitcoin yes, altcoins no," so you don't come back to me crying that some altcoin went down.
Charles Hoskinson Compares Cardano to Anthropic
Ivan: I love Charles, guys. I love Charles. The confidence this guy has is amazing. Cardano — it's a ghost chain, no one's using it — but he's comparing Cardano and the strategy of Cardano to Anthropic. Now, Anthropic, to be fair, is like a two- or three-year-old company. Cardano is over ten years old. But here he compares: "We're doing like Anthropic. We're going to be like Anthropic." Meaning that first Google had the lead in AI, then OpenAI had the lead in AI, then Anthropic leapfrogged both — not by moving faster, but by building differently. So basically Cardano is going to come from behind and leapfrog Solana, leapfrog everyone. Let's listen.
Charles Hoskinson: Looking at it like Anthropic to OpenAI and Google. So Google initially had the big lead, then OpenAI had the big lead, and then somehow this Anthropic thing came out and they were able to just leapfrog everybody. Well, they didn't fundamentally change — they just had the right mindset. They started with an AI constitution, and they had a very clear line of sight to how they wanted to build Claude and these other models, and it wasn't very sexy, and a lot of people ignored them. But now they're kind of on the other side, and they're the leader of the pack, because that philosophy turned out to be the right one for how to build an agent like that. So much the same way with Cardano — I think people are starting to wake up, especially in the age of AI hacking where everything is getting broken. Speed to market is not necessarily the most desirable thing. The recent Bybit thing and the Kelp thing shows you how quickly you can lose your TVL and how quickly you can lose your customer base. So it works until it doesn't, and then when it doesn't, it's catastrophic for the ecosystem. People want stability, and stability only comes when you have a clear governance system, a clear software development system, and really good ideas about how to evolve your roadmap in a sustainable way over time that leaves no one behind. So it took us a long time to get here. A lot of mistakes were made, and I own the lion's share of them as the leader. But ultimately, I'm very happy with where we sit, and I think we're going to grow.
Ivan: Yeah. Listen, guys. If they can pull it off, fantastic. I have nothing against Cardano. I just find it funny. Would it be crazy if Cardano came from behind and just dominated everything? I mean, I'm here for it. I have nothing against Cardano. People say, "Ivan, why are you so mean?" — you have a fully ghost chain, price-wise one of the worst coins. Everything about it is one of the worst. But the community thinks they are so grand and so noble, and the guy is saying they're going to be like Anthropic, although they're three times older than Anthropic. Let's see. I'm all for it. Anyone can come and do great things and recover and have a comeback story. Very, very possible.
The Clarity Act, Elizabeth Warren, and Trump on Crypto
Ivan: Next, guys. Goldman Sachs coming out of nowhere saying it's time to pass the Clarity Act. People want the Clarity Act. The most important thing with the Clarity Act is all the protections for customers, but also for developers — the fact that if you do non-custodial, you are not part of any money transmitter, you're not doing anything illegal. There is one person who doesn't like the Clarity Act. It is Elizabeth Warren. Listen to this.
Elizabeth Warren: Senate Republicans just released their updated version of the Clarity Act, a bill meant to regulate crypto, and it's going to a vote on the floor. That's a glaring omission — it does not stop Donald Trump from cashing in on his presidency. A new poll found Trump's crypto earnings are deeply unpopular with Americans. And let's be clear, this is our best chance to rein in President Trump's crypto. If that's not bad enough, this latest draft bill would make it easier for criminals — and cartels and terrorists — to move money and finance their operations. And it fails to protect investors in our financial system. Look, this isn't regulation. This is a giveaway. This bill should be dead on arrival.
Ivan: Now it is interesting because Goldman Sachs said it's time to pass it. So I'm wondering who is left in Elizabeth Warren's court, so to speak, because she was pro-banker before. It seems like those were the interests she was pushing. Now bankers also want to be in crypto. So let's see. But also she doesn't have a lot of power now. So that's good. Hopefully they can get it through.
