bitcoin
getty
Bitcoin is sure to crash and it is as sure to moon, that is how bitcoin moves. Right now people can be forgiven for being scared bitcoin is going to crash more so than usual. I’ve been a bear since bitcoin broke above $40,000, or more accurately, risk off in big crypto since then. I’ve been playing in DeFi and in tokens at a level leveraging the insane volatility of lesser cryptos rather than hold “all in positions” in bitcoin. Playing smaller tokens with big beta at smaller position size, keeps the downside at a much lower level than playing bitcoin or for that matter Ethereum in huge size, while retaining the nominal upside.
That has worked out well and I have missed out on a lot of white-knuckle action and picked up a few nice moves without risking my shirt on the outcome. As a bear it’s hard to play the long game but even as a bear I’m not insane enough to short bitcoin or Ethereum and risk “gamblers ruin.”
My current favorite token position is matic token on the Polygon chain. If bitcoin is not going to drop off its perch, then matic will do extremely well with a 50%-100% upside. For bitcoin to do that well would be titanic and tokens like matic would likely go up well beyond 100% in such a move. Conversely, if BTC was to crash under $20,000, I don’t mind wearing matic tokens for the long term. The mid-term future of bitcoin is simply not predictable at this point, so the way to trade crypto is to size positions conservatively and manage risk.
Token prices have also been on the back foot in the last month, many falling heavily from highs, yet Ethereum has been firm by comparison. This fall back has meant certain tokens are looking tempting for me but I’m not in a hurry. Compound, after its accidental largesse, is looking inviting and so is sushiswap. Both of course have the U.S. regulatory sword of Damocles hanging over their head, but you have to factor that in for every project out there that gets to a certain market cap scale. I’m in gentle acquisition mode with them.
Meanwhile bitcoin is in a “move,” that is to say it is no longer in the bull wave that saved it from crashing this summer and seems to be on the cusp of something dramatic. How that pans out is the call we have to make. I’m still bearish, so I’m expecting big drops, but I have to say I’m not going to back that with a short position because me and the market are not at one in crypto, since I lurched off with my gains back at the beginning of the year. The crash I expected happened, but half way down it turned right around and went back on up. So I defer to the bulls, at least for now.
Here is the basic chart as I see it:
The bitcoin chart as I see it
Credit: ADVFN
This is a solid picture but simply too boring for either bull or bear, but it’s a good guide to judge the natural volatility of bitcoin, even when it’s going sideways. Colossal volatility means huge range, which is why it is so hard to predict the next moves.
The classic chartist without a position would say this is what happens next:
The classic chartist view of what will happen next to bitcoin
Credit: ADVFN
That suits my bearish view but so far every time I produce a subsequent bullish counter-argument for bitcoin, that is the way it goes.
So this would be a basic bull chart:
The bullish chart for bitcoin
Credit: ADVFN
You can see that looks optically attractive.
Whichever way it goes there is a struggle going on between bulls and bears or maybe bulls and sellers who just want to take their profits or protect their capital.
As I write (December 12, 2021) is a perfect example:
The bitcoin price remains volatile as today's chart shows
Credit: ADVFN
That to me is not a healthy market. The market clearly doesn’t know the price and to me that’s bearish. That is quite hard to say when the asset is going up in a vertical fashion but uncertainty is a bad sign in my book.
To me it will take a development to push bitcoin to a new all-time high and if there isn’t one we will see the grind down. This process was underway after the last high in April, but up popped the China social clampdown and the Afghanistan debacle, which fueled the need for highly portable, easy to hide assets, and up went bitcoin.
I therefore remain a bear, but one prepared to buy crypto value or growth projects like Matic/Polygon or projects I use and respect like Compound and Sushiswap.
The crypto market is now a trade and happily there is so much to play.