Very hard to pick a side on Bitcoin now. Patience is key.
Hello friends.
Right now it's tremendously difficult for me to pick a side on Bitcoin. I have arguments for being bullish, and I have arguments for being bearish. Both of these arguments are quite compelling.
Bullish arguments:
We have not yet seen the kind of peak euphoria that we might expect from an echo bubble. Nowhere did sentiment overflow with excessive positivity.
We have been in a consolidation-looking phase for the past 200 days. If we were going to form an impulse down, shouldn't it have happened by now? It would make sense for the price to be trending down very rapidly in that kind of situation. Instead, it's dead flat, suggesting that we aren't inside of a bearish impulse.
TOTAL (Total Crypto Marketcap) has quite a different-looking structure compared to Bitcoin which has risen a lot more this year. I would say TOTAL looks a lot more bullish and primed to give another wave upwards, and in such a case it's hard to argue that Bitcoin would itself be falling during that move.
Bearish arguments:
Global liquidity is rapidly falling, and Bitcoin is very likely to follow it on the way down. Related, the stock market is effed and is set to collapse. It's quite rare for the stock market to crash and not take Bitcoin along with it.
Even though we didn't reach peak euphoria, that is somewhat expected -- this isn't a true bull market, it's just an echo bubble. You can only force so much euphoria into a beaten-down, depressed market. It was never going to feel anything like the sentiment did when Bitcoin was topping at 69k. Most people in crypto are down a lot on their 'investments' even with the recent price gains in 2023, so they can't get all that excited about this just yet. If you look at BLX, everyone is still long-term bullish AF on Bitcoin. So one way or another, the sentiment seems locked perpetually on max bullish for many traders in this crypto market.
I can't reconcile these arguments into a strong view one way or the other. I would say that I am SLIGHTLY more bullish than bearish on crypto, but I emphasize slightly. I don't have a real opinion here, and I want to avoid trading anything crypto-related until the market shows me a real opportunity.
If the bear case is correct and crypto starts to collapse, we will see signs of that happening, but we likely won't have any good entry points and it may be too late to actually take the trade as I don't usually like chasing trends. Ideally, this will not happen, as I might not make any money from this outcome. I won't lose any either though, so it would be more neutral than anything.
If the bull case is correct and crypto rallies hard, this is what will really present a golden opportunity for me. I will get to short Bitcoin from potentially as high as $40,000, which is incredible. With a setup like that, I would feel confident enough in the trade to take a 6 figure position. I would likely execute the trade itself by buying puts on something crypto-related, like Microstrategy, Coinbase, or some bitcoin miners. If price rises like this, it eliminates a lot of my bullish arguments, while keeping the bearish arguments on the table. It also takes away the bullish count. I don't see Bitcoin breaking or even coming close to 69k ever again as even a possibility worth considering, so the risk is extremely low when shorting Bitcoin at around the 40k level, and the reward is extremely high considering I have a long-term target of around 8k for Bitcoin.
For my strategy, being patient and waiting for a great opportunity is what makes the most money. That is how I got long on Greyscale Bitcoin Trust back when it was 8 bucks a pop last year and had 16 bucks of NAV (50% discounted)!
So, we can all wait and hope the bulls are "right" and that Bitcoin rallies. Because that's the best way to take their money, and win big!
Right now it's tremendously difficult for me to pick a side on Bitcoin. I have arguments for being bullish, and I have arguments for being bearish. Both of these arguments are quite compelling.
Bullish arguments:
We have not yet seen the kind of peak euphoria that we might expect from an echo bubble. Nowhere did sentiment overflow with excessive positivity.
We have been in a consolidation-looking phase for the past 200 days. If we were going to form an impulse down, shouldn't it have happened by now? It would make sense for the price to be trending down very rapidly in that kind of situation. Instead, it's dead flat, suggesting that we aren't inside of a bearish impulse.
TOTAL (Total Crypto Marketcap) has quite a different-looking structure compared to Bitcoin which has risen a lot more this year. I would say TOTAL looks a lot more bullish and primed to give another wave upwards, and in such a case it's hard to argue that Bitcoin would itself be falling during that move.
Bearish arguments:
Global liquidity is rapidly falling, and Bitcoin is very likely to follow it on the way down. Related, the stock market is effed and is set to collapse. It's quite rare for the stock market to crash and not take Bitcoin along with it.
Even though we didn't reach peak euphoria, that is somewhat expected -- this isn't a true bull market, it's just an echo bubble. You can only force so much euphoria into a beaten-down, depressed market. It was never going to feel anything like the sentiment did when Bitcoin was topping at 69k. Most people in crypto are down a lot on their 'investments' even with the recent price gains in 2023, so they can't get all that excited about this just yet. If you look at BLX, everyone is still long-term bullish AF on Bitcoin. So one way or another, the sentiment seems locked perpetually on max bullish for many traders in this crypto market.
I can't reconcile these arguments into a strong view one way or the other. I would say that I am SLIGHTLY more bullish than bearish on crypto, but I emphasize slightly. I don't have a real opinion here, and I want to avoid trading anything crypto-related until the market shows me a real opportunity.
If the bear case is correct and crypto starts to collapse, we will see signs of that happening, but we likely won't have any good entry points and it may be too late to actually take the trade as I don't usually like chasing trends. Ideally, this will not happen, as I might not make any money from this outcome. I won't lose any either though, so it would be more neutral than anything.
If the bull case is correct and crypto rallies hard, this is what will really present a golden opportunity for me. I will get to short Bitcoin from potentially as high as $40,000, which is incredible. With a setup like that, I would feel confident enough in the trade to take a 6 figure position. I would likely execute the trade itself by buying puts on something crypto-related, like Microstrategy, Coinbase, or some bitcoin miners. If price rises like this, it eliminates a lot of my bullish arguments, while keeping the bearish arguments on the table. It also takes away the bullish count. I don't see Bitcoin breaking or even coming close to 69k ever again as even a possibility worth considering, so the risk is extremely low when shorting Bitcoin at around the 40k level, and the reward is extremely high considering I have a long-term target of around 8k for Bitcoin.
For my strategy, being patient and waiting for a great opportunity is what makes the most money. That is how I got long on Greyscale Bitcoin Trust back when it was 8 bucks a pop last year and had 16 bucks of NAV (50% discounted)!
So, we can all wait and hope the bulls are "right" and that Bitcoin rallies. Because that's the best way to take their money, and win big!
Comment:
Another argument favoring the bulls is that we likely want to see a Bitcoin ETF approval before things peak out. If we see approval, it's definitly the signal to short TF out of Bitcoin following that pump.