Look here — Trump is saying: "We want to stay in front of crypto. We're leaving China and all others by a lot in AI and crypto. We want to stay in front, especially in crypto." He wants to stay in front. That's very, very good.
SpaceX Stock Decline and a Note on Paper Wealth
Ivan: SpaceX going lower and lower and lower. Went from like $250 now to $112. Many people got saved just by watching this free YouTube stream that we do day in and day out, tirelessly, in bull market and bear market. Congratulations if you got saved. It's going lower. Could even go below $100. We just have to see when the trend changes. It's still bearish, it's still not good. As soon as it's bull, we're going to enter it.
One comment I want to make though is that SpaceX fell 50%, meaning that Elon lost like half a trillion dollars on paper. He went from around $1.5 trillion to roughly $1 trillion. And world hunger did not get solved. He lost $500 billion and world hunger did not get saved. Why? I thought that was what the leftists said — that if you just took his money, you could solve world hunger. But if you're a lefty, you're big welcome here. You understand there's a big problem with that thinking. He lost half a trillion. Where did it go? It didn't work like that. Big problem. Big, big problem.
Tokenization, Coinbase AI Trading, and Modern Finance On-Chain
Ivan: Next. We have modern finance moving on-chain. It's a question of when, not if. We're already seeing it with institutions embracing tokenization. Let's listen to what that is — it's one of the drivers in the next bull market.
Guest: If you look below the headlines, what you are seeing institutionally is a wide array of investments and partnerships with companies like Coinbase. Not a week goes by, Joe, even on your show, where someone isn't announcing some new project or investment into crypto. And we're having an inevitable convergence where a few years from now, we're not talking about traditional finance and crypto — we're simply just talking about modern financial institutions. Because it appears every modern financial institution recognizes what Coinbase did nearly 15 years ago, which is it's simply a question of when, not if, everyone adopts crypto and the blockchain technology that underpins it.
Ivan: I mean, bullish — that's the conclusion at least. Look here. Brian Armstrong went on a podcast with Ananth and got very good feedback. Basically, Ananth told him: don't pick favorites. For example, you guys tried picking this creator tokenized tweet thing as a favorite industry for the bull market. Don't do it. The market tells you what matters. Be quicker on listings. Hire more people who live in the trenches. It's true. I could have told them that many, many years ago.
But they are doing something interesting here for AI, guys. If you are an AI developer, try out Coinbase. The team shipped a bunch of new features and tools this week making it easier for users to test out agentic trading. But it's another one of these things — agentic trading. Will the average player use agentic trading? I don't know, guys. It's another one of these ideas they push so hard. AI trading — have you tried it? Personally, I haven't tried too much. I mean, we have the grid bot, but it's not really AI. Because I see how unreliable Claude is sometimes, and to allow it to trade big amounts of money — I'm not sure, man. Maybe small amounts, maybe to play around. But it's another thing I see they push so much: agentic, agentic, agentic. This LLM hallucination is going to go nuts in my Coinbase account? Okay, let's see. Maybe it's going to be good at the end of the day. It depends on the tool.
Obviously there are ways to automate trading, but connecting your Claude or your OpenAI to it — is that the best thing you can have doing your trades? AI is used in trading by institutions, yes, but it's not Claude. It's not this version of AI that we get as consumers. So, let's see, guys. If you use it, let us know. Maybe it's good. Maybe I need to be more open to it. But it's one of the things he's pushing hard. Likely it's going to be okay because Vlad at Robin Hood is pushing the same. If both Robin Hood and Coinbase are pushing it, I guess it makes sense. They obviously know better.
Crypto VC Activity and Talent Rotation from AI
Ivan: You have Imran coming out — Imran is having this VC alliance, a crypto-native VC — saying the following: "Yesterday we broke every application record with the highest density of crypto talent we've ever seen." The market is coming back. I'm telling you, the market is coming back. Startups coming back, VC coming back, repeat founders, top technical talent, and teams that might have chosen AI a year ago are now building in crypto and fintech. Crypto is back. Yes, rotation from AI is happening in real time — when it comes to talent, when it comes to most things.
