Crypto

If a term feels confusing in the chapters, come back here. This is the lookup.

Crypto isn't a stock. You don't own a piece of a company. There's no CEO, no earnings report, no board of directors. You own a digital asset on a public ledger. That asset has value because enough people agree it does — and only because of that.

1.1What You're Actually Buying

When you buy Bitcoin, you don't buy a share of a company called "Bitcoin." You buy a slot in a public database (the blockchain) that says "this address controls 0.5 BTC." That's it.

The value comes from:

• Scarcity — Bitcoin has a hard cap of 21 million. Many coins are capped, but not all: Ethereum, Solana and Dogecoin have no hard cap.
• Network effect — more users using a blockchain makes it more valuable.
• Utility — what you can actually do with it (smart contracts on Ethereum, payments on Bitcoin).
• Speculation — people betting it'll be worth more later. Often the biggest driver.

1.2Bitcoin vs Ethereum vs Everything Else

The reserve asset of crypto. Most institutional money sits here. Slow, simple, secure. Treated as digital gold by most investors.

The largest smart contract platform. Most DeFi, NFTs, and apps run on it (or on chains compatible with it). More volatile than Bitcoin. More upside potential, more downside.

Everything else. Solana, Avalanche, BNB, thousands more. Higher risk, higher potential. Most go to zero over time. The ones that survive can return many multiples.

USDT, USDC, DAI. Pegged to $1 USD. Used to park capital between trades without converting to fiat. Treated as cash in the crypto economy.

DOGE, SHIB, PEPE, and thousands of others. Built around jokes. Can pump 100x. Can rug overnight. Pure speculation — not investments.

1.3How You Actually Hold Crypto

Two options. Both have trade-offs.

Coinbase, Kraken, Bitunix and others. Not every exchange is open where you live, so check Section 1.5 first. You see your balance, you can trade, you can withdraw. Easy. But the exchange controls your keys — if they get hacked, fail, or freeze withdrawals, you lose access.

"Not your keys, not your coins." Old saying. Still true.

A non-custodial wallet (MetaMask, Phantom, Rabby for hot — Ledger, Trezor for cold). You hold the keys. Full control. Full responsibility — lose your seed phrase and your crypto is gone forever.

For long-term holds, move funds off exchanges into a cold wallet. For active trading, exchange is fine.

1.4Markets Never Close

This is the single biggest difference from stocks. Crypto trades 24/7/365. No bell, no premarket, no holidays.

Implications:

• Big moves happen overnight while you sleep
• Weekends are real trading days (and often where volatility hides)
• You can't really "step away" — positions are live around the clock
• Liquidity varies dramatically by time of day and day of week

This is part of why position sizing is so much tighter in crypto. You can't watch every move. Build positions assuming you might wake up to a 20% drop.

1.5Where Should You Actually Trade Crypto?

I use three venues: Coinbase, Bitunix and Hyperliquid. Only Coinbase is CSA-registered. Here's where each one stands, next to the big names you'll see recommended online:

What "registered" means for you: CSA-registered platforms can't give regular investors margin, leverage or perps, and they can only list approved stablecoins. USDT (Tether) isn't one, so you trade in CAD or USDC. Bitunix and Hyperliquid are offshore and not CSA-registered, so no Canadian securities regulator oversees your trading there.

Coinbase is the registered one of my three. Use it the cheap way.

• Simple buys cost more — the Buy/Sell screen builds a spread into the price and adds a fee on top, and card buys cost the most. On a small buy, a real chunk is gone before the trade even moves.
• Use Coinbase Advanced — the order-book screen is cheaper, and it adds limit and stop orders. Its fees vary by region and by how much you trade, so check the current fee table and the all-in total on the preview screen.
• No perps for regular investors — regular Canadian investors can't get perps or leverage here, because no registered Canadian crypto platform can offer them.

You'll see these two recommended everywhere online. Both left Canada in 2023 when the new Canadian crypto rules came in. Binance.com isn't available in the US either (Binance.US is a separate, smaller company). Don't use a VPN to get around it: that breaks their terms, and they can freeze the account.

A DEX (decentralized exchange) lets you trade crypto without giving up custody of your coins. No company holds your funds. Usually no KYC and no withdrawal limits. It isn't untouchable, though: stablecoin issuers like Tether and Circle can freeze their tokens in any wallet, many DEX websites block restricted countries, and the tax rules still apply.

