Head of the Bitcoin Family, Didi Taihuttu, is located in Lagos, Portugal, a hotspot for cryptocurrency taxation. His investments in cryptocurrencies have flourished despite the highly unstable exchange rates and the crypto bear market, due to an algorithm he designed in 2019. However, he is aware that this advantage may become obsolete as AI-generated software makes it simpler to develop similar algorithms.
In the small Portuguese coastal town of Lagos, located in the Algarve region, Didi Taihuttu typically starts his day on the roof of his villa. This property is set on a hill with softness sloping down towards the Atlantic Ocean. The house is quite plain from the outside, with white stucco walls and an orange terracotta roof. Additionally, there is a plastic chair and round table nearby. Taihuttu takes his time to enjoy some coffee and analyze cryptocurrency price charts on his MacBook Pro, before he makes any trades. He stresses to CNBC that he only needs a few thousand per month to live on, so the outcome of the trades is not a huge concern. The magnificent view from the deck is of a deep blue sea, backed by serene beaches and bougainvillea bushes.
Taihuttu's humble existence doesn't reflect his success. Back in 2017, the 45-year-old and his wife and children sold all their tangible belongings and replaced them with bitcoin when it was trading around $900. At the time of writing, it is priced at over $30,000 (its all-time high was close to $70,000 in November 2021). The volatile character of bitcoin has grown Taihuttu's cryptocurrency portfolio. Over the past 7 years, he has been buying and selling bitcoin, frequently exchanging it for dollar-pegged stablecoins in order to benefit from the variation in the cryptocurrency's market value. This approach has been paying off, owing to a trading index he devised called Didi BAM BAM.
Taihuttu's indicator looks at a combination of data, like directional trading figures and moon cycles, that have determined his investments since he developed it before the arrival of Covid-19. According to him, the early evidence of the end of the bear market was detected from mid-November to the start of December 2022, which was subsequently confirmed in January 2023. “Anyone who invested in bitcoin at $16K must be really pleased now as it is currently around $30K,” he said, indicating a 90% gain.
The Taihuttu family has seen their crypto investments grow by almost 50% since the bottom of the bear market. Though they decided to not disclose the exact sum of their investment, Taihuttu revealed that they had completely bought back into bitcoin at around the $19,000 mark. Fortunately, the nomadic family’s primary residence in Portugal means that they don’t need to worry about capital gains tax or any other tax related to cryptocurrency as long as they don’t offer any services in the country. “It’s a really beautiful bitcoin haven,” he noted.
When Taihuttu began day trading tokens, he initially relied on traditional predictive metrics such as the stock-to-flow model and the Mayer Multiple — a measure computed by dividing the current price of bitcoin by the 200-day moving average to help detect situations when an asset's cost exceeds its intrinsic value. Finding that investing the time to scrutinize all these somewhat-related factors was not a good use of his time, Taihuttu chose to make his own unique combination of the best indicators on the market. "It's not just enough to know which indicators go into a formula," Taihuttu clarified. "What can't be seen is the calculus and the code that works over the stock conditions. Those calculations appear on the charts." Starting in 2019, Taihuttu began incubating and optimizing a custom-built predictive trading tool that could weigh multiple technical indicators — plus a hint of astrology — and then generate real-time insights into probable price movements. "It's a combination of Bollinger Bands, Lower and Upper Bands, NMA, Red/Green Ribbon, NormStoch, RSI, Price Oscillator, Plot, MACD, Cross, Chande Momentum Oscillator, RSI-EMA, Full Moon and New Moon," Taihuttu said, naming some of the most widely used market signals that crypto traders take into account when making investment decisions. "Short and long signals and validation signals are displayed on the charts when it could be the perfect time to buy or sell," Taihuttu continued.
This model is composed of Bollinger Bands, a simple moving average line combined with two standard deviation lines referred to as Upper and Lower Bands. These provide an insight to whether an asset is oversold or vice versa. The N-day Moving Average is a mean calculation of the asset's closing price over a variable period of time or 'N' days. Red/Green Ribbon indicators display bearish or red, and bullish or green market conditions. The Normalized Stochastic is an indicator which compares the closing price to its price variation over a designated period and it measures price momentum. Furthermore, the Relative Strength Index is a metric that evaluates if an asset is oversold or overbought as it ranges from 0 to 100. Moving Average Convergence Divergence compares the 26 and 12 period Exponential Moving Averages. The Percentage Price Oscillator is the MACD reading divided by the 26-period EMA, and it enables the comparison of assets with large price discrepancies. For Bitcoin, a 'Golden Cross' happens when the 50-day moving average crosses over the 200-day moving average, thus indicating a bull market. On the flip side, when the 50-day moving average is below the 200-day moving average, it is referred to as the 'Death Cross', implying a bear market might be just around the corner. The Chande Momentum Oscillator is similar to the Relative Strength Index and Stochastic Oscillator, but it responds faster to price variation. The Relative Strength Index - Exponential Moving Average indicator combines both the RSI and EMA.
Taihuttu noted that the moon can influence bitcoin prices, although he cautions it isn't a hard and fast rule. People tend to trade more when there is a full moon or a half moon, which leads to buy and sell peaks. This pattern is usually in sync with the opening and closing of bitcoin options. As he puts it, if they're at the peak of the Bollinger Band combined with a full moon, then you know it's going to be a market sell-off.
Taihuttu used to make a profit from selling the Didi BAM BAM indicator to traders, but in the future he plans to give it away to chosen bitcoin enthusiasts as part of a promotion to increase its popularity. He acknowledges that this will have a negative impact on his company. "People can now approach ChatGPT and request custom indicators based on a specific cycle or variety of moving averages. This means I'm likely to lose out on potential business," he said.
Generative artificial intelligence (AI) has been grabbing headlines lately, following the popularization of OpenAI's GPT language processing technology. ChatGPT, a system employing massive language models to generate human-sounding responses to queries, has been triggering an AI arms race among rivals. While ChatGPT may not be able to generate a Pine Script trading algorithm (TradingView's programming language) on demand, it has been challenging the role of investment advisers. In March, Goldman Sachs' chief information officer, Marco Argenti, declared in an interview with CNBC that the bank is experimenting with generative AI tools internally to automatically generate and test code. Recently, Goldman spun off Louisa, an AI-powered social media company for companies, as the first startup from the bank's internal incubator. This move is part of David Solomon's effort to expedite Goldman's digital transformation. On its part, Morgan Stanley has been using generative AI to provide its financial advisors with relevant data and research. The bank has been testing an OpenAI-driven chatbot with 300 advisors, targeting at endowing its 16,000 advisors with the bank's repository of information. According to Taihuttu, a user of ChatGPT, the technology is a great time-saver, as it helps him write articles on topics such as bitcoin and the Lightning Network. That said, the results of using generative AI may not hold up in search results. — CNBC's Ryan Browne contributed to this report.
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