Where Are We in the Cycle?
Ivan: Guys, let's discuss where we are in the cycle. Have we bottomed? Have we not bottomed? First thing, as always, is that no one knows for sure. We're in a quantum state — both bullish and bearish — and you have to just ensure that no matter what happens, you're okay.
But what's likely to happen here is that we are sideways until September or October, potentially do a new low, or just remain sideways like we are now. We need to create a bottom, and that takes time. The flip level has to come down closer to the current price. That's going to happen should we go sideways for a bit and have low volatility. When volatility is low, the flip level will come down more. Just like here when we went into bull — you see that the flip level did come down quite a lot. It dropped, then was sideways, then boop boop boop, and then we basically reached it. The same thing is very likely now as well. Sideways, potentially a new low, but also could be that this is the low. Who the hell knows? We're good no matter what.
I'm very certain that we're going to make a lot of money — many millions — just like we did back here by getting in super early. You don't have to know the future to make money in crypto or in any market. In fact, if you try to predict instead of react, you are going to get wrecked, because no one can predict. No one knows anything. You can just react to the price action, position yourself accordingly, and ride the trend until the end.
Just think about it. If you think you can predict when to buy, you need to be correct on two things. Number one: what will happen? That's very hard. Most people are wrong. It's okay. Most people cannot predict anything. And then you also need to predict when it's going to happen. You need both of them at the same time, because if you just get one, the result is wrong. Both of them correct, then you buy the very bottom. You see, the odds are really stacked against you if you try to predict anything.
Instead, react to the situation. For example, should we go bull on the money line, you react by being mega bull. Are we in the buy zone? You react by being slightly bullish — small bull, not mega bull. We deploy between 10 and 15% in the buy zone before we flip bullish. Be more reacting, less predicting. That's it. Very simple.
Base Chain, Near Intents, and the Privacy Narrative
Ivan: Base is saying ten reasons to build on Base — deep liquidity, Base ecosystem fund, corporate chain if you want corporate chain. And there's another contract getting 65,000 transactions on mainnet in six months. What are they building? Token Works. What is this? A playground for on-chain financialized ideas. Fake world assets. A new way to build and sell NFTs. Experimentation coming back. Doing dumb stuff, trying things — coming back. I like this.
Near Intents have surpassed two billion in Zcash flows, guys. This is very important. If you have Bitcoin, if you have ETH and you want to take it private, you want to take it across chain, try Near Intents. It's one of the key plays for the privacy narrative. Near Intents basically allows you to bridge Bitcoin, bridge ETH, bridge whatever — they support many cryptos — into Zcash and back, in a private way. This is massive. Near Intents basically allows cross-chain privacy. They're expecting to reach $10 billion sometime next year once Ironwood is deployed and people are able to swap any asset into shielded Zcash with confidential intents. Very nice. I love this.
Netherlands 36% Unrealized Capital Gains Tax
Ivan: We have bad news for Guzman. Guzman, unfortunately, in the Netherlands where Guzman is based, they are getting a 36% unrealized capital gains tax, and this has now passed the Dutch House of Representatives. Guzman, what's your comment on the ground? We've been telling you for over a year now to leave. Why have you still not left? I've been telling you here ever since we started to hear about it. But no, no, no — I see Guzman sometimes saying, "Oh, but it's not decided yet. It's not decided." Bro, it's going to be decided. They're not going to say no to money. You think they're going to say no to taking your money? They're going to say yes. Please give me more money. So Guzman, you've got to leave right now. Right now. Don't wait until 2028. You have to leave in 2026. Pack your bag. It takes just a few hours' flight and you change the tax system.
