Bitcoin has crashed again.
I’ve been drawing and posting the following chart and variation on it, a lot recently and being bearish that the outcome would be a breakdown.
So here it is and here is a bearish map.
So we are looking down the barrel of another potential $1500 drop.
What to do?
Firstly, a change in the global situation could dramatically change the picture.
BTC is falling because China is closing with the US on a trade deal.
The recent sudden fall, at least in my model, is because the deal suddenly got much closer.
Again, in my model we should hear this good news in the coming days.
What to do depends on your position.
If you are naked long BTC for trading glory, you probably would get out in this instance and hope to buy in lower. This would be about the lowest risk way to go. The whole trading gamut is at your fingertips. Good luck with that.
If you are a BTC believer. Buy the dip in small chunks, increasing size as the price gets lower. Plan your purchases.
If you are an equity investors, bear in mind BTC is a hedge. Do you want to lift that hedge now, with the financial market fizzing with liquidity problems and the current President the arbiter of trade war volatility?
If you are an equity investor you should be thinking that BTC down today means equities up tomorrow. Are you risk on or risk off?
If you are an equity trader are you thinking about trading trade war progress. There have been some spectacular long QQQQ trades off the back of sudden BTC drop moves.
Personally I’m buying the dip and happy to have an equity hedge. BTC seems to have 5-10 convexity to my equities, so what is not to love.
Its hard to sit there an watch positions take a beating but that is what hedges do. The key is the overall result and one thing is for sure, chopping and changing is expensive and very, very hard to get right.
So buy and hold and dollar cost averaging is the way to go with BTC and it looks like there is some cheaper BTC coming our way.