Bitcoin Bulls reaching a crescendo - BEWARE
Updated
In my previous idea (25 September) I explained the mounting pressure on earlier buyers to take profit now, at a time when there is no longer any question about whether or not we are in a bubble, the only question is: How far in?
From that idea I took a small short and covered it at a loss for 0.25% of account (1 x 400th of my trading account). But the long term picture has not changed and I have a new small short open.
The key to Bitcoin is zooming out on the chart and a bit of patience. On a reputable exchange that has not undergone any existential crises (hacks, regulators, etc.) in the past year such as Kraken, there is a very marked decline in volume between the major leg up from mid July (orange arrow on chart) and the recent leg up to ATH (red arrow on chart). Make no mistake – this is a classic bad sign – rising price but lower volume. It means that many are still hoping for higher prices (even sellers are not so urgent) but not nearly as many are buying anymore relative to previous months.
As well as this, today Bitcoin is struggling to keep above major resistance (around $4213) in comparison with the return from the last major bounce in mid-July when it was already convincingly past the same relative resistance (around $2540). The same time has gone by following the bounce but Bitcoin is clearly not doing as well this time around.
One thing is clear – the long-term trend started at the end of 2015 is weakening; the question is how much longer can it hold?
I believe that the big correction is already underway. It will take longer and be more excruciating than the bubble burst of prior years, because there are more participants and more bulls to wear out. This will take significant time.
A word on the bulls – it is just after a long-term ATH that they become the most shrill and defiant. It was exactly the same in 2013/2014 – bulls of all classes defiant as ever as the market dwindled until it reached a small fraction of its peak size and everyone slowly became bears... too late! It's classic denial and it affects everyone – from the lowliest amateur noob to the most reputable pro traders on here. We are all human – no-one is immune. Ultimately everyone is talking their book, myself included. But either the bears' or the bulls' book has to be right.
If it turns out that I am shorting too early then I will take another couple of small losses on account between here and $5,000, and will be looking for increasingly larger short positions from the moment we start approaching $6,000, unless volume magically picks up to hitherto never seen before levels, something that has very little chance of happening IMO. It didn't happen in January 2014 when everyone was screaming we were going mainstream, and it won't happen now. I will be following more or less the projections of tradingview.com/u/IvanLabrie/, who has a peak projected for sometime in November, which is the most reasonable view here. I just think (and have seen it happen many times before) the Bitcoin market moves quicker – both up and down – than most people realise, and the bear market he projects to happen after his November peak is already starting now.
Unless you want to lose your money or HODL paper losses for a long time, don't pay attention to the predictions sending us to tens of thousands and beyond in 2018. It doesn't matter who these predictions come from – it won't happen. Be careful – there are many pro traders, hedge fund managers, and other apparently competent analysts in this camp. They are either early to the game, have no experience of Bitcoin and are therefore are high on Kool Aid right now, or have no scruples about always talking up their investments no matter what. There were many such pros calling bullish ideas following the 2013 peak, with predictions for $100,000s per Bitcoin by 2015 etc. very common.
Just remember, the SMART money is not buying now. It's now up to the DUMB money to take this higher, if it can.
From that idea I took a small short and covered it at a loss for 0.25% of account (1 x 400th of my trading account). But the long term picture has not changed and I have a new small short open.
The key to Bitcoin is zooming out on the chart and a bit of patience. On a reputable exchange that has not undergone any existential crises (hacks, regulators, etc.) in the past year such as Kraken, there is a very marked decline in volume between the major leg up from mid July (orange arrow on chart) and the recent leg up to ATH (red arrow on chart). Make no mistake – this is a classic bad sign – rising price but lower volume. It means that many are still hoping for higher prices (even sellers are not so urgent) but not nearly as many are buying anymore relative to previous months.
As well as this, today Bitcoin is struggling to keep above major resistance (around $4213) in comparison with the return from the last major bounce in mid-July when it was already convincingly past the same relative resistance (around $2540). The same time has gone by following the bounce but Bitcoin is clearly not doing as well this time around.
One thing is clear – the long-term trend started at the end of 2015 is weakening; the question is how much longer can it hold?
I believe that the big correction is already underway. It will take longer and be more excruciating than the bubble burst of prior years, because there are more participants and more bulls to wear out. This will take significant time.
A word on the bulls – it is just after a long-term ATH that they become the most shrill and defiant. It was exactly the same in 2013/2014 – bulls of all classes defiant as ever as the market dwindled until it reached a small fraction of its peak size and everyone slowly became bears... too late! It's classic denial and it affects everyone – from the lowliest amateur noob to the most reputable pro traders on here. We are all human – no-one is immune. Ultimately everyone is talking their book, myself included. But either the bears' or the bulls' book has to be right.
If it turns out that I am shorting too early then I will take another couple of small losses on account between here and $5,000, and will be looking for increasingly larger short positions from the moment we start approaching $6,000, unless volume magically picks up to hitherto never seen before levels, something that has very little chance of happening IMO. It didn't happen in January 2014 when everyone was screaming we were going mainstream, and it won't happen now. I will be following more or less the projections of tradingview.com/u/IvanLabrie/, who has a peak projected for sometime in November, which is the most reasonable view here. I just think (and have seen it happen many times before) the Bitcoin market moves quicker – both up and down – than most people realise, and the bear market he projects to happen after his November peak is already starting now.
Unless you want to lose your money or HODL paper losses for a long time, don't pay attention to the predictions sending us to tens of thousands and beyond in 2018. It doesn't matter who these predictions come from – it won't happen. Be careful – there are many pro traders, hedge fund managers, and other apparently competent analysts in this camp. They are either early to the game, have no experience of Bitcoin and are therefore are high on Kool Aid right now, or have no scruples about always talking up their investments no matter what. There were many such pros calling bullish ideas following the 2013 peak, with predictions for $100,000s per Bitcoin by 2015 etc. very common.
Just remember, the SMART money is not buying now. It's now up to the DUMB money to take this higher, if it can.
Trade active
New shorts open just above 3600 EUR. More updates tomorrow.
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