• Your wallet connects directly to a smart contract on the blockchain
• You swap one token for another in a single on-chain transaction
• The smart contract handles the trade — no middleman, no exchange holding your funds
• You hold the keys to your wallet the entire time

• Hyperliquid — the leading perp DEX, and one of my three venues. Deep liquidity, transparent on-chain order book, and you keep custody. Popular with active perp traders. Not fully "trustless": a small set of validators runs its chain, and they stepped in to delist the JELLY market in March 2025. Its terms bar US and Ontario residents.
• Uniswap — the original spot DEX on Ethereum. Used for buying smaller altcoins not listed on centralized exchanges.
• Jupiter — aggregator DEX on Solana. Best prices across the Solana ecosystem.
• PancakeSwap — DEX on BNB Chain. Cheaper transactions than Ethereum DEXs.

• Pros: no exchange custody risk, usually no KYC, no exchange withdrawal freezes, access to coins exchanges won't list, full control
• Cons: gas fees (especially on Ethereum), slippage on illiquid pairs, smart-contract bugs and hacks, more technical to use, you must safeguard your seed phrase yourself

This is what I run. Copy only the parts that are legal where you live.

• Coinbase — the registered piece, for spot buys and moving CAD in and out. Use Advanced, not the Buy button.
• Hyperliquid — perps with self-custody. Its terms bar US and Ontario residents.
• Bitunix — only for specific pairs I can't get elsewhere, and I don't keep capital there. It lists Canada and the US as restricted, and its terms let it terminate accounts reached through a VPN.
• Hardware wallet for long-term spot holds — Ledger or Trezor

Also useful: Uniswap or Jupiter for buying small altcoins that aren't on centralized exchanges.

If perps aren't open to you, a registered platform plus a hardware wallet covers what most members need (see 5.6). Avoid bank-style "easy" buy-crypto apps (in the US, Cash App and PayPal crypto): the same fee problem as Coinbase's Buy button, with a worse selection.

If you trade stocks and assume crypto follows the same rules, you'll get hurt. Crypto markets are younger, less regulated, more retail-driven, and operate around the clock. Every one of those facts creates a different risk profile.

2.1Exchange Risk

Crypto platforms have failed. Spectacularly. Exchanges (FTX, Mt. Gox) and crypto lenders (Celsius, Voyager, BlockFi) — billions of dollars frozen. In every case, users couldn't get their coins out because the platform controlled the keys.

Some money came back, years later. FTX's estate is repaying most customers about 118% of their claim, but valued at November 2022 crash prices, when Bitcoin was about $16,900. Mt. Gox users waited about ten years. You don't want to be in that line.

• Don't keep more on any exchange than you'd be willing to lose
• Move long-term holds to a hardware wallet (Ledger, Trezor)
• Spread funds across multiple exchanges if you trade large size
• Withdraw to your own wallet regularly to confirm the exchange still processes

2.2Volatility

Crypto moves like nothing else. Bitcoin can drop 20% in a day. Altcoins can drop 50% in a day. Memecoins can lose 90% in an hour.

• Position sizing has to assume drawdowns of 30-50% are normal
• Stop losses get blown through during fast moves — slippage is real
• Leverage amplifies all of this. At 10x, a 5% move against you wipes out half your margin, and a move just under 10% = liquidation (see 3.3)

2.3Rug Pulls

Specific to crypto. A project launches a token, builds hype, lets people buy. The developers hold most of the supply. They dump it on holders and disappear. The token goes to zero in minutes.

How to avoid:

• Stick to established projects with proven teams
• Check token distribution — if devs hold >30% of supply, that's a red flag
• Avoid brand-new coins until they survive 6+ months
• Be suspicious of any project promising guaranteed returns

2.4Honeypots and Scams

Honeypots are tokens you can buy but can't sell — the contract is rigged. Common on new chains with low-quality tokens.

Other scams to watch for:

• Fake airdrops — sites that promise free tokens but steal your keys
• Phishing wallets — fake versions of MetaMask, Phantom, etc.
• "Pump groups" — coordinated pump-and-dumps. You're the exit liquidity.
• Influencer shills — paid promotions on Twitter/Telegram disguised as opinion

2.5Liquidity Risk

Most crypto liquidity sits in the top 20-30 coins. Everything else trades thin.

