Short

BITCOIN POTENTIAL SHORT: BEAR FUNDAMENTALS

Updated

This is a sad moment for Bitcoin. And probably for whole crypto-market.

We've seen bullish exhuberance on altcoin markets, where major alts (DASH, ETH, XMR) gained an 100% in average last 7 days. And they gained much more at their peaks.

These are the actual numbers against BTC since bitcoin ETF rejection:

XMR +155%
ETH +295%
DASH +265%

And other minor alts also grew A LOT against btc.

We've seen this before. Prior the great bear market in BTC at the end of 2013 begining of 2014.
This could be bitcoin whales manipulating the small altcoins markets to squeeze as much bitcoin as possible prior the bitcoin bear market. Or in the best case scenario (unlikely in my opinion) a migration from BTC to other solutions.

And we have some important bear fundamentals:

Bitcoin ETF was rejected. Basically the SEC told us that bitcoin markets are not regulated, and so, easily manipulated and not elegible for american regular investor. Source.
A potential non-friendly hardfork is more real than ever. The relations between Bitcoin Core and its community and Bitcoin Unlimited and its community are more tense than ever (source).
Recently BU nodes were attacked (see sharp nodes drop), and the whole BU team made fun off (source).
Even after those problems, currently BU scalability solution (hard fork to bigger blocks) is signaled by +32% of the hashrate, while Bitcoin Core scalability solution (SegWit) is signaled by +27% of the hashrate (Source). Bitcoin Core community won't ever accept Unlimited solution, and viceversa. And what is worse, important people in the bitcoin world are already considering/planing how to list/treat two potential bitcoins. (source)
PBOC preparing highly STRICT regulations. There is a draft, not approved yet, suggesting mandatory in person verification prior first deposit/cashout. (Sources: 1, 2, 3, 4)
Bitfinex hacked coins apparently on the move. (Source)

I have my opinions about this Bitcoin Core/Bitcoin Unlimited war, but i think they are irrelevant. What is relevant is that something MUST be done. And splitting bitcoin in two different chains IS NOT AN OPTION.

The bigger bitcoin is, the most difficult finding a solution will be. This has been delayed too much. And it has a huge negative effect: people could start thinking that a decentralized governance IS NOT POSSIBLE. As bitcoin is proving unable to reach consensus for years, and what is worse, this consensus seems more difficult each day.

And this seems to be simplified to a big disconformity about what is bitcoin.

¿Is bitcoin a currency/payment method or is bitcoin a store of value? If even early adopters and leaders of the community can't agree on this, then bitcoin's future is doomed.

All this makes me feel quite unconfident of bitcoin ability to hold it's current market cap.
I personally sold 40% of my cold storage (~$300 avg buy price) into fiat at 1200.

And now i am opening a short.

I am laddering my short entry, 1130-1150-1170-1215-1250.
I will stop this short once i see the scaling debate/potential hardfork finding a friendly solution.

Note

More info about this trade.
1130 - 5% of trade
1150 - 15% of trade
1170 - 20% of trade
1215 - 20% of trade
1250 - 40% of trade

Currently 1130 and 1150 filled, so 20% of trade already opened.
If we breakdown clearly of current support (1115-1120) i will readjust my entry remaining entry points.

Unless something changes dramatically, my current target is 690. Though it will be adjusted to market conditions.

Note

Changing entry targets.
While i decide them, i have a 5% at 1040, 5% at 1050 and 5% at 1055.
So far, as expected, most alts couldn't stand btc sharp drop and their usd values were dismished.
Amazing the ZEC ability to make a 100% in usd value during this sharp drop of btc.

Note

Now bitfinex allows you to speculate about if there'll be or not a hard fork and what would be the resulting two coins worth.
bitfinex.com/cst_token_terms
IMO an unfriendly hard fork with 2 chains with enough support would be the most bearish scenario possible. Outsiders would make fun of bitcoin and its failure to upgrade.
And unluckily each day this seems more and more possible.

Note

Decided my short entries for now. If we simply keep going down without bounce, i might have to give up and leave this short smaller than i initially thought.
I'm trying to catch the top of any potential bounce for now.

So currently, these are my short entries, included the already filled ones:

1200 - 30%
1170 - 20%
1150 - 15% (filled)
1130 - 5% (filled)
1110 - 5%
1100 - 5%
1090 - 5%
1055 - 5%
1050 - 5%
1040 - 5%

1040-1050-1055 are the top of the 4h downtrend.
1090-1100-1110 are the retest of the broken daily uptrend.
1170-1200 are the top of the daily downtrend.

