Where is the market heading to?
The price did make its new ATM yesterday. MM got their SLs from shortists. This may seem like a continuation of a no doubt. However, the price is at the top of an ascending on 1D. resistance line has not been broken yet. RVI is still below 50. Vertical volumes are still declining. The may well continue, but it’s best to wait for confirmation from the indicators.
I have tried to get some constructive arguments from chats and articles on why the price is expected to go up and reach 100,000 USD other than on the fool’s theory where the price goes up until the last fool buys. Some prefer to call it a parabolic price increase. However, nobody seems to offer any logical explanation. I’ll make an attempt on their behalf.
1. Bitcoin is a hard asset, the price will go up and reach one million eventually.
2. Tether has increased, therefore, bitcoin cap is well justified.
3. Bond price is rising, yields are falling, cash is moved from bonds into bitcoin .
4. Bitcoin is a commodity, a digital gold , gold price is expected to rise.
I can make a constructive argument.
1. While bitcoin may well reach the moon, it may crash a few times on its way. Regardless of being a hard asset, it is still a highly risky asset due to its when it comes to . It can crash at any time up to 80-100%. US Binance 1 minute crash on 21 October 2021 is a perfect example.
2. Tether Ltd has not been audited still. Tether’s assets that support USDT, do not exist, at least partially. In May 2021, Tether published a report showing that only 2.9% of Tether was backed by cash, with over 65% backed by commercial paper. New that has been put into circulation in October has been spent already. I am not going to go into the details of the law suits that claim almost 1.4 trillion USD in fraud damages as well as a relationship with the exchange Bitfinex, which turned to Tether for financial help after the exchange was robbed of 850 million USD in 2018. The bottom line is that Tether is just an ordinary money laundering scam, which is already on the verge of a bubble.
3. FEB is decreasing asset purchasing by 15% at least on monthly basis, which will slow down rate. Lower will decrease Long hedging contract volumes and hence, reduce bitcoin price. At the end of a day, bitcoin is used as a hedging instrument from negative bond yields, which are now at their rock bottom.
4. Although botcoin is a commodity, it has a greater correlation of around 73% with SP500 on 1-10D in 2021. Therefore, it is not clear why would bitcoin should rise if equity market falls. Also, check out gold chart on 1M. There is an obvious divergence on and RVI from around June 2011.
What’s the plan if you are trading futures?
1. To minimise risk, it would be smart to go Short around the navy blue resistance line from 73500 USD to 77500 USD depending on where the price hits it. The second entry point for Short order where you may double your lot can be at the crossing of a dotted black line. Make sure you also have your Long orders at 52500 and 47500 USD. These entry points do not suggest a trend reversal at this time, but merely a profit making opportunity from short/medium term impulse reversal.
2. If you already have an open postion and your nerves are catching up with you, consider hedging, make a lock, and wait for the price to hit either resistance or . Then either close the lock or continue with a lock and enter the market with a double lot in relation to the original size position to either break even or take profit.
Remember that bitcoin had no correction still and that it can happen at any time. MM will need that liquidity shortly.