Trade BTCUSD volatility - don't be a lemming FOMO investor
Various journalist on each side of the emotional spectrum have been quick to state that either BTCUSD is dead OR that after a +20% gain on the H4 chart after one day, somehow magically BTCUSD recovered after the recent sell off.
Any sane and rational investor will be able to see that no, neither of these statements are true. The bears are still leading, so says MACD and RSI and that is reflected in the D1 chart trend in which we see a downtrending BTCUSD. Do not be confused by the massive volatility of +/- 20% that is BTCUSD on each candle in the day chart and the full 70%-points that is the bollinger band spread; rather take note of the trend, pivot points for the trend and let RSI/MACD help you to see if the bulls are winning or not -- which eventually they will.
The short term market is ruled by FOMO and FUD driven lemming investors who overreact on the smallest news - latest South Korean rumours that somehow BTC would be illegal just because the financial police and the Financial Services Authorities raided a couple of un-regulated and dubious exchanges.
The long term market is ruled by a small group of ideologically driven early crypto folks + a small group of extremely invested but greedy mining companies and pools. Neither of these will or can sell off (the early crypto folks won't and the greedy mining companies can't because they would loose the capex they've invested in their mining kits). So both groups WILL hold an invisible hand under BTC - but they can't control the short term FOMO guys buying and selling. That's your volatility but with a secret hand underneath.
Finally we now have a big group of over capitalised "companies" having done ICOs who as well will keep a hand indirectly under BTC knowing how correlated it is with ETH. Neither of these groups are regulated by financial services authorities so we should expect major market manipulation no different from how Soros, Buffett and other similar folks made their money. Do not underestimate their market power.
That is why you should only sell when D1 or H4 chart shows candles that touches the upper bollinger band and the following candle is red (time if with MACD and RSI). Pivot/Swing Trading and Ichimoku chart tools can help you see the trend as well. Buy the dips when we hit the lower bound of the bollinger band - and in way go against the panic when folks are selling off and against the FOMO when folks are panic buying. Fibonacci retracements can help confirm the levels as well.
On the D1 chart - if the trend is down as it is now - consider being out in fiat until hitting bottom of bollinger band and buy up there, knowing that we will continue down trending until some big bulls decide to buy up (ie. the ideological holders and the mining cos). This will make your average price per BTC lower and lower so that when the bull market comes back you will be a happy investor basically buying out the FOMO investors who are panic selling and then sell them back when they're FOMO panicking to get back in the market.
Be careful with shorting - you can get squeezed out very fast due to the volatility - I would avoid it entirely unless you are a very precise, disciplined trader; or you have a great H1 to H4 trading algo working for you; respect your stop losses.
Some black swans to think about if you're using BTC as gold (long term store of value):
- early crypto folks have a secret meeting, decide to create a new and truly decentralised currency, decide to dump their BTC and go into new coin (they won't because they're greedy too even if they say they aren't)
- mining cos have a secret meeting to create a new and more profitable coin that only works with their special ASICS (they won't because they're too short term profit driven)
- quantum computing guys from North Korea (haha!) figure out a new quantum algo to hijack the different blockchains exploiting the 51% hashing power vulnerability (they won't because North Korea?!)
Any sane and rational investor will be able to see that no, neither of these statements are true. The bears are still leading, so says MACD and RSI and that is reflected in the D1 chart trend in which we see a downtrending BTCUSD. Do not be confused by the massive volatility of +/- 20% that is BTCUSD on each candle in the day chart and the full 70%-points that is the bollinger band spread; rather take note of the trend, pivot points for the trend and let RSI/MACD help you to see if the bulls are winning or not -- which eventually they will.
The short term market is ruled by FOMO and FUD driven lemming investors who overreact on the smallest news - latest South Korean rumours that somehow BTC would be illegal just because the financial police and the Financial Services Authorities raided a couple of un-regulated and dubious exchanges.
The long term market is ruled by a small group of ideologically driven early crypto folks + a small group of extremely invested but greedy mining companies and pools. Neither of these will or can sell off (the early crypto folks won't and the greedy mining companies can't because they would loose the capex they've invested in their mining kits). So both groups WILL hold an invisible hand under BTC - but they can't control the short term FOMO guys buying and selling. That's your volatility but with a secret hand underneath.
Finally we now have a big group of over capitalised "companies" having done ICOs who as well will keep a hand indirectly under BTC knowing how correlated it is with ETH. Neither of these groups are regulated by financial services authorities so we should expect major market manipulation no different from how Soros, Buffett and other similar folks made their money. Do not underestimate their market power.
That is why you should only sell when D1 or H4 chart shows candles that touches the upper bollinger band and the following candle is red (time if with MACD and RSI). Pivot/Swing Trading and Ichimoku chart tools can help you see the trend as well. Buy the dips when we hit the lower bound of the bollinger band - and in way go against the panic when folks are selling off and against the FOMO when folks are panic buying. Fibonacci retracements can help confirm the levels as well.
On the D1 chart - if the trend is down as it is now - consider being out in fiat until hitting bottom of bollinger band and buy up there, knowing that we will continue down trending until some big bulls decide to buy up (ie. the ideological holders and the mining cos). This will make your average price per BTC lower and lower so that when the bull market comes back you will be a happy investor basically buying out the FOMO investors who are panic selling and then sell them back when they're FOMO panicking to get back in the market.
Be careful with shorting - you can get squeezed out very fast due to the volatility - I would avoid it entirely unless you are a very precise, disciplined trader; or you have a great H1 to H4 trading algo working for you; respect your stop losses.
Some black swans to think about if you're using BTC as gold (long term store of value):
- early crypto folks have a secret meeting, decide to create a new and truly decentralised currency, decide to dump their BTC and go into new coin (they won't because they're greedy too even if they say they aren't)
- mining cos have a secret meeting to create a new and more profitable coin that only works with their special ASICS (they won't because they're too short term profit driven)
- quantum computing guys from North Korea (haha!) figure out a new quantum algo to hijack the different blockchains exploiting the 51% hashing power vulnerability (they won't because North Korea?!)
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