Jump to content

Bitcoin - Price Behaviour

Recommended Posts

@AbDXB1345,

What time frame are you using? I tend to use the 'daily'. The 200 DMA was breached and then the price went back above it on the 'daily'. This is the problem with setting stop losses on technical indicators such as the moving averages which are so common that a lot of traders set them around them. The markets and institutions know this. 

For me news is a big driver in Bitcoin and other alt coins but on this occasion the specifics begin the sharp and extreme move down could not have been anticipated by the small retail traders. This is the big risk in trading Crypto's and why a lot of good and experienced traders stay away from it. It is not for everyone.

I would not suggest Crypto's unless you have a high risk tolerance and have a good amount of capital. The margin requirements are pretty premium when compared to other assets but the potential points reward is also greater due to the volatility.

Try being patient and waiting for Bitcoin to pick a strong direction and then trade in that direction. If you are going to trade right now then the only trade is 'short'. Do not try and go 'long' and trade against the current trend in my opinion unless you are an expert day trader at Crypto's. 

I think there is going to be a big move in Bitcoin ahead of the halving event. Exactly when this will be I don't know. That is going to be the trade to participate in if you have limited capital and limited experience of trading Bitcoin. Crypto's can turn at any given time which is why they are disliked so much and why they remain ultra high risk. 

  • Great! 1

Share this post


Link to post

@TrendFollower I trade daily charts, with longer term positions proving to be better for me. 

I think you are right, best to wait for an established trend and then get onboard instead of waiting on the fence hoping for the direction to favour my position.

Share this post


Link to post

@AbDXB1345,

Well stated. 👍 I could not have put it any better. 

If you just take a position based on emotion, personal thoughts, personal judgement, etc. then you are relying on 'hope' and 'luck' that the price follows your personal opinion. Unfortunately, markets do not follow small retail traders. Markets are ruthless. Hope and luck are not words you want to use in trading. They are bad words and one must avoid them. 

This is why when trading Crypto's I only try and trade them when they are trending strongly in either an upward or downward direction (like now). I have day traded Bitcoin and other Crypto's in the past but due to my work commitments as I work full time, I just simply do not have the time. I did make some really good profits per day but it was mentally exhausting though rewarding. I need to trade Bitcoin et al in a way that allows it not to interfere in my time and work during the day. This is where adopting trend following principles comes in. I too also trade longer term positions based on trends. 

  • Thanks 1

Share this post


Link to post

It is being reported that Bitcoin even after its recent drop is still the best performing asset in 2019 to date. I accept there are still a couple of months to go and even if another asset was to outperform it in the next couple of months it would still be one of the highest performing assets in 2019. 

 

Share this post


Link to post

So it seems Bitcoin is experiencing a breakout.

For me the recent consolidation was not long enough. However, this is Bitcoin and it has not stopped Bitcoin before in making a sharp move when the market least expects. 

This is precisely why it makes trading Bitcoin and Cryptocurrencies in general so difficult to trade and certain text book theory is extremely difficult to apply. 

What I now want to see is whether the current breakout in the price of Bitcoin leads to a strong trending movement. 

Share this post


Link to post

For me the downside risk of any rally is still the possibility that Bitcoin goes down to the $7k levels.

Earlier on I did not think this was going to happen but it just shows that even Bitcoin is resorting to 'text book' technical analysis rules. My assumption could still be proved to be wrong and the price action will confirm this one way or another. 

Share this post


Link to post

I wouldn't say rules there @TrendFollower.  TA is merely a way to visualise price action by mapping market participants sentiment as expressed in the price action.  It puts price action into a context such that one can see a breakout or a potential trend change, or continuation, building and select an appropriate entry and stop point.  Bitcoin, and any market for that matter, is gonna do what it's gonna do, which will be driven by sentiment.  Perhaps we can say that sentiment is driven by fundamentals but good old fashioned greed and fear are also big factors, especially with markets more prone to speculation.

Share this post


Link to post

@Mercury,

I would add that TA is merely a way to visualise 'historical' price action.

I think for Bitcoin, sentiment is driven by positive or negative news as it is still very difficult to value Bitcoin compared to other more traditional assets. Yes there is a limited supply of 21m and yes it is worth what someone is willing to pay regardless of whether it is worth that much or not. 

My view is that the 'whales' will buy and drive price up prior to the halving event next year. That is my assumption and the price action will either accept or reject my assumption. The the 'Big Dump' will come where profits are taken and the herd are left nursing losses.

Share this post


Link to post

Not sure how one would visualise future prices...  The whole point is to put likely scenarios into historic context (i.e. we have had a deep bearish retrace therefore a bullish phase may be coming, how do you see that).

Share this post


Link to post

@Mercury,

So historical price action is one part of the information which can go into the 'decision basket'. Another can be news being released both positive and negative. One can also have a 'gut' feeling or 'instinct' on a trade which can also go into the decision basket. You can also make 'assumptions' based on your knowledge and experience and this too can go into the decision basket. This can be used to 'visualise' mentally how you think the future prices could look like. Of course there is no guarantee but when we make a trading decision based on various factors what ever they may be (different traders will have different factors) we are visualising future price action. Whether this visualisation becomes a reality is determined by how the price behaves and ultimately the price action going forwards once the trade is initiated. 

