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How Bitcoin Amplifies Compounding

coinmonks profile image CoinMonks Originally published at Medium on ・8 min read

Einstein calls compounding interest the eighth wonder of the world… When you do it with an asset like bitcoin, it’s the 9th wonder. Let me show you why and how you can do it using FTX.

You’ve heard the stories before.

Start with one grain of rice in the first square of a chessboard and double the amount of rice for each of the following squares. By the last square you have 18,000,000,000,000,000,000 grains of rice.

Or maybe something along the lines of…

Two young adults start saving for retirement. One at 22 and another at 31. Both earn 10% per year on their investment.

The 22-year old contributes $300 per month (total of $21,600 of capital)… And if the 22-year old doesn’t contribute another cent after six years, then by 65 they will be a millionaire.

The 31-year old on the other hand does the same thing and contributes $300 per month towards retirement and earns the same 10%… By age 65 they will also be a millionaire.

However, the 22-year old invested $21,600 while the 21-year old invested $126,000.

No mater how anybody frames it, compounding is an incredible investing lesson. And once you understand it, the way you approach trading and investing will change forever.

Today, I want to show you what happens when you apply this same lesson to an asset that’s poised to grow over the next decade — bitcoin.

What we see is the compounding effect is amplified. And it’s why I’m calling it the 9th wonder.

It’s About the Asset

At Jarvis Labs our goal is six to ten percent on average per month. People love it and people hate it.

We find in crypto this amount is the sweet spot.

That’s because our focus is on the best risk to reward available in the market. If there isn’t anything that looks good, then there’s no trade to be had.

If you’re a baseball batter, take what the pitcher gives you. In this way you can maximize your success rate when you swing the bat.

It’s how Jarvis AI operates. It takes the trading opportunities that work for it. It might not be sexy, but it works. And it translates to a higher “hit” rate. And the key is using it on an asset that’s poised for growth over the coming years…

So here’s how six percent per month of the course of one and two years looks like.

January 1st you have 2 BTC.

Six percent over twelve months places your account value at 4.024 BTC by the end of the year. That’s more than double your account.

After two years… 8.0978 BTC.

Pretty incredible. But here’s where things get amplified…

Your account grew in terms of BTC, not US dollars. This means we need to take into account the growth of bitcoin over that span. And for our purposes here, we will assume on average bitcoin grows in value over time.

Let’s say in year one bitcoin starts at $10,000. By the end of the first year, its value doubled to $20,000.

In terms of your account value in the US dollar, this translates to annual growth of 302%.

By the end of the second year bitcoin’s value doubled again to $40,000.

This means from your first day of investing $20,000 your account grew by about 1,520% to $323,912.

An account value of $323,912 from where you started is substantial. It means that over the next thirty days if you realized another 6%, your profit would be $19,434.

That’s compounding amplified.

The key to such a setup is in finding an asset that can act as a store of value and is anticipated to see its market expand. That’s bitcoin.

(Gold is another great asset since it’s expected to grow over the coming years in light of the money supply expansion globally. Although it isn’t going from a small niche market to a main stream audience. Regardless, it’s a great store of value and if you prefer gold, we can set you up with custom instructions for that as well.)

What to Do

OK, so compounding bitcoin seems like something you want to give a stab at. And you’ve generated a strategy that’s consistent and will earn a small percentage gain each month.

Then assuming you understand the risks associated with trading, here’s a way to book your trading profits in bitcoin using FTX.

First, here’s how the program works…

If bitcoin falls from $10,000 to $8,000 and you profit $2,000 from the trade, your $2,000 with be used to purchase 0.25 BTC (minus fees).

If bitcoin rises from $8,000 to $10,000, the $2,000 you made from the trade will be used to purchase 0.2 BTC (minus fees).

This is because the profit that’s in USD will be used to buy BTC at the end of the trade.

It’s done via a code you can copy and paste into FTX’s Quant Zone. Here’s a step by step guide to get you set up…

How to Book Profits in BTC on FTX

This guide is for users who want to grow their account value in terms of BTC. In order to do so, you need to add a “rule” to your FTX account using a section of the platform called Quant Zone. This ensures whenever there is a profit it’s converted to BTC and added to your account.

Follow the steps below to create a rule in your account that converts your profits to BTC.

  1. Log in to your account at https://ftx.com/

  2. Once you’re logged in, open this website: https://ftx.com/quant-zone/rules in a separate window or tab.

  3. Go ahead and select “CREATE NEW RULE”.

  1. Now under “Rule Name” go ahead and type “collaterisedProfits”.

  1. Next copy this line of code:
balance(“USD”)>0 and (balance(“USDT”)>0 or balance(“BTC”)>0 or balance(“ETH”)>0 or balance(“BCH”)>0 or balance(“FTT”)>0 or balance(“BNB”)>0 or balance(“LTC”)>0 or balance(“TRYB”)>0 or balance(“PAXG”)>0 or balance(“XAUT”)>0)
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  1. Now paste the code under “Condition” as seen in the image below.

  1. After the code is in Conditions, scroll below to “Actions”.

  1. Select the drop down menu under “Type”. Go ahead and select “Place Custom Order” as seen in the image below.

  1. Now make sure the following values are set up as follows:

Order Type: “Market Order”

Side: “Buy”

Market: “BTC/USD”

It should like this.

  1. Next, copy this line of code:

(balance(“USD”)/price(“BTC/USD”))*balance(“BTC”)*price(“BTC/USD”)/(balance(“USDT”)*price(“USDT/USD”) + balance (“BTC”)*price(“BTC/USD”) + balance(“ETH”)*price(“ETH/USD”) + balance(“BCH”)*price(“BCH/USD”) + balance(“FTT”)*price(“FTT/USD”) + balance(“BNB”)*price(“BNB/USD”) + balance(“LTC”)*price(“LTC/USD”) + balance(“TRYB”)*price(“TRYB/USD”) + balance(“PAXG”)*price(“PAXG/USD”) + balance(“XAUT”)*price(“XAUT/USD”))

  1. Paste the code under “Order Size” as seen below.

  1. Now ensure the remaining options under the “Actions” section are filled out like this.

  1. Once everything looks good, select “SAVE AND RUN”.

  1. A pop up will appear, go ahead and select “I UNDERSTAND” if you agree with the terms.

  1. To make sure the rule you just entered is enabled, go to this link: https://ftx.com/quant-zone/rules and make sure you see the new rule enabled as seen below.

If it looks good, congratulations! You are all set.

Your profits will now be booked in BTC on your FTX account. Get ready to start stacking sats.

If you want tips like this or want to follow our daily updates via our free newsletter, Espresso, subscribe here.

Until next time.

Your pulse on crypto,

B Lilly

Jarvis Labs : We provide actionable on-chain data (ChainPulse.ai website — coming soon), software solutions, and research that leans on our autonomous ai/ml trading software, Jarvis AI. Our customers are hedge funds, family offices, and retail customers.

If you want to learn more about Jarvis Labs, Jarvis AI or ChainPulse.ai message us on our webpage at www.jarvis-labs.xyz or send us an e-mail at askus@jarvis-labs.xyz.

You can also follow us on Telegram at t.me/jarvis_labs, message me on Telegram @Ben_Lilly, or send me an e-mail at ben.lilly@jarvis-labs.xyz.

Disclaimer : This is an educational piece on using compounding on an asset with long-term growth potential. Actual results may vary with Jarvis Labs.

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