‘Bitcoin Family’ has a trading algorithm that tracks moon cycles

LAGOS, PORTUGAL – In the small seaside town of Lagos in the heart of Portugal’s southern Algarve region, Didi Taihoto starts most days on the roof of his villa – a modest home of rustic charm perched atop a hill jutting out from the Atlantic Ocean. The Mediterranean sun reflects off the house’s bright white stucco walls, illuminating the orange terracotta ceiling and casting a glint over Taihoto, who is seated on a plastic chair tucked under a round table of the same style. Dutch Patriarchbitcoin Family members drink black coffee and pore through cryptocurrency price charts on his MacBook Pro as he decides which trades to start his day.

“We only need a few thousand a month to live, so our performance isn’t really important to us,” Taihoto tells CNBC from his deck overlooking an endless expanse of cobalt-coloured water, cliff-backed beaches and bougainvillea.

Taihoto’s self-deprecation and humble surroundings belie the 45-year-old’s success. In 2017, Taihutu, along with his wife and three children, liquidated all of their assets, trading a 2,500-square-foot home and most of their land holdings for bitcoin and a life on the road. This was back when Bitcoin was around $900. Bitcoin is currently trading at over $30,000, down from an all-time high of around $70,000 in November 2021.

These extreme price swings have helped the crypto nest egg of the Dutch family grow.

For seven years, the investor has been regularly exchanging his Bitcoin for stable currencies pegged to the US dollar in order to take advantage of fluctuations in the price of the world’s largest cryptocurrency. When Taihuttu thinks bitcoin has reached the peak of a bull market, he trades his bitcoins in stablecoins like Tether, USDC, and DAI — and when it looks as if bitcoin is touching cycle bottoms during a bear market, he starts buying them again. So far, Taihuttu says gambling is working great thanks to a market indicator he created himself and calls it “Didi BAM BAM”.

The Taihuttu indicator is a combination of inputs, including directional trading data and moon cycles. She has guided all of Taihuttu’s investment decisions since he created it before the pandemic.

“From mid-November to early December 2022, we saw the first signs that the bear market was completely over,” Taihuto said. It was confirmed in January 2023 when the long flag appeared on the model.

He added, “People should have already been buying bitcoin, because every bitcoin you buy at $16k, it’s $30k now, that’s almost a 90% uptick.”

The father of five says his investment in bitcoin is up about 50% since the bottom of the most recent bear market.

Taihuttus declined to share the current dollar amount of their cryptocurrency investment with CNBC — but Didi did reveal that all of the bitcoin was bought back by the time the coin crossed the $19,000 price threshold, so they “don’t do it badly.”

It also helps that the main home of the nomadic family is in Portugal – the ultimate cryptocurrency tax haven in Europe.

“You don’t pay any capital gains taxes or anything else in Portugal on cryptocurrency,” Taihutu said. “As long as you are not earning cryptocurrency for providing services in Portugal, you are in the clear.”

“It is a very beautiful bitcoin paradise,” he said.

When Taihuttu started trading intraday tokens, he initially turned to traditional predictive metrics such as the Equity Flow Model and Mayer Multiple — a metric calculated by dividing the current price of bitcoin by the 200-day moving average to help identify foam moments in the market when it exceeds The value of an asset is its intrinsic value.

But spending time reading tea leaves for all of these somewhat related actions didn’t seem like a particularly productive use of his time, so Taihuttu decided to create his own blend of the best indices on the market.

“It’s not enough just to know the indicators that go into the formula,” Taihutu explained. “What you can’t see is the calculus and the code that is being performed on the inventory conditions. Those calculations are displayed in graphs.”

So starting in 2019, Taihuttu began to embrace and perfect a custom-built predictive trading tool that would weigh multiple technical indicators — plus a little astrology — and then spit out real-time insights into potential price swings.