Obviously you have to remove all the connections to your previous country — sell all real estate, relocate your business, remove all connections. But that's quite crazy: you go from big tax to small tax and it's just a few hours' flight. But you have to leave your real estate, you have to leave most things, which is probably worth it. Because the compounding of it — taxes compound just like compounding is the eighth wonder of the world. If you have a portfolio where you get to keep all the gains, and another portfolio where you are taxed 36% on unrealized gains, model it over 50 years. Let's say you have 8% per year post-inflation gain, which is the standard long-term historic stock market return. One model where you keep all of it — and many countries have zero capital gains, there are many countries like that — versus another model where they remove 36% unrealized. It's crazy. It's crazy.
For what? What do you get? School? Roads? You don't get too much safety. I mean, unfortunately, you don't get it. So yeah, I'm very curious how not only the Netherlands but high-tax countries in general are going to figure something out, because the model does not make sense. The equation does not make sense. It made sense 20 years ago when you went to other countries and it was, you know, very rough. Now, with the internet and working from home — yeah, I don't know, guys. Up to you what you do. But I keep repeating and repeating, and Guzman, we wish for your relocation very, very soon.
Another guy says, "The law isn't approved, man." I'm telling you, it's going to be approved. Do you think they're going to say no? If they say no, they're going to vote again — just like with chat control. It's money for them. They're not going to say no to money. It's going to get approved. They need the money. They need it soon. So don't be fooled by "oh, it's not approved yet." The last time people thought like that was with chat control. They said, "Oh man, it didn't get approved." Then two months later they vote again. That's how it works. You've got to understand how it works and adapt.
EU Fines on Big Tech and the VAT Discussion
Ivan: The EU fined Google yesterday for €800 million. And this is interesting — look here. Projected EU fines on big tech are bigger than projected tax income from European public tech companies. That's interesting. They have a business model here which is — some people say it's piracy. Nikita Beer from Twitter says modern piracy. Think about it as tariffs, because the EU cannot put tariffs or tax on US companies the same way, so they charge it this way.
Well, not entirely true. The EU has a lot of tax on any company doing business in the EU, because you need to pay VAT. When you buy something in Europe as an individual, you have to pay VAT — up to 27%. I know Sweden is 25%, but I think someone has 27% — is it Croatia or someone in Eastern Europe? Someone has 27% tax just on buying stuff. You want to spend your money, you want to buy food — sometimes they have lower rates on food, to be fair, but on digital services it's like 20 to 27%.
So it's not true that the EU doesn't already charge tax. The US charges tariffs on European products. Europe charges their companies on services. It's not a one-way street. Europe is trying to find the maximum amount of fines they can issue without affecting overall revenue — trying to find where Trump is going to go loco and how much they can extract before that happens. If Trump sees this, either they need to invest it in Trump Coin or it's a big geopolitical problem.
Capital Gains Tax Comparisons Across Countries
Ivan: It's Hungary — yeah, I remember. Hungary has 27% VAT. Holy crap. Well, to be fair, it's better to have VAT than capital gains. It's way better because then everyone just pays based on consumption. You consume a lot, you pay a lot. In many countries that attract wealth, they have VAT mainly. Monaco — I believe you pay VAT. Let me check. Monaco VAT rate: 20%. Yeah, exactly. Dubai, before they had corporate tax, they added VAT first. Hungary capital gains — let me check. 15%. Not bad. Not bad at all. I would rather have 15% capital gains and high VAT than vice versa. But you can also have zero capital gains.
Australia will now tax at 47%. Oh, what? What's happening with these countries? Australia's proposed capital gains tax replaces the 50% discount and potentially exposes top earners to marginal tax. Oh. Oh. Oh. Yeah. High net worth earners whose total income exceeds $190,000. It's not a high income if you have $190,000 per year, guys. It's not a lot. Good luck living in a big city. It may seem like a lot — it's not a lot. You can barely buy a nice house in Australia for a million, and they say you're a high earner if you earn that. To buy a nice house with that income, you need a big fat mortgage, become a slave to the bank with high interest rates, and then they milk you 40 cents on the dollar.
