Issue #5: The No-Nonsense Guide to Recession Preparation and Crypto Timing for Maximum Gains
Keep your money safe in a recession, know when to buy or sell crypto, and see the real cost of what you spend.
Reading time: 5 minutes
Charts 2-Pack
Two Indicators Every Investor Should Track
I want to teach you about two powerful macroeconomic indicators that could help you prepare for potential financial challenges more than you might realize.
First is the Sahm Rule.
Without getting too complicated, if this indicator rises above 0.5% from its lowest point in the past 12 months, it typically signals an approaching recession.
Since the 1970s, this rule has accurately signaled 9 recessions.
But using the Sahm Rule alone isn't always enough. That's where the inverted yield curve comes in as a complementary tool.
The inverted yield curve is another key recession indicator.
In simple terms, if the curve goes below 0, it means short-term bonds (like 2-year Treasury bonds) are paying more interest than long-term bonds (like 10-year Treasury bonds). Historically, this has been an early signal, typically predicting recessions 6-18 months in advance.
So, why should you care about these indicators?
Because they offer a heads-up on possible economic downturns, which can mean layoffs, inflation spikes, or other financial challenges. When both the inverted yield curve drops below 0 and the Sahm Rule rises above 0.5, it's time to prepare.
Here's what you can do:
Build a Larger Emergency Fund: If you already have one, consider expanding it to cover more months of expenses, as your job stability can become uncertain in a recession.
Budget More Strictly: Prioritize essential spending, delay big purchases, and avoid taking on new debt. Focus on preserving what you have.
Be Conservative with Investments: Cash provides stability. While recessions often lead to lower prices and good buying opportunities, cash reserves help you avoid panic selling and allow you to buy when prices are favorable.
Focus on Job Security: If your job feels unstable, consider searching for more secure roles or starting a side gig as a backup plan.
These indicators won't eliminate risk, but they can help you prepare, strengthen your financial position, and make it through downturns with more confidence.
Knowledge 2-Pack
When to Buy and Sell Crypto?
When to Sell Crypto
Crypto moves in 4-year cycles, and it's best to sell near the end of one. The cycles work as follows:
Ignition (2012, 2016, 2020, 2024...): Bitcoin and the broader market start climbing at a noticeable pace.
Euphoria (2013, 2017, 2021, 2025...): Prices go parabolic, everyone's talking about crypto, and even the skeptics start buying in—the best time to sell.
Capitulation (2014, 2018, 2022, 2026...): Bitcoin and altcoins crash hard and fast, often more than -80%.
Recovery (2015, 2019, 2023, 2027...): The calm before the next storm. Prices slowly start crawling back.
Additionally, since Bitcoin drives the entire crypto market, it makes sense to pay close attention to it.
There are a few key indicators that could help determine when it might be time to sell.
Puell Multiple in the Red Zone (Daily BTC Issuance in USD / 365-Day Moving Average): Miner profits surpass historical norms, which increases the chances of selling. More Bitcoin entering the market drives prices down.
MVRV-Z Score in the Red Zone: A high market value compared to realized value leads to profit-taking, which results in increased selling pressure. ↑Selling Pressure = ↓Price.
Pi Cycle Top Indicator Going Off: The 111-day moving average crosses above double the 350-day moving average, signaling a likely peak in Bitcoin's price.
Approaching the Resistance Band in the Power Law Corridor: Bitcoin's price approaching or touching the upper resistance band of the Power Law corridor may indicate the end of a bull market.
Consistent Decline in Your Crypto/Bitcoin Ratio: The dropping ratio means your crypto is underperforming against Bitcoin. In such cases, it may make sense to switch back to Bitcoin.
Lastly, if any of these indicators below show significantly higher values for your chosen cryptocurrency compared to its peers, it's likely an overvalued one. In such cases, consider selling and rotating into another crypto with lower ratios.
Market Cap / Total Value Locked
Market Cap / Decentralized Exchange Volume
Market Cap / Daily Transactions
Market Cap / Daily Active Addresses
When to Buy Crypto
The best time to buy is during the Capitulation phase—lump sum if possible, followed by continuous buying through the Recovery and Ignition phases.
If lump sum isn't an option, then steadily buying throughout Capitulation, Recovery, and Ignition phases works well, too. Keep accumulating through these stages while prices are still reasonable.
Also, just flip the sell signals around. If the opposite of the sell points holds true, that's a good sign to start buying.
Life Hacks 2-Pack
Avoid Clicking the First Link on Google
Most people instinctively click the first link on Google, but that's often an ad, and sometimes, those ads can be malicious.
Instead, scroll down to find the first non-ad link—one without the "Sponsored" text or any other indicator, depending on the search engine you use.
Better yet, save the genuine website as a bookmark so you don't accidentally end up on a copycat.
Scammers create identical-looking sites with tiny differences, like “myrequiredwebsite.com” vs. “myrequiredwebssite.com.” That extra "s" can be easy to miss.
Every Dollar Spent Is Time Lost
Viewing purchases in terms of time rather than money changes everything.
If you earn $10 an hour and want to buy something for $100, you're not just spending $100; you're spending 10 hours of your life.
This mindset should help you focus on what truly brings value, as each purchase now represents a chunk of time that could have been spent elsewhere.
Money comes and goes, but time doesn't return.
Thank you so much for going through this week's insights. Hope you found them useful.
Catch you next Thursday!