Captainsmugglebutt
Short

ETH-USD Descending Triangle - Short

BITFINEX:ETHUSD   Ethereum / U.S. Dollar
Currently in this trade. Shorting to $211-$212 then backing out and watching from there.

ETH bounced off both the upper bound of the descending triangle and the 38% on the fib retracement. I see very strong potential for ETH to continue down to the 50% on the fib and then we will see if it can come back or not.

Stay tuned.

Trade closed manually: A couple of notes and updates to this idea. First off, I have already closed this trade. My entry point was already higher than the price point when I published. This was one of my more hastily posted trades as I was already actively trading and wanted to make sure I could publish in time to hopefully give others the chance to capitalize on what I was seeing.

My entry point on this short was right off of the bounce on the 38% point on the fib retracement. I layered my entries from $220-$218. Because of my higher entry points, the movements into the $214-215 territory were a good 2.5% movement. Given that I am trading ETH on high leverage (35x for this particular trade) I was satisfied with my 85% gain and decided to close the majority of the position and leave limit sell orders in place.

Even more of my sell orders filled overnight (the derivatives continued below the actual trading range of ETH) which means my position was fully closed out at pretty nice levels.

I still believe we could see ETH go further to the $212 territory referenced originally, but I was more than happy with my return and decided to take everything off the table.
Nice idea on ETHUSD and there may be potential gains as you have identified by going short. For our set up, we have identified the key resistance and support levels. Currently, price is approaching our first resistance at 222.91. It is horizontal swing high resistance, 61.8%, 100% Fibonacci extension and a 61.8% Fibonacci retracement. Stochastic is approaching resistance and we might see a corresponding drop in price. If a corresponding drop does occur, we may want to take a look at the 209.17 support level. It is a horizontal swing low support, 50% Fibonacci retracement and a 100% Fibonacci extension.

Please take a look at our idea and share with us what you think.


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Be careful with this short man. The whales are out of their short positions on ETH. Shorting at this time is dangerous. This chart is from oct 16, just hit the play button and see where we are at. Whales have abandoned their short positions:
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@cocoadreamboy, I appreciate your word of caution.

Exactly why I am only shorting within the fib range mentioned in the idea until I really see stronger confirmation of a continuation in the short-term downtrend. I think on the long-term we could actually see some more upwards momentum for a couple of weeks. See my last published idea;


That being said, if ETH really can break this long-term downtrend, like I was speculating, it would likely be short lived. It would need a massive amount of buy side pressure which would likely be met very quickly with sell side pressure from all those bag holders and ICOs that are still looking to get out. If ETH did manage to have a rebound I would see it reaching into the mid 400s at a maximum before reverting back to the mean.

I actually entered the trade in the $220/ETH (just late about publishing the idea) and already closed out through the $214-215 range. While it was only a ~2.5% movement, at 35x leverage I netted a good 85%+ on this trade.

At this point I still have a short position open. I am risking about 10% of my 85% profit on the first trade to keep a position open, but with higher (50x) leverage to ideally capture movement down towards the $211-212 range.

I have open long orders between $208-210 which would ideally get filled before (my expected) bounce up to retest $220 range. If it doesn't bounce up I have a tight stop loss to $207 and then would open more shorts with a $200 target.

Happy trading mate!
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cocoadreamboy Captainsmugglebutt
@Captainsmugglebutt,
Hey man my first thought after reading your idea was "his leverage amount is insane!". I think you are valuing the ICO sell off effect too highly. The ico SCAMMERS (that is what they were) sold out, at the latest, last September back at the 170-190 price range imho. I am very based on fundamentals in my analysis, but even the technical analysts are saying the we are passing trend line after trend line. It is pulling into a bull growth period. In my last analysis I pointed out that we have been in a "bull" market since June 29 the lowest BTC has been in the current growth climate (the most recent cycle is based on growth since April and May 2017)

To still be shorting in this upcoming market is risky, to still be shorting on that high leverage is dangerous. Whales change the price at will as demonstrated on October 10 and 15.

Just like how bitcoin and crypto has been going down this year it goes up just as fast, if not FASTER. Whales make more money if prices go up vs down. You have to be aware of not only stop loss hunts, "bart moves", but also short squeezes at all times.

I sold ETH at 1000 this year to pay taxes ( I waited until may to pay taxes lol it was cheaper to take the fee than sell in late march/early April), but even when I sold then I didn't want to. Crypto is a very clear response to global market instability and in any impending debt crisis, recession, or depression legitimate cryptocurrencies like BTC and ETH are the clear inflation-proof, non-conventional investment you can make.