“It is a combination of Bollinger Bands, Lower and Upper Bands, NMA, Red/Green Band, NormStoch, RSI, Price Oscillator, Plot, MACD, Cross, Chande Momentum Oscillator, RSI-EMA, Full Moon, and New Moon,” Taihuttu explained, naming Tens of the most popular market signals that cryptocurrency traders watch when making investment decisions.

“Short and long signals and confirmation signals appear on the charts when it is a great moment to buy or sell,” Taihuttu continued.

Here is a quick breakdown of the technologies underlying the model:

• Bollinger Bands Focus on price volatility over time. The pattern consists of a simple moving average line with two standard deviation lines known as the upper and lower bands. Price movement outside of those outer bands can indicate if the asset is oversold – or vice versa.
• N day moving average (NMA) It is a type of moving average that takes the average closing price of an asset over a variable time period, or “N” days.
• Red/green tape Indicators depict bullish, green, bearish or red market conditions.
• the normal stochastic (normstoch) Looks at price momentum. He. She It is a divergence of the Stochastic Oscillator – an indicator that compares the closing price of an asset with the change in its price over a specified period of time.
• Similar to Bollinger Bands, the Relative Strength Index (RSI) Evaluates whether an asset is oversold or overbought. The indicator, which ranges from 0 to 100, measures the speed and magnitude of an asset’s recent price fluctuations.
• Moving Average Convergence Divergence (MACD) Compares two moving averages of the price of a cryptocurrency by subtracting 26 periods Exponential moving average (EMA) of the 12-period EMA.
• the Percentage Price Oscillator (PPO) It takes the MACD reading and divides it by the 26 period EMA. It is possible to compare the PPO measures of different assets with greater price variances, because it is expressed as a percentage.
• With bitcoin, when the line plotting the 50-day moving average crosses above the bullish 200-day moving average, it reads as a bullish indicator known as golden cross. When the 50-day moving average crosses below the bearish 200-day moving average, it is known as a Death crossindicating that a bear market may be imminent.
• Chandni momentum oscillator It is a technical momentum indicator similar to the RSI and Stochastic Oscillator, except that it reacts faster to price changes.
• As the name suggests, the Relative Strength Index – Exponential Moving Average (RSI-EMA) Combines both metrics into one indicator.

Then there are the intangible price influencers – like the phases of the moon.

“I wouldn’t say it always affects the price of bitcoin, but the moon does a lot,” Taihutu said.

Taihuttu found that when there is a full moon or half moon, people tend to trade more.

“They tend to buy more, and they tend to sell more,” he said. “Maybe it’s a coincidence, but if you look at the graph, you can see that mostly on a full moon, depending on where we are in the cycle, there’s a landfill or a pump.”

Taihuttu added that the lunar phases also usually coincide with the opening and closing of monthly Bitcoin puts and options.

“So if we’re at the top of the Bollinger Band along with the full moon, you know we’re going to run,” Taihuto continued, noting that a sell-off is imminent in the market.

Technology has grabbed the limelight after the widespread public adoption of OpenAI’s GPT language processing technology. ChatGPT, which uses massive language models to create human-looking responses to questions, has sparked an arms race among some companies over what is seen as the next “paradigm shift” in technology.

More recently, in May, Goldman spun off the first startup from the bank’s internal incubator — an AI-powered social media company for corporate use called Louisa. The push into artificial intelligence is part of a larger effort by CEO David Solomon to accelerate the bank’s digital transformation.

Meanwhile, Morgan Stanley uses it to inform its financial advisors of inquiries they might have. The bank has been testing an OpenAI-powered chatbot with 300 advisors so far, aiming to help its roughly 16,000 advisors leverage Morgan Stanley’s warehouse of research and data, according to Jeff McMillan, head of analytics and data in the company’s wealth management division.

Taihuttu uses ChatGPT himself – but uses it more to write articles on topics like Bitcoin and Lightning Networks. But he points out that while it’s a productivity hack, output doesn’t necessarily rank high in search results.

“They’ll find out it’s still ChatGPT,” he says. “But it still saves you a lot of time.”

– CNBC’s Ryan Brown contributed to this report.