• Bid/ask spreads on small coins can be 5-10%
• Trying to exit a large position can move the market against you
• During panics, liquidity vanishes — you can't get filled at any reasonable price

2.6Regulatory Risk

Governments are still figuring out crypto. Rules can change fast.

• Exchanges can get blocked in your country with little notice — Binance and Bybit both pulled out of Canada in 2023
• Specific tokens can be classified as securities, killing liquidity overnight
• Tax rules are still evolving — keep records of every trade

For Canadian traders specifically: the CRA treats crypto as a commodity, not money. Selling it, spending it, or swapping one coin for another (including into a stablecoin) is a disposition you have to report. Usually that's a capital gain, and half of it is taxable. Frequent, short-term trading can instead be taxed as business income, where all of it is taxable. Exchanges, Chapter 3 explains capital gains vs business income.

The biggest mistake people make moving from stocks to crypto is using the same sizing rules. They size a coin the way they'd size a stock. The volatility eats them alive.

3.1The Total Crypto Allocation

Before talking about per-coin sizing, decide how much of your total portfolio crypto gets.

• Conservative: 2-5% of total portfolio in crypto
• Standard: 5-10% of total portfolio in crypto
• Aggressive: 10-20% of total portfolio in crypto
• Crypto-native: 20%+ — most of your wealth is in crypto. Different game entirely.

Most members fit in the 2-10% range. Crypto is satellite exposure on top of a stock-heavy portfolio.

3.2Per-Coin Sizing

Within your crypto allocation, split across multiple coins. Don't put 100% into one altcoin.

• 50-70% Bitcoin — the reserve asset, lowest volatility, most institutional
• 20-30% Ethereum — the second-largest, more growth potential, more risk
• 10-20% altcoins — split across 3-5 names you actually believe in
• 5% or less — speculation, memecoins, experiments

This isn't a rule. It's a starting framework: pick a point in each range so the total comes to 100%. Adjust based on your conviction and risk tolerance.

3.3Perps and Leverage

Perpetual futures let you trade with leverage. Most exchanges allow 10x, 20x, even 50x or higher.

• 5x leverage — a 20% adverse move liquidates you
• 10x leverage — a 10% adverse move liquidates you
• 20x leverage — a 5% adverse move liquidates you

Those are the best case. Exchanges close you out before your margin hits zero (the maintenance margin), and fees and funding eat into it too, so liquidation comes a bit sooner. Check the liquidation price the exchange shows you before you enter.

Bitcoin can move 5% in an hour. 20x leverage means you can be perfectly right on direction and still get liquidated by the move that happens before the bigger move.

Practical leverage rule: if you're new, don't use leverage at all. If you must, cap it at 2-3x. I keep mine between 1x and 3x.

3.4The Copy Trading Approach

For most members who aren't full-time crypto traders, copy trading is the right way to play it. Pick experienced traders to follow, allocate a small percentage of your crypto bucket, and let them trade for you.

• You get exposure without the screen time
• You spread risk across multiple traders
• You learn by watching their entries and exits
• You don't have to be awake at 3 AM when something moves

The trade-off: you pay a profit share or fee. Worth it for most people who aren't doing this full-time. Most copy trading runs on offshore perp exchanges, so check the legal limits in 3.3 first.

If you've read the Stocks Read-an-Alert chapter, this will feel familiar. The format is similar. The differences are the round-the-clock timing, the use of perps with leverage, and the need to size much smaller.

4.1The Format

Sample crypto alert from the trades channel:

4.2Breaking It Down

BTC/USDT = trading Bitcoin priced in USDT (a stablecoin pegged to $1). Registered Canadian platforms don't list USDT, so there you'd trade BTC/CAD or BTC/USDC instead.

Same as stocks. Where to buy, where to exit if wrong, where to exit if right.

There's no fixed number. You size by conviction, and you size out of your crypto allocation, not your total portfolio. Say your crypto bucket is 5% of $100k, so $5k: every crypto trade comes out of that $5k.

Conviction comes from your own research on the coin and the setup. A starter position is a small piece of the bucket, and high conviction gets more. But even a high-conviction crypto trade stays smaller than a high-conviction stock. The volatility is the leverage.