This trade is indeed quite good at your number 220 sell and buys at 215. I felt obligated to tell you that I think your strategy is susceptible to simple and easy whale manipulation, and that if you can defend your whale movement vulnerability, you will be VERY interesting and helpful to read.

I enjoy your ideas and your balls. I will def follow you.
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@cocoadreamboy, thanks man!

I've definitely gotten blown out by massive unexpected "whale" movements, ones that made absolutely no sense considering the trends at those points in time.


I definitely have a different fundamental view of ETH than you. I currently work within the industry and I've seen a lot of very interesting things. There are a lot of companies out there that still hold large amounts of ETH and still need to liquidate to cover operations. Additionally I've found that a lot of vendors no longer want to get paid in ETH or pay out in ETH due to the volatility. ETH has a lot of fundamental issues and the speculative nature of the market actually hurts it more than it helps in my opinion. People who are willing to accept ETH immediately liquidate it for fiat.

I am much more bullish on BTC than ETH. There are a few reasons why BTC could actually become a store of value, and I believe it is gradually moving into that territory. Once of the things I've noted personally is how the equation of exchange for valuing these currencies is vastly different between these two. The equation of exchange, if you are unfamiliar with it, goes as follows: MV = PQ. Where M is the money supply, V is velocity, P is prices of goods/services and Q is the quantity of those goods/services.

One theory of valuation states that if you take M = PQ / V then you are getting the total $ value of the entire monetary base. If you then take M divided by the total available supply then you have, in theory, the value of each unit.

What I've noticed many people seem to misunderstand, or just not think about at all, is the role that velocity plays in these circumstances. Velocity, if you're unfamiliar, is the number of times per year the average dollar (ETH/BTC unit) changes hands or is spent.

You could have absolutely massive P * Q, in the ETH network this would equate to things like the price of transactions, or goods available for purchase with ETH, and the quantity of these transactions. So if the network is healthy, seeing large adoption and is growing, then you could say that P * Q would also be very large. That being said, P * Q would have to outpace velocity at an incredible rate. Velocity has the biggest impact on the equation (so does total available supply but that is more static/known given the ETH mining rate, etc, and would always increase until the hard cap). If we are assuming the same scenario, a large growth in adoption, then we would also have to assume that ETH is changing hands very frequently within this economy as goods and services are being purchased. The more ETH changes hands, the larger Velocity is and of course this has a huge drag on the total $ value of the entire monetary base.

To simplify my argument here against ETH fundamentals, the velocity problem will persist if ETH is adopted as a functional unit of exchange. Velocity, in traditional economic bases, usually levels out to an average number. (See continuation...)
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Captainsmugglebutt Captainsmugglebutt
@cocoadreamboy



The US dollar has an average velocity of 5+, meaning each dollar usually changes hands 5 times during a year.

Eventually, assuming ETH is a medium of exchange, it would follow the MV = PQ equation. We would see velocity stablize as the economy (network) matures. We would also see stablization of M/Total Supply of ETH as we reach the hard cap. At that point in time growth in P*Q (network activity) would actually be able to drive an increase in the token's value.


The velocity problem is almost unavoidable for ETH. Eventually (i.e., years from now) we would see V stablize with a healthy network and then we could start to see an inflationary effect.

This is the exact reason I am bearish on ETH (mid term 6mo. - 1 year) and more bullish on BTC.

When you look at the same equation with BTC there is something interesting that lends to it having a greater potential for becoming the store of value token and seeing appreciation in the value of each Bitcoin. The slower speed of the BTC network actually lends to this greatly versus the faster ETH network. With BTC taking longer to transfer it would in theory have a much lower velocity as it would not be moving around frequently to buy goods and services. You could see a point that if BTC becomes a store of value, velocity could be even lower than 1 if people hold onto it as the store of value and don't spend it. With BTC's potential low velocity the total $ value of the network, M, would increase much more consistently than M would increase for ETH.

An interesting feedback effect is that if BTC's velocity decreases as it becomes a store of value, the price per BTC would increase, it follows that as that happens more people may be less willing to relinquish their store of value tokens and velocity decreases further which continues to increase M and so on and so forth.

People talk all the time about these tokens being enormously valuable if they were adopted as a currency, but if they are adopted as currency then they would fall in line with economic theories that have applied to fiat currencies. I think people really don't understand that, or just want to ignore it.
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