Bitcoin update:
It appears that the combination of the Goldman Sachs news and a "mysterious" whale moving 10K BTC has motivated a sell off. Many "experts" who were full blown long just hours ago are now calling for shorts. Typical amateur reaction to drama and excellent example of the herd mentality in motion. The reality? Price is still trading within a high probability reversal zone that is attractive for investing.
BTC 3K? Again?
Be careful not to get sucked into the herd mentality of BTC 3K. Whenever there is a dramatic move in the markets, higher or lower, many so called "experts" want to capitalize on the attention. So they do the obvious which is expect the market to continue in the same direction. They will point to oscillators and chart drawings after the fact.
Reacting to a market move is the sign of an amateur. If they were as skilled and experienced as they make themselves out to be, they would have laid out a specific short trade in ADVANCE. Not vague references to levels like, "it's a short around the 7400 area with a stop around 8K". And then after the market moves their way they say,"Good thing I called that short. Did you short it?".
When we share trade ideas with our Expert Swing Trades members, we lay out a specific entry, stop and target BEFORE the move unfolds. This gives ample time to get into the trade and benefit from the move.
BTCUSD Chart Update
Bitcoin: Swift sell off is just a shake out.
The Broad Consolidation
While everyone is focused on the move in front of them, we always make it a point to take a step back. This means we consider where price is relative to the bigger picture levels.
There is a wide support zone between 8171 and 4983. It is proportionate to the highs made in December of 2017. This area is relevant because as long as price stays within, it is more likely to find support over the long term (as opposed to going to 3K).
If price can stabilize anywhere above 4983, then it is presenting the greater possibility of a broad consolidation. And these environments call for specific expectations and strategies like the ones we share with our Premium Members.
Compare recent Bitcoin analysis here.
What To Do Now?
Self proclaimed "experts" who do not provide specifics are really nothing more than market entertainers, not professional timers. Evaluating analysis and considering the ideas of others to help confirm a trade idea is one thing, but ultimately the idea must come from within.
With that being said, right now there is no reason to do anything in this market. The short term momentum and structure are too weak to initiate new longs, while price is nearing major supports in a potentially range bound market which makes shorting an extremely risky thing to do also.
There are moments in a market where both sides of the trade are unattractive and this is one of the times. This is why having a process, or your own specific criteria to measure the market against is so important.
Playing One Side
During movements like this one, many market entertainers brag about going short. That is when you have to use leverage to sell coins you don't own in order to benefit from price declines. After experiencing how sharp the bearish movements can be, you may wonder, why not time the short side?
One of the main reasons why we avoid the short side altogether is because of exchange intervention risk. This is when the exchange decides to change the rules at their own convenience. This happened recently with OKex when irresponsible margin policies lead them into a 400 million dollar margin liquidation situation. In order to help cover it, they chose to "claw back" profits from their customers who where short.
It is one thing if you are playing around with a couple of coins, but not worth the risk if you are trying to manage greater size, or considering defensive measures like a portfolio hedge over a longer time horizon. Plus there are other markets that are more stable and do not have exchange intervention risk like forex and stock options for short strategies.
Working from one side of the market also provides a layer of simplicity. Since we are active in multiple markets, we are not totally dependent on the movements of this market alone. We aim for consistency across a variety of strategies and markets, not 40,000% profits in one market (like so many entertainers strategically promote).
Flat Is A Position
Being out of the market is just as important as being in. It is a form of defense that protects capital from noise and randomness. The best part is you can stay out for as long as you want and your capital will not decrease.
Having an investment plan, or swing trade process is what defines an opportunity that is relative to your specific financial situation and risk tolerance. This is another reason why the original idea must come from you and not someone else, especially a market entertainer who doesn't have any real money on the line.
We carry Bitcoin in our main portfolio and plan to add once the market provides the right opportunity. We have been buying since 13K, but because of careful sizing and position management, we were able to effectively cost average the position. This means we strategically bought more at lower prices and locked in profits on portions of the position when the market offered the chance.
No leverage and technical timing has allowed us to thrive while many were pushed out of the market. As they say, this is a marathon not a sprint. And we are transparent about how we plan to grow the portfolio at a time when everyone and their cousin is thinking short again. During the next recovery phase we will be rotating out of the weaker alts and moving that capital in Bitcoin. When exactly? The market will let us know. Until then we wait.
Questions and comments welcome.