Published this idea yesterday where the second red arrow is, but it was hidden by a moderator and I was given a warning because it had a twitter link to a chart image in the description. Seems a bit harsh, but whatever. Reposting the idea exactly as it was but with the twitter link removed, for posterity.
You can see what happened when there was a clear break of the Moving Average (99) and trend line support on February 21-22; it's the same setup now, and history often repeats itself. Under these circumstances, the risk/reward ratio for shorting is highly favorable. Personally, this is the only scenario where I would even consider shorting in an exuberant bull market. More importantly, sentiment has shifted to the negative side, which backs up the trade even more and makes it less likely to be a bear trap (always set a stop-loss; the placement should be obvious). Fundamental analysis always takes priority over technical analysis.
Here are the key points to back up the negative sentiment at the moment:
Coinbase under fire for shady trading practices; fined by the CFTC for self-trading.
Coinbase delayed their direct listing; plan currently under review by the SEC.
GBTC no longer trading at a premium; now at a discount.
Bond yields keep rising.
It's March.
This is historically a bad month for the market.
The pandemic is winding down as more and more people get vaccinated.
If the pandemic sparked this wild bull market, what happens when it's over?
The first three points are crucial. Coinbase is the go-to exchange for institutional inflow of capital in the US. It is supposed to be the holy grail of all exchanges, and now they've lost a great deal of trust. Any institutions on the fence will now think twice about entering this market. This spells trouble for the current price in the short to mid-term. GBTC trading at a discount indicates a lack of demand from institutions.
You can see what happened when there was a clear break of the Moving Average (99) and trend line support on February 21-22; it's the same setup now, and history often repeats itself. Under these circumstances, the risk/reward ratio for shorting is highly favorable. Personally, this is the only scenario where I would even consider shorting in an exuberant bull market. More importantly, sentiment has shifted to the negative side, which backs up the trade even more and makes it less likely to be a bear trap (always set a stop-loss; the placement should be obvious). Fundamental analysis always takes priority over technical analysis.
Here are the key points to back up the negative sentiment at the moment:
Coinbase under fire for shady trading practices; fined by the CFTC for self-trading.
Coinbase delayed their direct listing; plan currently under review by the SEC.
GBTC no longer trading at a premium; now at a discount.
Bond yields keep rising.
It's March.
This is historically a bad month for the market.
The pandemic is winding down as more and more people get vaccinated.
If the pandemic sparked this wild bull market, what happens when it's over?
The first three points are crucial. Coinbase is the go-to exchange for institutional inflow of capital in the US. It is supposed to be the holy grail of all exchanges, and now they've lost a great deal of trust. Any institutions on the fence will now think twice about entering this market. This spells trouble for the current price in the short to mid-term. GBTC trading at a discount indicates a lack of demand from institutions.