So to put this into the context of Bitcoin. I have visualised the future price action of Bitcoin as increasing prior to the halving event in 2020. I am making an assumption which the price action is going to test. I am visualising future price action. Elements of this visualisation are based on historical price action. So for example how the price of Bitcoin has reacted to prior to previous halving events. Of course there is absolutely no guarantee that Bitcoin's price will behave the same way prior to the next halving event but trading is based on 'odds and probability' and one could argue that based on the information we have and what we have experienced when it comes to Bitcoin then could be more than likely that Bitcoin could repeat a similar pattern. I don't necessarily think the this is a given but based on the fact that Bitcoin has not crashed or gone $1k or even $2k suggests that there is likely to be another mighty rise before the next mighty fall.

Share this post


Link to post

The price behaviour of Bitcoin could be described as erratic. I don't think it helps that there is uncertainty around the globe on whether the asset should be a commodity, security or currency. This certainly does not help. Also regulation is slow across the globe too and even this differs depending on the jurisdiction. 

Until these things are resolved the price of Bitcoin is going to behave erratically and continue with the extreme volatility we have seen. 

Share this post


Link to post

Personal View on Bitcoin - At Present (This may well change as time passes)

The problem I have with Bitcoin is that I can see it making a play towards its all time high based on a historical pattern of halving events and limited supply arguments.

However, such is the nature of Bitcoin that I can all see it come crashing down also based on historical patterns and lack of appreciation, value and understanding. Speculation is rife in this asset class and for Bitcoin specifically. It is speculation that will drive prices down sharp and quickly. 

One of the things that would change my mind is if there was serious regulation in the US and UK in relation to Bitcoin and Cryptocurrencies. Another is if India changed its stance on Bitcoin. One important thing could be if the US approved a Bitcoin ETF. These things would change the landscape for Bitcoin to change historical patterns which have played out in a similar fashion. Until this happens I fear we could see similar patterns playing out in the future.

I think Bitcoin is going to make a play for $20k. I have no idea if it will exceed but it could easily do so. Once we are closer to the halving event then I see large profits being taken and a massive drop coming in Bitcoin because there will be a long time before there is another halving event. The only thing that could change this is if any of the things in the above paragraph in blue happened. If not then I see a major downside move in Bitcoin. 

Share this post


Link to post

I think Bitcoin needs to go above $10k and every day it now remains below $10k given an increase in the chance that the next big move is downwards. This is based on my personal experience, gut feeling and instinct. One needs to see Bitcoin aggressively drive past $10k for there to be this 'big' move some of us are expecting (including me) that will take Bitcoin above its all time high before it comes crashing back down. 

Share this post


Link to post

Let's just say that Bitcoin now tumbled down to $7k or even $5k. Those who have been following Bitcoin over the past many years have seen such falls constantly. The way Bitcoin operates it would still be capable of making a new all time high from that position. 

It is not impossible in my view that Bitcoin can be amended, upgraded and improved to make it an even stronger and better asset. If this were to happen and there are some extremely clever minds at work on this then would it not stop Bitcoin crashing to zero?

This is where an understanding of the underlying technology behind Bitcoin, Blockchain, comes in. I just simply do not see Bitcoin crashing to zero this year or next year. If it does then I will be wrong and I am fine with that. Too many large organisations are now getting involved with Bitcoin who had not say 3 years ago or even 5 years ago. I think many others will join the journey so this Christmas 2019 should be an interesting one.

Share this post


Link to post

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Member Statistics

    • Total Topics
      7,629
    • Total Posts
      39,148
    • Total Members
      49,326
    Newest Member
    Seagrove
    Joined 19/10/19 18:34
  • Posts

    • Hey @dmedin. That news piece is something I long suspected. If anyone can move the market with just one tweet then why shouldn't the cronies profit from it. I'm just surprised this has taken so long to get to the "news".
    • Ok, so I took this approach to the next level. Rather than telling the algorithm enter long at 25% and enter short at 75% levels, I decided to let the algorithm decide itself at what levels its best to enter short or long. This simplifies the strategy and boosts its gains dramatically. Top level stats over 100,000 5min candles: Gain: +1,307% % of winning trades: 60% Starting with a £2000 account, after 1 year and 1 quarter that account would have grown to almost £30k (£28k). The equity curve looks also a lot more stable, too. I resolved the issue with the lot size, this is now a formula. Unfortunately we still have 3 negative months, but overall the max runup is a lot higher than the max drawdown. Overall time in market is only 20%, so there should be the opportunity to run multiple of this strategy on different assets simultaneously to further boost the return. If let's say 3 of these programs could run simultaneously and deliver similar results you could grow £2000 to £100k within about 18 months. Still not as good as the results of the few world-class top traders like Ross Cameron from Warrior Trading, etc but a start nonetheless. The variables which the program optimised are the following: Take Profit for Long Positions: 84 points Take Profit for Short Positions: 70 Points Entry LvL for Long Positions: 23 Points below the low of previous day Entry LvL for Short Positions: 7 Points below the high of previous day Interestingly, it turned out the strategy works best without a set stop-loss, but just to close out any open positions at 21.00 o'clock at night, if not already closed by the take profit rule. I'm gonna simulate this on NASDAQ next. Obviously will need to find out the 4 variables again, as these will be subject to the Index where this is traded.   What do you guys think? Worth a shot this strategy?  
    • Lool, I'm sorry for my first post here, but it's funny :)
×
×