BitcoinShort
Crypto Is At A Turning Point
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Good evening!
Just wanted to throw up a quick post, because it seems BTCUSD and crypto in general is in a very interesting spot. Right now, we are in the midst of a massive volume node, between 41k and 31k. As of this very minute, we are bouncing off of a huge area of support, which has held numerous times since the initial breakout above 20k last December. The most high probability trade from this point is a mean reversion buy, back to the middle of the volume node / channel. From there, however, it's anyone's guess.
We suspect a break lower to 20k.
This zone is absolutely crucial to Bitcoin's story, and it's important to explain why.
If you really break it down, Bitcoin has no underlying value. People can argue with that statement until they are blue in the face, but from a non-delusional perspective, BTC has no value. There's no cash flow to fall back on, and the market decides it's value by pure order flow. One could say the same about any asset, but the order flow in equities, for example, is heavily informed by fundamental analysis. Commodities supply and demand is controlled by the END USE CASE. The end use case with BTC is supposedly within it's own parallel financial system. In developed economies, this end use case is questionable at best. Why am I paying gas fees when I can Venmo or cash app my friend for free, again?
In our view, the only argument here that holds any water is the digital gold / inflation argument. And in general, the same people who want to REALLY REALLY "own" their money (good luck calling customer support when you lose your key) are the same people who buy canned corn and shotgun shells for the apocalypse, and aren't a big enough subset of the population to sustain huge massive buying order flow. If GLD is good enough for the Rothschilds, it's good enough for you.
Because of this, the value could evaporate to zero, and you'd be left with nothing. For this reason, we here at Discordia look at BTC as a "Momentum Asset". It's the wild west out there, with pure trading price discovery. This means that understanding Technicals and the narrative is 90% of the battle for trading this successfully.
Which, by the way, we have done.
Initial Buy:
Initial Sell:
Additional Sell:
As it sits right now, there are two cases.
Bull:
1.) Buy the dip off of support in a once-in-a-lifetime asset class opportunity ("Have fun staying poor").
2.) Negative news flow about miners in China should probably be hurting the asset more than it is (our read), which means people are reluctant to sell, which means the aggregate underlying decision making is digesting this news better than expected.
Bear:
1.) Momentum is categorically negative, and we are still on the backside of this megatrend
2.) The breakout attempt a week ago was stuffed
3.) Who is buying here who is new to the story?
a.) low conviction corporates who really late to the party
b.) BTC perma-bulls who were waiting for a dip to yolo their annual bonus on
In other words, most people who "feel strongly enough" to buy this dip ALREADY KNOW ABOUT THE ASSET CLASS. Who is, truly, stumbling across crypto now for the first time? These are the types of market newbies who make emotional trading decisions and make all of the typical beginner mistakes - too much leverage, yada yada. You never want to be on the same side as these people.
4.) The markets tend to screw everybody in the end. Guess where every trader's stop is?
hint: $29,999.99
5.) Finally, given that high inflation expectations is really the only "fundamental bull case", falling interest rates (Look at TLT) should also weigh heavily and cause real portfolio managers to sell / adjust down exposure here.
On a break of 30k, We expect to see a pure washout down to 20k, the original breakout spot, which is where we have our starting bids out for a speculative position we are looking to TRADE around.
Hopefully this helped clarify the situation for you. Cheers, and stay safe out there!
Let us know your questions / feedback in the comments.
Just wanted to throw up a quick post, because it seems BTCUSD and crypto in general is in a very interesting spot. Right now, we are in the midst of a massive volume node, between 41k and 31k. As of this very minute, we are bouncing off of a huge area of support, which has held numerous times since the initial breakout above 20k last December. The most high probability trade from this point is a mean reversion buy, back to the middle of the volume node / channel. From there, however, it's anyone's guess.
We suspect a break lower to 20k.
This zone is absolutely crucial to Bitcoin's story, and it's important to explain why.
If you really break it down, Bitcoin has no underlying value. People can argue with that statement until they are blue in the face, but from a non-delusional perspective, BTC has no value. There's no cash flow to fall back on, and the market decides it's value by pure order flow. One could say the same about any asset, but the order flow in equities, for example, is heavily informed by fundamental analysis. Commodities supply and demand is controlled by the END USE CASE. The end use case with BTC is supposedly within it's own parallel financial system. In developed economies, this end use case is questionable at best. Why am I paying gas fees when I can Venmo or cash app my friend for free, again?
In our view, the only argument here that holds any water is the digital gold / inflation argument. And in general, the same people who want to REALLY REALLY "own" their money (good luck calling customer support when you lose your key) are the same people who buy canned corn and shotgun shells for the apocalypse, and aren't a big enough subset of the population to sustain huge massive buying order flow. If GLD is good enough for the Rothschilds, it's good enough for you.
Because of this, the value could evaporate to zero, and you'd be left with nothing. For this reason, we here at Discordia look at BTC as a "Momentum Asset". It's the wild west out there, with pure trading price discovery. This means that understanding Technicals and the narrative is 90% of the battle for trading this successfully.
Which, by the way, we have done.
Initial Buy:
Initial Sell:
Additional Sell:
As it sits right now, there are two cases.
Bull:
1.) Buy the dip off of support in a once-in-a-lifetime asset class opportunity ("Have fun staying poor").
2.) Negative news flow about miners in China should probably be hurting the asset more than it is (our read), which means people are reluctant to sell, which means the aggregate underlying decision making is digesting this news better than expected.
Bear:
1.) Momentum is categorically negative, and we are still on the backside of this megatrend
2.) The breakout attempt a week ago was stuffed
3.) Who is buying here who is new to the story?
a.) low conviction corporates who really late to the party
b.) BTC perma-bulls who were waiting for a dip to yolo their annual bonus on
In other words, most people who "feel strongly enough" to buy this dip ALREADY KNOW ABOUT THE ASSET CLASS. Who is, truly, stumbling across crypto now for the first time? These are the types of market newbies who make emotional trading decisions and make all of the typical beginner mistakes - too much leverage, yada yada. You never want to be on the same side as these people.
4.) The markets tend to screw everybody in the end. Guess where every trader's stop is?
hint: $29,999.99
5.) Finally, given that high inflation expectations is really the only "fundamental bull case", falling interest rates (Look at TLT) should also weigh heavily and cause real portfolio managers to sell / adjust down exposure here.
On a break of 30k, We expect to see a pure washout down to 20k, the original breakout spot, which is where we have our starting bids out for a speculative position we are looking to TRADE around.
Hopefully this helped clarify the situation for you. Cheers, and stay safe out there!
Let us know your questions / feedback in the comments.
Nota
UPDATE: If this candle finishes as it look right now, then it's rather bullish, having been saved from a complete and total breakdown. Possibly some upside here! We have initiated a starter position earlier than anticipated in this should BTC continue to trade higher.
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