What is the difference between this and the Soviet Union? People say, "Oh, China is communist." Let me check what the capital gains rate is in China. Capital gains in China — generally a flat 25%. You see, it's low. Let's check Kazakhstan. Most Westerners think of Borat when they hear Kazakhstan, but Kazakhstan is actually very good. Capital gains in Kazakhstan — there is no distinct standalone capital gains tax. Okay, so there's no capital gains. But it's treated as income. Ah, okay. Then it's not good if it's like salary. But the max rate — 10 to 15%. That's way below 50%.
You see, it's crazy. For what you pay — I mean, there are nice beaches, but for what you pay — some people say, "Oh, it's free healthcare." With this amount of money, if you're a high net earner paying that much, you can buy any healthcare yourself. Some people say, "Oh, you've got to be solidaric." But at the end of the day, look at the Soviet Union — too much solidarity and no one gives a duck. Too much solidarity, you don't own anything, and at some point you're just like, "Yeah, let me relax. Let me write fake numbers. Boss is going to take the fake report anyway." So yeah, anyways, let's go to Q&A.
We're apolitical. We're fully apolitical. If you're communist, you're big welcome here. We're apolitical. We're here to spread crypto to the world. No matter your politics, no matter where you are, no matter who you are — we are an apolitical channel. Fully apolitical.
The Psychology of Hedging and Staying in the Game
Ivan: Someone asks: "Ivan, isn't 15% quite a low amount to deploy as your hedge?" It's not low, because 50% of the effect is psychological. By the way, this is the kind of stuff that's really important to discuss on the cycle review call. But 50% of the hedge is actually not financial — it's psychological. It's the fact that you're part of the game. You're not sitting there saying, "Please go lower, please go lower. I'm not part of this at all." Just like when we started to de-risk in October — it wasn't sell everything at once. We started to de-risk one part at a time. Sell all altcoins one part at a time. So that as it goes lower, you're like, "Good. Yes." I mean, you did lose a bit because you didn't sell everything, but no one can sell everything at the top. It isn't possible. But you feel that you're in control. You're not frozen.
Otherwise, if you're not part of the game, you become one-directional and you become frozen. "Oh, because I feel dumb, it goes lower and lower — please go up, please go up." Or if you're fully on the sidelines, then it's vice versa: "Please go down. Maybe it's going to give me another dip." And then boom, it shoots higher. So 50% of the effect is psychological — that you're in control. Very important.
You need to feel in control of whatever happens. Otherwise, you've probably been there: you buy something, it goes against what you wanted, and then you're stuck. Before you know it, it's down 30%, and then you get used to that 30%. It kind of feels like the new baseline. Then in a few months it drops to minus 50%. It's painful, but then it becomes the new normal. And then yeah, before you know it, you're minus 90%. Which would have been unbelievable at the start, but now it's kind of, you know — you dropped, you dropped, you dropped, you became frozen. The same thing happens on the way up.
So yeah, 50% is psychological. And then 50% is financial. You're part of the journey. As soon as we flip bull on the money line, you can deploy more. Fantastic. So you see, no matter what happens, you're good.
The Unrealized Tax Trap — A Worked Example
Ivan: Someone from the Netherlands says: "I will sell my stocks. Not going to be exposed to the risk of the government taking 36% without any risk." Exactly. And then your stock goes down. Yeah. Just do some calculations. Let's say you have a stock worth $1,000. Then from January to December it goes to $1,500. December ends, your unrealized capital gain is calculated on this gain — but you did not sell. So you owe tax just because your stock went up. Then let's say on January 2nd it dumps back to $1,000, which happens all the time. You're back to $1,000. So you owe money which you don't have.
Even if you have a profit, you can lose money. Think about this: it goes from $1,000 to $2,000. You made a $1,000 gain — 36% — so you owe $360 at the end of the year. Then let's say January starts and now it goes from $2,000 to $1,200. You still have a profit, but you have to pay $360 in tax because the year ended at $2,000. So your stock has a profit but you are at a big loss. Crazy. So Guzman, time to relocate.