A Fair Warning to the Bears: Disbelief is the Ultimate Bear Trap

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Roughly 1 year ago, BTC went on a Spring bull run of +200% before it corrected more than about 15%. You can go a long way up during the disbelief stage of the market cycle without correcting.

In the face of a remarkably steady march upwards with strong support against any attempted corrections which even started around the same time as last year (and the kicker: on a market that tends to follow a similar seasonal cycle each year), there's been a of bias in the cryptocurrency chat/trollbox towards guesstimating the target for the inevitable correction. There's been mostly disbelief towards guesstimates of additional bull moves. Meanwhile USDBTCLONGS/USDBTCSHORTS is back to November 2017 levels, as are Google trends for cryptocurrency keywords - sentiment is reset to where it was before the parabolic move. That wasn't where we were in March when we rebounded at 7200, rallied for 2 weeks, and then violently crashed to 6400.

After 2 weeks of sideways near 6500-7000, everyone and their mother was talking about how they wanted to see one final capitulation nosedive and then buy that level - which is to say, we'd reached the point where people wanted to start selling so that they could accumulate cheaper, *NOT* because they were ready to give up on the market. Lo and behold, we had an Eve bottom as the bull whales stepped in to defend 6400 and the bears got exhausted. Lo and behold, when the bears shorted BTC to the point that USDBTCLONGS/USDBTCSHORTS was 0.85 with shorts at an ATH , the price continued to trend up because there were buyers happily accumulating, and finally the market makers sprung the trap to squeeze them all.

We retraced 70% from the ATH from 20k to 6.4k. There's a case to be made that maybe it should be 85%, and BTC is still an obvious bubble that doesn't seem to do anything better than many of the coins that have come after. Well, sure, but even the 2014 crash had a +100%ish rally in the middle of it that broke the downtrend channel . However, 70% could just be enough, this could just be a correction that falls short of an extended crash, and the fact that cryptocurrency is starting to see mainstream institutional and retail investors put money in now could just mean that there's enough support for BTC for the correction to be over. Do either of those scenarios sound like something you want to be shorting at +45% as BTC steadily marches with shows of strength at every test?

In a bear market you look like a genius for shorting every rally as soon as the oscillators get overheated and in a bull market you look like a genius for buying every dip. The transition period between the two is one where, if you miss the fact that we switched, the previous strategy just doesn't seem to be working and just seems to keep burning money failing to catch the knife. I'm seeing that sense of frustration starting to grow amongst those who are still shorting. Well, it is exactly because people disbelieve and try to sell into willing buyers that the market cycle can begin anew.
My volatility-based indicators are available for sale at

Feel free to reach out to me with any questions; more information is available on the SharkCharts website and the SharkCharts discord

Related Ideas