Bitcoin Investors Know Not to ‘Fight the Tape’
$BTCUSD, $CME, $CBOE
Just at the start of Y 2018 Bitcoin began trending towards $20,000. Thursday, it marked $10,000 on a bounce after correcting to $7,500.
At that mark it was down 65% from its highs.
Currently, Bitcoin is trading at: 9,862.84, -170.91, or -1.70%, as of 7:00a GMT, the market is open.
The price action made a clear parabolic move that you could easily track on a chart. The percentage gains simply started to outpace the previous month’s percentage gains as Y 2017 continued, investors were enticed.
A Bitcoin conference in December 2017 announced that they would not be accepting the digital currency on the grounds that the processing time and costs were rising too much.
In short, Bitcoin, the best known crypto currency, was becoming too difficult to use as intended.
Investors have begun to look at other big players that seem to have learned like litecoin, ethereum and Ripple.
So, as long as any crypto token can offer a cheaper means of transferring wealth than Bitcoin their value will go to Zero.
Things are beginning to look better, as Bitcoin unwind last year’s parabolic move. And just as one part of the parabola is great for those Long, the other part of the parabola is great for those Short, but terrible for those who went Long in December
The Big Q: What can investors do when something they own goes parabolic?
The Big A: Some things are easier to do with some assets Vs others. So, when that asset market is surging, going to cash is the move, of course the case money is already prudently banked.
Here is how it is done by the savvy participants:
Sstart selling in tranches at pre-set price points along the move as it moves. Study Fibonacci, Support and Resistance, do not be greedy. Knowing there will always be a trade, maybe not one the 3X’s in a month, but there will always be a trade.
When something’s moving very fast, that means that lots of capital tries to squeeze into the opportunity.
And when the CME, CBOE and Nasdaq enter the game in December, the pros came to sheer the retail sheep, and they did.
Parabolic price moves are pretty rare in the broad market. But they do happen and it is Key that recognizing them is very important to investment success.
Nothing moves in a straight line, and a parabolic move is not sustainable, they always stall and fall.
How fast parabolic bounces back to new highs varries.
The tech bubble burst between Y’s 2000 and 2002 when stocks bottomed. But tech stocks, as measured by the NAS Comp, did not retrace and post new highs until Y 2014.
An 80-90% dive is typical after a parabolic move North.
Bitcoin saw a correction a few years ago, and it took a few years for it to retrace.
We do not know what the future holds for the price of cryptocurrencies. But, we do know they do have a future, just as tech stocks, Gold, and housing do.
But, the price move on the chart aka pattern should put a chill on any retail investor.
Because no matter how good the news is, when a lot of money goes into a small space quickly, the gains look great, but the pros take no prisoners. When managed money exits the pain is excruciating for many players.
A parabola is a sign that something is off with investors regarding an asset, and it will be sorted out in due course.
For many the best move is do not get caught up in a Hot market, wait for the steam to come off to enter.
Analysts expect that Y 2018 will remain a strong year for cryptocurrencies, but see established blockchain networks such as Bitcoin and ethereum dominating the action.
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Remember, it is your money, your responsibility, and never fight the tape.