If perps are being used (only where they're legal for you; see 3.3). Most alerts will specify 1x (spot), 2x, or 3x. Higher leverage means tighter stops because liquidation risk goes up.

Long perp = leveraged bullish bet. Spot = buying the actual coin. Short perp = leveraged bearish bet.

4.3Crypto-Specific Things to Check

If you're going long a perp, check the funding rate. Positive funding = longs pay shorts. Negative funding = shorts pay longs. Most centralized exchanges charge it every 8 hours; Hyperliquid charges it every hour. High positive funding (over 0.05% per 8h, about 0.006% per hour on Hyperliquid) means longs are crowded — the trade can squeeze.

Crypto moves around the world. Asian session, European session, US session each have their own character. A breakout at 3 AM UTC might fail when European traders wake up.

Saturdays and Sundays have thinner books. Moves can be more violent because there's less depth absorbing them.

4.4What to Do After You Enter

1. Set your stop immediately on the exchange. Don't rely on alerts. Crypto moves too fast.
2. Don't average down on a falling perp. Theta-style decay isn't the issue — liquidation is. Adding to a loser brings liquidation closer.
3. Watch for trim alerts. Crypto moves fast. By the time you check the chat, the move might be over.
4. Move profits to spot or stablecoin. Locked-in gains in stablecoin can't be liquidated.

4.5Common Mistakes

• Using stock-sized positions for crypto trades
• Using high leverage to "make up for" small position size
• Ignoring funding rates on multi-day perp holds
• Treating altcoin alerts the same as Bitcoin alerts (altcoins move 2-5x harder)
• Holding perps through the weekend without checking liquidity

Crypto has more strategy variety than stocks because the market structure allows it — 24/7 trading, deep perp leverage, on-chain data, prediction markets, yield products. For most members, two or three strategies cover everything they need.

5.1Dollar-Cost Averaging (DCA)

The simplest strategy. Buy a fixed dollar amount every week or month regardless of price. Over time, you average into the asset.

Best for: long-term Bitcoin and Ethereum exposure

Why it works: removes timing pressure. You're not trying to call the bottom.

The trade-off: in strong bull runs, you pay higher prices over time. But you also avoid catastrophic top-buys.

5.2Long-Term Holding (Spot)

Buy and hold the major coins through cycles. Move them to cold storage. Don't touch them.

• Bitcoin as the core — most institutional flow, most predictable cycles
• Ethereum as growth — higher volatility, more upside in DeFi cycles
• 1-2 large altcoins at most — high-conviction names only

This is the lowest-effort, highest-success crypto strategy historically.

5.3Swing Trading the Cycles

Crypto moves in 3-4 year cycles. Bull market, peak, crash, bear market, accumulation, bull market again.

• Accumulate in bear markets and accumulation phases
• Hold through the first half of the bull market
• Start trimming as euphoria builds and altcoins go vertical
• Sell aggressively at signs of cycle top

Easier said than done — most people sell too early in the bull and buy too late in the bear. But the cycle framework helps avoid the worst mistakes.

5.4Perp Trading

Active trading on perpetual futures. Short-term setups with leverage. Highest skill ceiling, highest risk.

Best for: experienced traders with time to watch screens

The mechanics:

• Pick a setup (breakout, retest, range bounce)
• Keep leverage low: 1-3x
• Set stops tight — perps liquidate fast
• Take profits in chunks, not all at once

5.5Copy Trading

Pick experienced traders and copy their positions automatically. Most major perp exchanges support this, so check the legal limits in 3.3 first.

• You get active trading exposure without doing the work
• Spread across multiple traders to diversify
• Cap each trader at a small portion of your crypto allocation
• Check performance weekly — drop traders who are losing

This is how most casual crypto traders should approach active trading. Doing it yourself is a full-time job.

5.6What Most Members Should Do

For 90% of members, the right crypto mix is:

• DCA into Bitcoin and Ethereum on a fixed schedule
• Cold storage for long-term holds
• A small active allocation for swing trades or copy trading
• Skip leverage until you've traded crypto for 6+ months
• Skip memecoins until you can afford to lose 100% without flinching

Perp Exchanges — Volume VI → Chart Reading — Volume VII →