I'm aware weekly uptrend is still untouched (we have room to go down to ~870), but i think the fundamentals exposed could be a catalyst to break it. This is more a fundamental trade than a technichal trade.

Note

1040, 1050 and 1055 filled.
35% of planned position already opened.
So far, we retested the 4h downwards trendline

Note

1200 - 30% (waiting)
1170 - 20% (waiting)
1150 - 15% (filled)
1130 - 5% (filled)
1110 - 5% (filled)
1100 - 5% (filled)
1090 - 5% (filled)
1055 - 5% (filled)
1050 - 5% (filled)
1040 - 5% (filled)

50% of short opened. 1092.5 average entry price.
If everything is filled i'll have a +1140 average entry point.

Fundamentals are the same. And technichally we just retesting the breakdown point.

Note

So naive to expect 1170-1200...!
But at least i loaded 50% of the short i planned, and it is still bigger than my remaining cold storage, so everything looking great.
Unrealized Profit so far: 17% w/o margin

Note

If we break the trendline and make a new high on hourly rsi, i will take any dip to scalp my short and open it higher. ~1050 is possible again if we break that trendline and clear out any potential bear divergence.

Note

Stopped at 1010.
I will reopen if any of these scenarios happen:
hidden bear div in 4h
1045-1055
4h closing under trendline again

Note

Correction potentially over

Bitcoin found resistance at the 0.618 fib retracement of the wave down, as it happened in the last correction that ended there too. Besides, this 0.618 retracement of the last wave concurrs with 0.382 retracement of the whole run.

Plus we have two potential hidden bear divs in the 4h

Note

Short reloaded. Same size.
1016 average after closing at 1010, so not worth accounting for the tiny profit made in this scalp.

Note

I made a mistake re-entering the short so fast. But we are still heading south.

We confirmed the hidden bear div in the 4h RSI and we are trying to confirm the same div in the 4h MACD, it will probably happen in the next 8h.

Then i'm expecting a new low around 840's.

Note

This is the sad truth about current bitcoin status:

Note

twitter.com/cnLedger/status/846500539839893504

Note

Even though this last bull try to break the downtrend, everything keeps signaling down in my opinion.
Next 6h are key.

Note

Okay, this went up with strengh against my expectations. Still i hold onto my fundamental analysis.

China is still unable to withdraw their coins, scaling debate is still far from reaching an agreement (we now have a third proposal, extension blocks: news.bitcoin.com/bcoin-test-concept-extension-blocks/) and there is an increasing toxicity in the atmosphere (eg: gregory maxwell lying about reverse engineering an asic to try proof segwit opposition is based in an "unfair" mining advantage medium.com/@samcole_74219/asicboost-655a73d48ae4). Also the SEC rejected bitcoin as elegible for american average investor, rejecting the SolidX etf proposal (news.bitcoin.com/solidxs-attempt-to-disqualify-secs-bitcoin-etf-decision-fails/).

Though we've had some good news lately: japan massive bitcoin adoption (news.bitcoin.com/bitcoin-accepted-260000-stores-summer/), Mexico regulation of bitcoin (news.bitcoin.com/mexico-bill-bitcoin-game-changer/) and bitfinex being able to pay off their debt after the massive hack they had (news.bitcoin.com/bitfinex-bfx-tokens-redeemed/).

Note

And this is the "bear chart" i have for current price.

I'm now 100% filled with +1140 average withoug considering the scalps done.
If the upper trendline is broken i'm ready to stop my short and try a new scalp.

Note

We broke down and then cancelled the breakdown once it was made public that bitfinex has sued Wells Fargo for suspending Bitfinex outgoing bank wires. (source: bravenewcoin.com/news/wells-fargo-sued-for-suspending-bitfinex-wire-transfers/)
I'm in a hurry now, i will analyze this later, but basically this could drive the price up short term as bitfinex customers try to cashout the allegedly 130M usd in fiat assets held by bitfinex in behalf of their customers.

Note

I'm still short. This fakeout on some exchanges (finex/polo/stamp) was surely due to the "fake" buy pressure from bitfinex. Me myself had to max my account to buy btc and get the hell out of there.
Fundamentals are bearer than ever regarding the scalability solution: the so called UASF is plainly wrong. Nodes are cheap and easily faked, that's why we have PoW to secure the network. If cheap nodes are reliable and can make decissions on bitcoin future, why the hell are we throwing away thousands of hundreds of usd in electricity to secure the network? Non sense.

Bear chart of the day:

Now dealing with that +5 points trendline, we need to break it to confirm bear reversal.

Note

Short term short idea:

bagofXMR

Also on:

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.