The best way to lose money in the markets is to sell when you are scared and buy/hold when you are happy with your profits.
So is was for me a couple of days ago when BTC was $9500. I so wanted to close out 25% of my BTC and leave myself to run the rest, having taken out the cost of my position in cash and thereby run the rest as free carry. You can spin all sorts of narrative why that’s a smart idea or why that’s a dumb one, but the fall was the impetus and the desire to flee a normal human emotion. It is an instinct that traders and especially investors need to control.
Luckily, I’ve been playing the high risk game long enough to wait. When I want to sell an investment solely becauseit has dumped I wait at least 2-3 days before making such a move. If and when Bitcoin hits $13500, I will want to load up on more but I will likewise stop myself from buying into bullishness.
So I did nothing with my Bitcoin and this happens.
Once again doing nothing is the best move you can make with a good position.
So in my model, this is China and this is down to the trade war.
When BTC jumps, something bad has just happened in the US/China trade talks. We won’t know what it is, but soon enough we will find out.
Well today we get a Trump tweet and up BTC goes again. Yesterday, what happened? I guess whatever it was that made Bitcoin pop, also left the US President even more incandescent than normal.
This is still a theory, but it keeps on playing out. So what to do?
In the short term the question is, is the China situation going to continue for long?
Continuation of the trade war means BTC up. The longer the war runs, the higher Bitcoin will go.
For me it’s likely that the trade war is going to run and run. Both sides can’t buckle and like most wars, sides are prepared to take big losses, not to lose. This means holding through a rollercoaster ride of developments.
If we are in for a trade war of attrition Bitcoin will be over £20,000 by Christmas or sooner.
What we also have here if this theory is right is a gift to the extra greedy. When Bitcoin flies, short the Dow, because when BTC flies, for no apparent reason, it is a high probability that something Dow slapping will come out of the Trade War, in a day or twos time. While information may flow more slowly in the US, whatever goes wrong will nonetheless hit the US equities market soon enough, but meanwhile the bad news will hit the Asia Bitcoins market much sooner, about as long as it takes for the participants to get out of their meetings and past the revolving doors.
BTC down on Monday, should also give Dow up on a Tuesday and visa. Bitcoin is the gift that keeps on giving to traders.
Gold and the whole PGM group will follow but at a much more refined and subdued pace, Bitcoin delivering another leading signal to the stacker community or any trader that wants to play the dangerous game of levered commodities.
Signals like this don’t come by very often and cant last for long, but while the stakes are in trillion dollar scale, quite a few million dollar crumbs are going to be left lying around the table.