Cryptocurrencies

BTC – Two Theses

OK, let’s keep this one as direct as possible. I currently hold two theses in regard to BTC. These theses are moving in the opposite direction but in time, both may well play-out.


Thesis 1

BTC as a Swing Trade (to the downside)

On a rejection off $6300-6500 and a strongly negative close (say -5% or more) on the daily – shorting BTC and targetting $5555 on half the position.

On the remainder, move the stop loss to break even and target $4805.

Stop loss $6858.


On a break above $6600 to $6800 – consider a second attempt at a short. Volume, momentum, etc. to be factored in at that point.


https://www.tradingview.com/x/EDVNS5Ef/


Thesis 2

BTC as an Investment

A more conservative approach would be to wait for a break above $6800 – your call.

A break above $6500-6600. An open and close above this level on the daily – I’m interested.

An open and close above this level on the weekly – looking to buy as an investment.

An open and close above $6600 on the weekly will be viewed as a confirmation of a change of trend – to the upside and invested in accordingly.


At the moment – I dollar cost BTC every week – small investments and have done so for the last 6 months.

On a reversal of trend – shifting to more significant investment in BTC – allocating sideline funds.

Pre-allocated 25% of my sideline crypto investment funds – no more.

Never go ‘all-in’.


Note

A more conservative approach would be to wait for a break above $6800 – your call.


Fund allocaton

50% at market – the week following an open and close above $6600

Profit target $17,100 just under previous ATH (see Bit Brian’s post on BTC’s previous ATH).

Stop loss $4380


50% on a retest of $6600 ($6611)

Profit target $17,100.

Stop loss $4380


Caveats

Tether is in trouble (only 74%ish backed by dollars)

Should Tether collapse BTC etc. might see a massive fall not unlikely. (Short-term but sharp)

Tether is the market dominant liquidity provider for BTC and most ALTS. A collapse could create a crisis of confidence and a liquidity break – never good.

And collapse it could.

Not convinced? Listen to this podcast on Bitfinex/Tether fund drama. Messy, messy, messy (illegal anyone?)

Though this would trigger the above stop loses – it would be a fantastic buying opportunity in my opinion (once the dust settled).

Remember Tether can cripple BTC price valuation in the short-term – it has absolutely no relevance to the long term valuation of BTC. None. So, should the market offer me this opportunity to pick up BTC at artificially low prices -I’ll take it.

Relevant Resources

The tangled web of Bitfinex/Tether:

https://podcasts.apple.com/au/podcast/what-happened-to-bitfinex-tethers-%24850-million-ep-071/id1347049808?i=1000437115727

Tether delisting in the works?

https://micky.com.au/growing-calls-to-delist-tether-from-binance-and-other-major-exchanges/

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