Hi traders, I am still sitting in cash.
Here's why.
Bitcoin.
- Bitcoin had a good pop on the news of the launch of Coinbase's new custody service for institutional investors:
- While the news was fundamentally good for Bitcoin, it now looks like the rally from $5700 is loosing steam as we failed to break through an area of low volume...
... and as a result we've resumed auctioning down the current value node:
- From here I would like to draw two possible scenarios. On the bull side, we could see a break out with volume in which case a retest of $6700 could constitute a good entry for a swing trade:
... on the bear side we could see a retest of $5700, possibly playing out over the weekend or from Monday next week...
... in which case the only thing that will save us from a drop to $4400 would be the benevolence of large players to hold the $5700 level (right on the edge of that massive volume well)...
... since there is not enough new money coming in to support the price:
Strategy.
This bear market has damaged the Bitcoin brand as a store of value. As a result liquidity is drying up and new investors are waiting on the sidelines.
In the absence of new money, it's up to larger players (miners, institutions) to provide liquidity to this market and decide what constitutes fair price. Right now, these players are trying to establish value and while it can be argued that $6000 is fair price, markets usually tend to overshoot before correcting and establishing a floor... which is why I am not ruling out Bitcoin dropping to lower prices.
As a result, I am keeping my powder dry until the market gives me a clear trading edge:
- multi-weeks sideways price action;
or - break out above $6700 with volume;
or - high volume dump to $4400.
Patience, Patience.
Now back to you traders, what is your strategy in this bear market?