Bitcoin fell close to 10% in a single hour yesterday on the news there were drones in the air heading from Iran to Israel.
I'm a trader and I'm not going to play Middle East expert on the internet, but there is one observation I'd like to make.
That is ... this should have been great for the Bitcoin narrative.
In what type of situation would people most need to store value in a place it can not be taken by domestic or foreign forces?
What type of situation would it be more useful to be able to store your wealth in a digital space while you travelled from one place to another?
When would it be more valid to worry about a bank's stability?
Is there anything that more ties into the BTC narrative of being able to stash away your money, move it easier, not have counter party risk and not have risk of being looted than a possible war?
And what happened?
It capitulated.
Which, to me, is a loud and clear signal from the market how it is treating BTC. It's treating it as a risk on / off asset. In times of uncertainty, it just went risk off. Exactly the way we'd expect to see with classic risk on / off assets.
It acted in no way at all as a protective asset, a store of value, a hedge against stocks exposure.
And this should not shock anyone because at this point in time you've got to see BTC do the exact same thing any time there's some sort of big panic event.
2020 in theory should have been a good time for the BTC narrative. Of course, it just crashed.
Russia / Ukraine - something else that should have fitted the BTC bull narrative and again, it resulted in a crash.
Now, even when the narrative is the potential for a full blown war. Even when this war is largely risking involving "Unbanked" countries - when all of the conditions for BTC to live up to its name occur - what we see is a bloodbath in BTC. Straight down. Do not pass go. Slams all the way to the support levels where it stalls.
If the classic Bitcoin narrative was to hold true, yesterday we'd all have been thinking "Erm ... better transfer my money to BTC".
Literally, even if you didn't want to be in BTC most of the time times like yesterday would be the perfect time to store funds in BTC "Just in case" something happened and you had to make some quick moves.
And it, clearly, isn't what happened.
If you'd put your money into BTC to protect it, you'd have just lost 10% of it instantly and be waiting to see if maybe it bounces back.
Which is exactly the situation you should expect to find yourself in if you mistime an entry into a speculative asset.
Hopefully the events of yesterday do not escalate further. I have a lot of short positions on but I'm not one to cheerlead bad things so I can make a bit of money on shorts. I'm happy to make money long or short and much prefer it not to be accompanied by disastrous news.
But one causality from yesterday has already been established, and that's the narrative that you can rely on BTC in times of crisis.
In reality, you can't. It's most reasonable to expect it to act as a risk on / off asset.
Which essentially means, BTC bulls tie their success entirely to the performance of the SPX.
It implied all the models people act as if having forward looking certainty are actually entirely dependent on exogenous events.
Over and over BTC bulls will tell you their narratives for why they think it's silly for you to consider fat tail risk in this market.
But over and over again the market suggests that makes a lot of sense.
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I don't care about news for trading. I've made a living for a long time trading TA patterns and often benefited from news based moves without knowing the news.
But I am interested in the tracking of news events alongside technical signals. This is interesting and has a lot of personal utility for me as a trader.
So here's a quick run down on the situation.
Israel report 300 or so drones were shot down.
It's said US and UK forces were involved in the shooting down of these drones. Which, while not extremely direct, is a form of conflict between UK/US and Iran.
Involvement of both UK and US forces appear to be confirmed by the respective govs.
Israel have recently had a meeting and they've said they plan to strike back against Iran (Which should surprise no one at all).
Bitcoin sold off during the initial news drones were in the air a few hours away from Israel.
Bottomed shortly thereafter and has since traded in a range.
We're waiting to see if this is a bull trap range or not.
Recently BTC has fallen 3% over a few minutes. I don't know if this is news related but it makes sense in a technical perspective.
Spikes to 66K or so would still be entirely fair game inside of a bear setup.
Technical short zone is 64 - 66K. Over 68K basic bear patterns have failed.
Will update either if there's some notable news or if we breach important TA price levels to the up/down side.
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UK's Independent newspaper issued this report at a similar time the recent sell off started.
"Israel has warned that the conflict with Iran is “not over yet” and vowed to “exact a price” as it considers its response to the 330 drones and missiles launched fired overnight by Tehran.
The Israeli military claimed more than 99 per cent of the drones and missiles were intercepted with help from allies including the US, UK and France – but several ballistic missiles reached Israeli territory, causing minor damage to an air base."
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Have to laugh at the BTC bulls comments that this is insignificant.
IDK if it will be important to the overall market move or not.
But I do know if BTC went up 10% bulls would be talking about how this evidences BTC's store of value props for literally months to come.
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Scores of people turned up on my previous posts to tell me how I don't understand BTC but none at all want to explain how this does not disprove what they said.
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Not sure if there were any news developments (Will check when i'm finished trading) but the 66K rejection came.
There are a couple possible bounce paths here valid in a downtrend.
Bears should be more careful here (But no point exiting shorts while lower lows continue).
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TA update. We now have the technical conditions for a strong bear break.
Classic little bear flag sort of range here and we have this right above major supports of 60K.
I've explained in depth in other posts why a break under 60K may result in a waterfall event.
So the TA here for a strong break is good. While it does not say there must be a break, it implies if there is one it's a big strong one.
Noted in this thread because strong moves are often driven by news.
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Break of 60K opens the door to 40K. Would be surprised to not see 40K hit if 60K fails.
Could be a fast move.
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Technical break made.
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New news:
"Israel has conducted airstrikes on a target in Iran, US officials say.
An official told ABC News that strikes hit a site in Iran, however it is unclear what target was hit or the extent of the damage.
It comes in response to Iran launching a barrage of hundreds of drones and rockets at Israel on Saturday, which was largely thwarted by Israel and its international allies.
Footage shared on social media appeared to show anti-aircraft fire striking over the city of Isfahan in central Iran. These reports have not been confirmed by officials.
Further explosions have reportedly hit Iraq and Syria. "
BTC has proven time and again that as soon as some macrostructural issue appear, it is the first asset to fall and the asset that collapses the most. It is NOT a store of value
holeyprofit
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@janm888, Agreed. It's the most volatile of risk assets. Most potential to overperform on the upside and most potential to underperform on the downside.
An objective fact at this point, I'd venture to say.
It's very sad to see people encouraged to put significant risk without any risk protective measures into such a thing.
The idea of these things is meant to be small bets for possible big pay offs. Not all in bets for all or nothing.
marcolopes
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@janm888, Maybe this time is different! :D (Seriously... the market crash was not fueled by these "War Games", it's part of the cycle)
holeyprofit
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@marcolopes, Link me any 3 examples of BTC bulls calling this move as part of the cycle.
I can link my call as a bear if requested.
holeyprofit
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@marcolopes, I track markets closely. It's close to impossible to see this much of a down day on BTC on a Sat. Seriously, I've ran various automated tests of strats that just scalp long Sat because sooo often it's a small up day and it's almost never a big down day.
I can think of 2 exceptions in all the time I've followed this - and we're talking about 4 years or more here. And one of them was yesterday.
But this was just business as usual? Just happened to coincide with the news?
Come on man. Your bias is leading you.
Talurtle84
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@janm888 gold and silver fall more than btc after the attack was announced
holeyprofit
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@Talurtle84, Okay. So gold and silver are not a good store of value in a panic. Something any rational person will have known. We've seen the narrative fail in 1929, 1987, 2000, 2008 and 2020.