On my last piece during the previous week, I analysed how the northern hemisphere summer time is usually kind on Bitcoin. Of course there was the 2011-2012 exception, when the entire market was bearish for almost 2 years in a row, but let’s ignore that for now. If we enter a dry season there is nothing to be done except patiently wait for the mercy of institutional money.
For obvious reasons, today we tell a different story.
One month after the June mini-bull run, we’re finally starting to see some positive action. New, fresh money is coming into Bitcoin and that has given the market a nice pump back into the USD 7400 price level.
Do you know what that means?
–this article shouldn’t be taken as financial advisement as it represents my personal opinion and views. I have savings invested in cryptocurrency so take whatever I write with a grain of salt. Do not invest what you cannot afford to lose and always read as much as possible about a project before investing. Never forget: with great power, comes great responsibility. Being your own bank means you’re always responsible for your own money—
Bitcoin Gone Wild
When the market turns around there are many signs you can check for, in order to have funds available to put into cryptocurrency. I won’t go into much detail about historical prices, as I’ve covered that already, but it’s worth mentioning again the two key factors for success:
Timing, or better yet, buying/selling at the right time;
Sentiment, as you need to understand market behavior in order to predict price movements.
If you master both, then you’ll have a fair chance at beating the market.
However, make the correct prediction at the wrong time, and it can cost you your hard-earned cash. Remember what almost happened to Michael Burry? He was absolutely correct when predicting the subprime mortgage crisis, except he thought it would start sooner than what it did.
That tiny miscalculation almost cost him his fortune.
Now, back to what matters.
What’s going on with Bitcoin’s price?
On July 17th, at its lowest, volume was around USD 4,242 Billion. Fast-forward a couple of hours and around USD 1 Billion was added to the market.
This drove Bitcoin prices to rise around 8%, from USD 6700 to USD 7300.
If you’re wondering what or who may have caused this, I really cannot be of much help. Most likely, we can blame the usual culprit: smart-money, so institutional investors, large hedge funds, banks, etc.
When we check some professional traders and investors, like Alessio Rastani, Mati Greenspan or Daniel Jeffries, we can see not only were they hedging in favour of Bitcoin, but also expecting a price movement like the one that just happened.
I’ll do my best to explain how this price action was predicted and how can you leverage that knowledge for the next bull-run.
Never follow dumb-money
One of the most widely accepted facts is that, usually, traditional media channels provide completely inaccurate cryptocurrency market predictions. The reason being, their “experts” panels are generally composed by people who do not understand cryptocurrencies.
Sure, I really do not doubt for a second many of these panelists do possess a degree of financial knowledge it would put me in a corner. Except, if you use that knowledge and try to apply it to different fields, like cryptocurrency, your predictions an analysis might not be as accurate as you might think.
Ignoring the underlying technology mechanics, when comparing traditional financial markets vs modern cryptocurrency markets, is a problem too few people care about.
Mixing ignorance with power is a great recipe for disaster.
If you are one of those folk who usually listen to CNBC, Bloomberg, Reuters, etc you might end up having a bad time, when it comes to advise on how to invest in Bitcoin.
A key rule for any successful crypto-trader or investor is to never listen to the news.
Partnerships are usually bull-crap (look at the many examples of the recent past), most expert analysis is paid by companies, success is measured by funds raised and not product development, usefulness, nor market reach and, last but not least, traditional news-sites usually need to please a greater reach of readers, meaning, it’s much easier to have click-bait news than actual real news.
Like: “How Bitcoin Is Just A Scam”
Want another example of why you shouldn’t follow media advice?
Shorting Bitcoin: best advice ever
The image above, taken from one of Alessio’s latest youtube analysis, shows the volume of CBOE’s futures contracts. As you can see, dumb-money was betting heavily on shorting Bitcoin at the USD 4500 level (non-commercials).
I’m pretty sure the recent news explaining and why you should be shorting Bitcoin had a little influence on this outcome.
Should you follow the herd, or bet against it? You already know the answer.
Enjoy the epic short-squeeze! This is, when short traders get destroyed by large quantities of fresh…