Crypto Market Virtual Roller Coaster Ride

Crypto Market Virtual Roller Coaster Ride

From the Brilliant Mind of Michael Hiles 10xts 

Crypto Market Virtual Roller Coaster Ride

Crypto Market Virtual Roller Coaster Ride: I’ve got too many people hitting me up 1:1 asking me my opinion of the crypto market slide right now. So here’s my current summary for everyone (for whatever it is worth):

1. I previously had set my forecast of BTC price at around $14k as being the SMA (simple moving average) line for probably all of 2018. That means if you look at the moving average ratios, the trading range would be somewhere between $7-8k and $21-22k. I still hold to that. For the past 4 years running, the second week of January has been the low floor for trade price range for the entire rest of the year. So 2018? Could still see a slide from the current price to the floor range. This would be a technical trading “Wave D” that I think is still yet to hit.

2. The equity market is at all-time highs, so its feasible money is moving back into the traditional stock market, especially with 200 points daily gain bait.

3. The FUD (fear, uncertainty, doubt) over South Korea last week, and China this week over government regulations have been blown out of proportion. When a single government cabinet minister makes a statement, it doesn’t become law – however, the media turns a single statement from one person into “South Korea is banning crypto trading“. Raids on exchanges in South Korea were based on the exchanges not being compliant with identity verification. China is sort of a repeat right now, a single person makes a statement and the media blows it into “China banning Bitcoin. China banning mining.” There are as many Chinese in the government who are profiting off of mining and trading as there are who are opposed. It’s not a simple matter of flipping a switch.

Crypto Market Virtual Roller Coaster Ride

4. Bitcoin “crashing” in price right now means it’s trading at November 2017 levels. A crash would be $2000. I don’t see that.

5. Altcoins follow BTC price trending, partly due to the fact that many exchanges peg the alt price to BTC or ETH only – so the alt price is a reflection of parity due to people using BTC or ETH to move money in or out of the alt.

6. Now, this is a bit lengthy and highly speculative on my part (but I previously had posted some stuff about the possibility of it back in December when it started)… The price of BTC was ~$15,000 on Dec. 10, the first BTC futures contracts, which started expiring today, were fixed at about that same price. In a simplified form, this means that tomorrow:

– the “short” side of those contracts must give the “long” side a BTC (which, if they don’t already have, could simply be bought at tomorrow’s market price); and

– the “long” side of those contracts must pay the “short” side $15,000 in return.

Now if you are a large fund evaluating these contracts (and the crypto market as a whole, on Dec. 10), obviously, making a large bet on either the “long” or “short” side is extremely risky, since the price of BTC when the contracts expire (January 17) could very easily be $50,000 or $500. This makes large bets on either side a bad option for a large institutional investor like yourself.

However, you also know that crypto is still an emerging market with a large number of new investors and “dumb money.” And because you are a large fund, futures contracts opens the door to a third option: use large bets on both sides to manufacture market chaos and make money on the ripple effects with little to no risk. Here is how:

Bet big on the “short” side of the futures contracts on Dec. 10. Let’s say you do this for 10,000 BTCs. This means that on January 17 you will owe 10,000 BTCs to the “long” side of those contracts, receiving $15k per ($150,000,000) in return.

Buy an equally large amount of BTC on Dec. 10 at the market price ($15k/BTC). This cancels out your risk/reward for the futures contracts, making you essentially immune to changes in BTC’s price while you hold both the contracts and BTCs. This also allows you to accumulate and hold an extremely large portion of the BTC market while taking little if any risk.

Shortly before your futures contracts expire, dump all of your 10,000 BTC on the market at once. Like clockwork, this will trigger stop-losses and panic sells from the consumer BTC market, virtually guaranteeing that the BTC price will continue to dip well below whatever price you just sold those 10,000 BTC for.

Ride that dip you just created to buy back the 10,000 BTC for much less than the price you just sold them for. This is particularly easy since the funds you need are already liquid and ready to get back in the market.

Use the re-purchased 10,000 BTC for the expiring futures contracts, which get swapped for your initial investment ($15k/BTC). The difference in the price that you sold the 10,000 BTCs to start the dip from the price that you bought the BTCs back during the dip becomes your net profit.

For funds with access to enough capital to move the crypto market, this play should be easy money. It would also explain the series of huge dips (seemingly out of nowhere) that we are dealing with today.

If I’m right about the cause (and I’m fairly confident that I am), the good news is the current dips are painful likely temporary and not signs of more systemic issues with cryptocurrencies as a whole. If there were, CBOE and CME would grind it to a halt. The market is working as it should be, which is good. The bad news is that I don’t know how this can be stopped as long as the prospect of capitalizing off of market fear remains a huge carrot for the sharks in this market.

I am not an investment advisor and this should not be construed as investment advice. Consult your licensed financial professional – and never bet the rent money.


#10xts #bitcoinrollarcoaster #michaelhiles

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