I think it’s Iran and the U.S./China trade war, others think it’s the impact of the Facebook, ‘Facebank’ move with their Libra project. We could both be right.
Whatever the reason, the rise is escalating and moving to levels I’ve predicted – but at a faster pace than I was expecting.
Today’s move hits levels where I’m expecting a pause and some period of sideways trading, but the market won’t listen to me.
If this pace keeps up we are going to hit the bubble phase ahead of time, which means we might be in for an early correction too. This will be great for traders because volatility is their fuel but it is not so good for investors, who hate a crazy ride.
I am expecting new highs in the low 20ks, but I’d prefer them to be in the months ahead, not in a few days’ time and only for an hour or two. The technical setup looks tremendous. You can judge a parabolic move by the scale of its base and the current base makes for a breathtaking projection:
I won’t even bother drawing it, it’s just too wild. If this is the ride we are going on over the next days, set your exit price or if you plan to HODL for years, best look away.
The thing is, this move is not driven by FOMO (fear of missing out) like last time, there are no hordes of ingenues wanting in, this move is driven by crypto’s use cases and the potential adoption of crypto by the mainstream via Facebook’s move.
I am expecting a pause here as per my previous article a few days ago but this kind of commodity price spike starts to look like the vertical is developing. The drivers of this move are emergent and we are mid-stage of a consequent repricing, that might not take a rest. The drivers of this move are not going to subside anytime soon and will even increase rather than lessen.
Now a cautionary. Companies short of BTC, are going to be in desperate trouble right now and these might include some of the more sketchy exchanges, who might have turned their platforms into the equivalent of crypto fractional-reserve banks. An exchange can issue you phony BTC on their exchange because balances are accounting numbers, not coins in wallets. So you can add your Litecoin or Dogecoin to a wallet in an exchange and sell it for BTC and your onscreen balance of Bitcoin goes up, but there is no BTC to cover it. You only find this out when you come to try to withdraw. Shady participants are the Achilles’ heel of crypto so you have to be on your toes.
Because of this heightened risk, you need to be very careful if you are trading on margin. I am pretty sure that some participants are trying to ‘stop-loss’ drive their clients out of their positions and steal their money.
This looks like a recent example from June 25, 2019:
While it might be a very rich idiot dumping their money carelessly, it is more likely a ‘stop drive.’ If you have an automatic stop loss, this sort of move can be manipulated to pour your money into the platform holder’s account. Such a villainous exchange simply knows where the stops are, works out what they need to sell onto the BID, puts their orders in low on the BID book. They then dump on the bid and trigger stop-loss sells, which pour onto their orders. They have sold high and bought low and seen the price snap back up and the stop losses customers have lost a packet.
There are several things a trader needs to do in this volatile environment. Lower their leverage and keep their stops mental and away from round numbers and the platform’s awareness. It is and always has been a sad fact that leverage kills and the more you have the faster the demise.
In crypto, security hygiene is a must. Rather than sweat the wild gyrations in Bitcoin’s price now are the time to sweat about the security of your crypto.