THELOGICALINDIAN - This is a account trading tips alternation alleged Writing On The Wall in which our bold approach adviser Eric Wall tries to analyze those writings This anniversary shorting bitcoin
I actually abominate accepting to abbreviate bitcoin. As a abiding accepter in bitcoin, it goes actual abundant adjoin my behavior to abbreviate what I accede to be the best and best undervalued banking asset in the world. Moreover, back the amount is consistently authoritative new best highs, there are no metrics, indicators or accoutrement that can be acclimated to anxiously appraisal attrition levels or changeabout points. Calling the top is basically a academic game. Therefore I usually abstain shorting bitcoin at all cost, except for beneath very attenuate and acute circumstances.
Also read: Trading Column `The Writing on the Wall´ – What Will CME Bitcoin Futures Do to the Price?
Shorting The Great Bitcoin Bull
As I accept articular in my antecedent posts on this topic, the astounding balderdash run bitcoin has had back $6,500 may accept been mostly apprenticed by the abstraction of bitcoin as an arising asset class, area retail investors accept been presented with the alarming befalling of accepting in aloof afore Wall Street does. While analysis tells me that the CME (and alike added so Cboe) bitcoin futures comprises a net absolute for the amount of bitcoin, I don’t accept the abounding furnishings of it will be anon arresting on barrage day (10 Dec for Cboe, 18 Dec for CME). Listing the apparatus on an barter is alone the aboriginal step; there are added hurdles that will charge to be beyond afore the instruments can be traded. For instance, it requires the allowance firms of the clearinghouse to bright the instruments for its audience and brokerages to action them to end-investors. For the institutional investors, there is usually some accommodation authoritative action and accident assay that needs to be done afore they can invest. With the Cboe announcement their barrage date alone a anniversary ago, I acquisition it awful absurd that they will boss the all-around bitcoin bazaar on the aboriginal anniversary of trading. What should accept a abundant beyond concise appulse on the amount is the abrupt dematerialization of retail buyers jumping on the abstraction of getting-in afore Wall Street.
Now, at $10,000, this wouldn’t accept been abundant for me to access a abundant abbreviate position on the greatest banking asset of all time. However, if you add addition $6,000 in beneath than a anniversary and the actuality that we’re activity into a weekend (when no new authorization can hit the exchanges) to the mix, the admiration to at atomic abatement my acknowledgment to bitcoin briefly becomes too acute to canyon up. Observing the contempo acute volatility, it is actual bright to me that the bazaar is overheated and could collapse for alike bottom affidavit than the ones I’ve detailed. However, affairs a block of bitcoin at a atom barter is not a actual adorable advantage due to taxation and careful risk. The added advantage is entering a leveraged abbreviate position, which allows you to abatement your acknowledgment after abrogation about as abundant funds on an exchange. As such, I’ve absitively to abbreviate the Great Bitcoin Bull.
Shorting on Bitmex comes with a amount absolute at which you get forcibly liquidated, so the timing is absolutely delicate. It is again not actual accessible that the amount is acutely volatile. As I mentioned earlier, calling the top with attention is mostly guesswork, yet still actual important. Perhaps that can explain why so abounding traders seek aid by attractive for appropriate clues in the patterns of the graphs to advice with this acute task–the art accepted as abstruse analysis.
The Head & Shoulders Pattern
The Head & Shoulders Arrangement (H&S) is a arrangement declared on Investopedia as a “specific blueprint accumulation that predicts a bullish-to-bearish trend reversal” and that it “is believed to be one of the best reliable trend changeabout patterns”. Note the chat “believed” in the closing sentence; abstruse assay is not empirically proven. Nevertheless, the H&S arrangement is one of the best frequently mentioned indicators on /r/BitcoinMarkets, and is frequently acclimated by abounding abstruse bitcoin traders. As such, it stands to acumen that the accumulation of such a arrangement may be a self-fulfilling apocalypse in the faculty that it can account a cerebral ambush which causes traders to account the amount movement they were predicting, and may be the activate that bursts a balloon that for added affidavit was already bursting.
As we can see in the blueprint above, a H&S arrangement has formed for bitcoin. Whether or not this absolutely is a allusive indicator to barter by is not yet proven, but for me, this is an as acceptable an avenue point as any. I entered a abundant abbreviate position at the amount of $16,236.40 on Bitmex, a few hours afterwards the arrangement was formed on the blueprint above. The bazaar during this weekend will apparently be awfully shaky, so it’s best to try to not to attending too abundant at the amount in adjustment to abstain accepting afraid out of one’s position. Set your stop losses, and may the gods be anytime in your favor.
What do you anticipate about shorting bitcoin? Let us apperceive in the comments area below.
Disclaimer: Bitcoin amount accessories and markets updates are advised for advisory purposes alone and should not to be advised as trading advice. Neither Bitcoin.com nor the columnist is amenable for any losses or gains, as the ultimate accommodation to conduct a barter is fabricated by the reader. Always bethink that alone those in ascendancy of the clandestine keys are in ascendancy of the “money.”
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