Hello friends.
We have opened a relatively large long position for Bitcoin, risking about 1% of our capital.
Our reasoning for this long position is based on the overwhelmingly bearish sentiment from content creators, the recent bankruptcy of Silvergate (seems like fade the news, similar to FTX bankruptcy in the days following the fallout contagion), and our wave count which shows the move up as impulsive and this move down as a corrective pullback (no viable alternative counts exist as far as I am aware, making this wave count more likely to unfold as expected). We also looked at the volume profile which shows us a good area of support below which to place the stop loss as well as a good area of resistance to place the take profit.
Overall the original theory still stands and we are likely within an "Echo Bubble" which is an optimal period for going long rather than short in most cases.
One risk to our long position is if the GBTC fund does indeed get court approval to convert into an arbitrage-able ETF, which might cause the market sale of hundreds of thousands of Bitcoins in a quick flash. We assign a subjective probability of around 40% to this actually happening, and 60% to the courts throwing away the Greyscale lawsuit against the SEC. If the lawsuit works out for Greyscale, we may get stopped out of this trade. If it doesn't, which we think is more likely, Bitcoin could rise substantially.
We have opened a relatively large long position for Bitcoin, risking about 1% of our capital.
Our reasoning for this long position is based on the overwhelmingly bearish sentiment from content creators, the recent bankruptcy of Silvergate (seems like fade the news, similar to FTX bankruptcy in the days following the fallout contagion), and our wave count which shows the move up as impulsive and this move down as a corrective pullback (no viable alternative counts exist as far as I am aware, making this wave count more likely to unfold as expected). We also looked at the volume profile which shows us a good area of support below which to place the stop loss as well as a good area of resistance to place the take profit.
Overall the original theory still stands and we are likely within an "Echo Bubble" which is an optimal period for going long rather than short in most cases.
One risk to our long position is if the GBTC fund does indeed get court approval to convert into an arbitrage-able ETF, which might cause the market sale of hundreds of thousands of Bitcoins in a quick flash. We assign a subjective probability of around 40% to this actually happening, and 60% to the courts throwing away the Greyscale lawsuit against the SEC. If the lawsuit works out for Greyscale, we may get stopped out of this trade. If it doesn't, which we think is more likely, Bitcoin could rise substantially.
Comment:
Makes sense to size down aggressively here due to uncertainty introduced from the USDC & USDT depegs