DrJLT
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BTC bubble burst but the bottom is close / what I did wrong

BITFINEX:BTCUSD   Bitcoin / Dollar
There's not much value to be had to say exactly where the bottom is, but I want to summarize what I (and many) have done wrong in the weeks preceding this bubble burst.

Still, first let's look at the bottom:

  • From ATH to neckline was a drop of 7250; target is 100% retracement to 5.5k.
  • From the bull trap to the bear pennant drop of $7750; target is about 3k.
  • From the second rising wedge to the bear flag drop of $3640; target 5.7k.

We now have FINALLY some volume . This means we're in the capitulation phase. Realistically we may expect the bottom between 3k and 5k.

In my mind, there's no doubt that the whales have overplayed their hands & lost control. The bubble is burst, and the depression will take some time. It won't bounce off like before.

Now, what have I done wrong?

1. On Dec 23, I posted that bitcoin would crash. However, I mistakenly thought my BCH wouldn't be affected as it was supposed to be the "cashening" moment. It was very obviously a bull trap & ABC correction was coming.



2. On Dec 28, I posted that bitcoin would crash after reviewing the long-term chart. I already sold almost everything. The chart was self-explanatory.



3. Beginning of Jan, I continued to be bearish , but the market went UP! Now I see it's because I looked at the chart too much & lost the big picture. I BOUGHT BACK 2/3.



4. Then I saw the bullish sentiment of the market, and thought BTC might not be a systemic risk. I BOUGHT BACK 1/3 IN SHITCOINS.



5. I also found some "triple insurance" that BTC wouldn't fall even though it looked like it was going to 7k. I OPENED TWO LONG POSITIONS ON MARGIN.



6. Last straw, I saw the two rising wedges & bear pennant but hoped for no kaput. I DID NOT SELL.



--------

Now I'm as fucked as everyone that has a bagful. But what's the lesson?

  • TradingView is a social media platform. People are looking for confirmation. Many "experts" here are just cheerleaders who hardly know anything more than you do. Don't believe in their posts.
  • Read the chart & be patient. What the chart tells you may not turn out immediately. It's very hard to time everything.
  • Be very careful with margin positions. Close 95% when it goes bad immediately.
  • Supposedly there's a lot of manipulation going on, but in retrospect the chart is very clean.
  • FAK fake news media & shills.
Kommentar: Looking back, does resemble 2014 a lot.

The interesting thing is that now we may also have a stock market crash that didn't happen in 2014. Where will the hot money go? (I hope to my exchange :D)

Kommentar: Horrible week. Profits from the past three months all gone.

Can't think right now. I'm depressed. After this is over I'll stop using my bitfinex account. Ever since I started there it's been a streak of bad trades. Three problems with that exchange:

  • Too many bots. Some of them may be there to prevent flash crashes, but who knows. Whenever you put in an order these bots creep up. The order book is distorted.
  • Their coins are old news. When coins get listed on their exchange, they've already been pumped 1000+% elsewhere.
  • Even though I think it's pure FUD, there's always a FUD linked to it.
Kommentar: Check out this fake news. China hasn't banned any exchanges. I checked Chinese news; it's pretty neutral with officials acknowledging the importance of the technology & want to take the lead.

This source of fake news in the end writes that PBOC bans access to overseas exchanges. Basically it means that Chinese banks can't deposit CNY to these exchanges. Then make this title and spin it like it's the end of the world ban.

Some people are extremely vile & evil.

https://cointelegraph.com/news/bitcoin-dips-below-7k-amidst-news-of-chinas-full-ban-of-cryptocurrency-exchanges
Kommentar: I think good news coming out of the cftc & sec meeting would be a good sign, but today's bounce could be the result of buying the rumor --- and we know what comes after that.

I'd say to really confirm we should go to 9k then fall to 8k then break the 9k neckline with volume (inverted H&S). Then we can know for sure that the market is ready.

The volume in the last few hours has been higher than during the drop. This is a good sign. More people start to think this is the bottom & opportunity for entry. At the same time, on the hourly chart it's overbought now. If the crash is stabilized, in a overbought condition the price trades sideways or drop slightly. In a crash, we've seen brief bounces that were very short-lived.
Kommentar: Giancarlo (CFTC) seems to be very positive
Kommentar: I think the hearing is very positive. They're referring to crypto as "disruptive innovation" & regulations as "we're already xxx".

They say ICO is securities while coins are commodities + currencies.

Hope that the crash can stop now.

btw, the stock market is crashing now. Monthly RSI fell from ATH (extremely overbought). This will be an interesting time because hot money needs to go somewhere.

Kommentar: Sen Warner used the word "transformational".
Kommentar: If we're fortunate, the market will stabilize in the current region for a while. Small investors will regain confidence likely around/after the Chinese NY.

Now is the moment to do some adjustment in portfolio. There's of course still downside risk.
Kommentar: I see a little bearish divergence (volume) in shorter timescale. IMHO wave 1 of today's cycle is about to conclude.
Also, FYI, prior to the hearing they had the documents in PDF form on the website the day before. So reddit and twitter were already posting the summaries and you could read the statements yourself. So that should have given most people with positions below $7.5k some confidence that we would see a reversal.
+1 Antworten
I think the big problem with a lot of "experts" on tradingview is the complete lack of discussion of fundamental valuation methods, arbitrage strategies, and most importantly, risk management and portfolio management strategies. If you had more disciplined portfolio management you probably would have avoided a lot of the impulsive behaviors that led you to overcompensate for failed strategies/predictions. But it's good to see someone actually run through in an orderly way their mistakes. I think that's far more educational than another shitpost about some coin's potential to go up Xhundreds of % based on a bunch of TA.
+1 Antworten
DrJLT powderpc
@powderpc, good point. I just started late last year. still learning. "discipline" is the keyword. I had many impulsive trades that didn't end well :)
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@DrJLT, My new strategy is to have a "panic button" contingency plan. This way if my strategy falls apart I have a plan that allows me to manage risk while not having to make something up under stress. Basically, this is no different than taking 50% profit so you have better risk management. If something goes wrong, set some price targets for a "safe" exit for half of the position. This gives you less pressure to overcompensate or make a bad decision that could lead to missing a profit or being too greedy.
+1 Antworten
DrJLT powderpc
@powderpc, makes sense. thanks for sharing. I'll note it down in my "investment principles" :)
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DrJLT powderpc
@powderpc, Thanks again. I've added your wise words to my investment principles: https://www.jlteng.com/category/my-principles/investment-principles/
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2800 -> 2600 is crash? maybe they try crypto for real crash
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@ha2, haha. but the target could be lower.
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DrJLT leondb
@leondb, thanks. KTRAD also shared it
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