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Is This the Beginning of a Crash?

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Written by Timothy Sykes
Updated 10/28/2021 6 min read
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Crucial points from this post:

  • Learn what’s behind stock crashes to understand why we might be at the beginning of one.
  • Bitcoin (BTC) is breaking out — but I’m not convinced it’ll last. Here’s why… 
  • I’ve warned about promoters for years. They finally arrested one!

Scary market? Learn how to trade through anything in my Trading Challenge!

If you’re thinking about getting into the stock market — and especially crypto — there’s something you should know.

I’ve been in the industry for 20+ years now. All that time and experience has given me a sixth sense.

I’m not saying I can predict the market. But something smells fishy to me.

You’re probably saying, “Tim what are you talking about? Bitcoin’s at all-time highs!”

Don’t bother me with that. To understand what’s really going on, you’ve gotta dig deeper…

Robinhood’s Down … But Bitcoin’s Up?

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A lot of traders don’t take the time to do sufficient market research. They just grab onto the hottest story and hope it’s the right one.

Sure, bitcoin’s up. But let’s try to connect the dots a little starting with…

What You Should Know About Robinhood’s Q3 Revenue

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Traders can buy bitcoin on Robinhood. It was a pretty smart business move for the company to make.

The last time bitcoin was at its highs, Robinhood’s revenue was through the roof. Can you guess why? Nearly everyone who bought crypto used Robinhood.

But the company just released news that quarterly revenues are way below expectations.

Look at this figure of Robinhood’s average revenue per user…

(Source: Robinhood Press Release)

Share prices took a big hit. Now look at the chart for Robinhood Markets Inc. (NASDAQ: HOOD). Can you guess when the news came out?

Right after the market close on Tuesday.

robinhood stock chart
HOOD chart, 2-days, 1-minute candles (Source: StocksToTrade)

Go check out the daily chart. It’s pretty ugly.

What’s the Deal With Bitcoin?

I know BTC is at all-time highs. But think about this…

If traders aren’t buying bitcoin on Robinhood … how is the price breaking out?

Here’s my theory…

Everyone pumping bitcoin said to hold position. If everyone held, the price would go up. Theoretically, that’s correct. But only if people keep buying to push the price higher.

Now we know that people aren’t buying bitcoin on Robinhood. That means it’s managed to break out on measly volume because no one’s selling.

But what happens if we run out of buyers?

If people stop buying bitcoin, the only way to go is down.

That sounds like the start of a huge crash!

Here’s another nail in the coffin…

Take a look at Proshares Bitcoin Strategy ETF (NYSE: BITO). Buying this stock is basically like buying bitcoin futures.

BITO penny stock chart
BITO chart, 1-month, 1-minute candles (Source: StocksToTrade)

It just started trading on October 19 and it’s tanking.

Why I Expect the Worst in This Niche

Have you heard of the stock promoter that got arrested recently? Read my post about it here.

I’ve been talking about these Twitter pumpers for years now. I never thought I’d see the day one got arrested.

Don’t get me wrong — what they do is horrible and immoral. But it’s gone unchecked for so long. I figured it was hopeless.

Now that it’s happened, maybe there will be more arrests in the future. None of this can be good news for the market’s reputation.

More Breaking News

What Should Traders Do Right Now?

© Millionaire Media, LLC

Tread lightly. Be extra careful if you’re getting into crypto or penny stocks.

These two news stories — Robinhood’s revenue and a promoter’s arrest — could be warnings of things to come.

Focus on your education. Learn rules to help you trade safe. I’m not saying anything’s for certain, but you must prepare in this niche.

That’s what my top students and I do in my Trading Challenge. If you think you’re ready, apply for the Trading Challenge today. I don’t accept everyone — only the truly dedicated. It’s where all my millionaire students started.

What do you think about bitcoin’s new highs? Is crypto here to stay or will it fall back down? I love to hear from you!

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”