goldbug1

BTC - The Pain Trade - Hold On to Your Panties Shorts

Long
COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Another week goes by and Bitcoin' is looking more like the air simply left the room. However there are some clues that something is lurking in the depths of the order book and it is evident in the chart. It is also evident in the so called expert analysts that seem to be swayed and confused daily as to which direction the market is headed.

The consolidation pattern we are seeing is likely a continuation trade. The ole Darvos box trading method. Love it and one of the simplest trades out there. Hey nothing wrong with keeping it simple. There are numerous trading techniques focused on consolidation from the Bollinger "Squeeze" to the Darvos' box. In price action it is just consolidation before the breakout. But something seems to be keeping it down. We have noticed several small price action moves recently, not with just Bitcoin 0.10% but with others as well. These little observations with price action are providing clues of accumulation.

Range bound low Volatility:

Bitcoin' is clearly trading in a range bound market with the 6k level forming a pretty solid floor. The range has been between 6k and 6800 for almost 2 months now, and the structure is providing some insight that we may be looking at a trend reversal.

This very low period of volatility is telling that the market is less and less likely to just fall apart here. After the Fake-n-Shake of weak hands the previous rally has failed to fall apart. Weak markets fall apart quickly, they do not linger around consolidating for weeks. But this is exactly what we are seeing and it is a sign of accumulation. We have mentioned that larger institutions like Yale, Harvard and others are investing into the space. Do you really think others are not? This again is evident in the price action we have noticed recently.

Insider Trading:

So for 9 months now we have heard calls for 2500-3500-4500 and we are still trading above 6k. In August the SEC' stated it would "review the Bitcoin' ETF' rejections". Hmmmmm? I want to thank someone, who sent me the VanEck presentation for the 9th -6.94% of October meeting with the SEC'. This presentation was to insure the SEC's concerns about a Bitcoin' ETF' have been resolved. Hmmmmmm. And we still have this silent price action. Bitcoin' just refuses to fall apart, and this may be likely due to institutional investors accumulating ahead of an announcement. Again evident in the price action.

Keep in mind, neither you, nor I nor my cousin Vinny (who seems to know everything) have insider information. One thing the insiders can NOT hide is order flow. Clearly there is accumulation taking place and any selloff is being bought up faster than SwissView can fill up my comment space with 53 charts and a bunch of FUD about Tether and a market collapse. How is that short working "Bro"? Do you think there will be a warning? Do you think you will catch a spike if a Bitcoin 0.10% ETF' is announced? Do you think the market makers are not engineering trades to accumulate as much as they can? Do you think the shorts are going to lose their panties?

Pain Trade:

One thing to keep in mind is the pain trade. The percent short to long is 60/ 40 or 60% of the leveraged market is short interest right now. Take into account we are trading near a low not a high. There is always risk in shorting near a low and especially a low that has put in a pretty solid floor. The pain trade is to the upside, in other words more people will be hurt on a breakout than a breakdown. The contrarian trade is long and the pain trade makes it just this much more sweet! This is going to knock a bunch of Shorts out of their panties. They will blame the whales and claim they got out "just in time". I know my cousin Vinny will. "Yeah bro got out just in time man, can I borrow $100 to go to the track?" Yep that's cousin Vinny alright, always on the right side of the trade, but somehow always broke.

Tether

Before I get the comments on Tether I covered this in another article. I wrote an entire article on Tether and why it is unlikely we see a collapse. In short there is too much money and too many big players in the market here. It far outreaches Bitfinex and goes to the core of everything, from a potential ETF's to a huge alt coin market. Though I do not recommend holding in Tether, or having coins on Tethered exchanges, at this point it is simply old news.

Summary

As the market is looking to reverse, we are slowly looking to add to our long term portfolio, SLOWLY. I know everyone wants action but ask many how action is working out? We are not going to fill up our portfolio with a bunch of crap, but coins that show the structure, formation and chart patterns that provide the best opportunity for success. It is not going to be 15-20 coins either, it is going to be a few coins with good structure period! It has been a long 8 months but after cutting out a couple under-performers we are looking to position for the next bull run.

Don't kid yourself, it could be closer than you think. Sure we can retest 6k or even 5400 but the longer we don't the less probability we do. IF we do, I am willing to step in and buy. After all keep up the FUD shorts sell right into the hands of the institutions waiting to take your coins. If you are short, you may want to hold on to your panties, because the pain trade is on you!

Comments

Well written and balanced unlike many crypto jokers out there :) , thanks for the quality article.
+6 Reply
goldbug1 liberatedstocktrader
@liberatedstocktrader, Thank you sir!
Reply
Interesting read.
I disagree 1 thing and that is the pain threshold. Most short/longs are on Bitmex right?
Well for over a month longs have been paying the shorts. I made 3% on my short in the past 30 days.
I would not mind if it continued.

There is something wrong with the whole thing thouhgt. I think sometimes the best trade is not trade. Too fishy.
I rather follow rule n°1 here (never lose any capital) & having a trailing stop loss & avoid taking a new trade.
We got no reaction on rather big news... seriously I think the big exchanges and miners are doing something there, maybe what looks like accumulation is Bitmain and Bitmex fake buying so they can keep making profit.
If we go up for real with momentum there will be PLENTY of opportunities to join the ride. The risk is too big, it's really not worth it imo.
Shorting is worse, as we got a strong support at 5500$, only if we truly lose that level there will be an opportunity as next support is on 3000$.

As for investing I prefer to miss out especially when risk is so high and have cash available when there is a recession or something.

Lmao if Bitmain goes bust and gets caught lying and Tether too and the whole thing collapses thought, that would be entertaining ^^
Sooo boring right now.
+5 Reply
@MrRenev, it's really all eyes on DXY. Stock market on a hard correction, and we don't really know if it will continue. A recession would most likely decimate crypto. It all feels like guessing until a trend is set.
Reply
goldbug1 MrRenev
@MrRenev, Actually I did not look at Bitmex because that is futures trading cash settled. I looked at Bitfinex which is more indicative of the true short interest. 3% is good, but my question is Since the February Low of 5900 there have been more bullish swings than bearish ones. Evidence is the fact we are at 6400, so why is it the longs paying the shorts?

Keep in mind I am an investor and trader, so I have a long term portfolio which I do not mind accumulating when its down.
Reply
MrRenev goldbug1
@goldbug1, I think Bitmex makes winners pay losers so they have something to pay with when they get liquidated - something like this.
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goldbug1 MrRenev
@MrRenev, Yes but there are ~32k shorts on bitfinex and ~22k longs (leveraged) so the pain is to the long side. Keep in mind that Bitcoin holders are not forced to sell only leveraged ones are.
+3 Reply
MrRenev goldbug1
@goldbug1, Oh yes I inverted them yesterday evening I guess I didn't have my brain functionning 100% lol. Thanks for pointing that out. I think there are good reasons to go up for a couple of months soon up to maybe 9-12k but then hit a wall, and then down the stock market down too.
If dow goes down below 23000 I wonder if some people would put their money into crypto (which is not very logical but logic and crypto ...) or flee a speculative asset and put it in gold/dollar like the rest.

Bitcoin went 80% of the way to its all time trendline + strong support at 3000$, would be "a shame" if we went all that way and then just stop short of it.

As always, always a pleasure to read the only author that has a differtent opinion than mine but uses arguments unlike 90% of the bulls that draw an arrow poiting to 1 million, put a little spaceship and call it a day :D
+1 Reply
goldbug1 MrRenev
@MrRenev, Thanks Renev
Reply
Pssstt...... I'm accumulating.

If you are reading this, you should too ;)
+4 Reply