THE BASIS AND OTHER FUNDAMENTALS KEEPS ME BULLISH AND LONG. . .
Just this shorty as I am getting a few tweets about my bitcoin position.
I was terribly ill over the week-end with a steady diet of water, NyQuil, and bed . . . I am tolerably better this morning.
The two week low was penetrated, at first barely and only on Bitstamp, the penetration was later confirmed on Bitfinex. This is how I measure trend. It is simple and straight forward and I am certain I am not alone looking at this.
Others have fancy ways of coming to similar conclusions but I am an Ugly Old Goat and not a very bright one at that . . . so I must KISS . . . keep it simply stupid. I was mildly bullish and looking to add to my position upon a penetration of 4115 which did one more time only to be rejected. . . which was a number many others were looking at and waiting for.
So breaking this low by definition turns me bearish . . . but trading is dynamic, not static. . . and there are exceptions to every rule.
Just as the backwardation of basis made me a buyer of every test of 6,000 until October 29, 2018 . . .
. . . the backwardation plus other factors kept me bullish upon breaking this two week low. . . so much so that I added lightly to my position at 3567.
Also, the reason I added is there was huge liquidation of 10,000,000+ rekts. . . and this GOAT loves to eat rekts! Note that rather than throw in market orders I used limit orders that got filled better than the limit. . . . in all other situations, I only use limit orders and thus get paid as a market maker on Bitmex. But in fast markets, I do not hesitate to use limit orders above the market if buying and limit orders below the market if selling.
I realize it gets very frustrating when markets spike and the system will not take your orders. . . that is why is often wise to enter a few ridiculously priced buy orders below or market and sell orders above a market.
I also realize Bitmex is accused of market manipulation in these situations, but such accusations come from rank amateurs. This old goat has been around the block a thousand times. . . . I have waited hours for fills from COMEX, CME, and CBOT in fast markets. . . . . sometimes as long as an hour before the next day’s opening. . . these pikers have no clue of how markets operate.
In my youth, I traded from the Kansas City stockyards . . . when there was still an active stockyards. . . a fast market is best described as a herd of confined cattle being prodded into a single chute. . . wish I could find a video that does it justice. . . but found this one highly entertaining.
Let me emphasize again . . . and I know you pikers will disagree . . . but Bitmex is hands down the most sophisticated and honest exchange ever created, regulated or unregulated . . . this is also reflected by its usage. No other exchange even comes close.
Fast markets happen. It is simply the nature of the beast. . . .When the herd is trying to exit through a small chute it is never a pretty sight. . . prods are painful. You don’t want to be on the wrong end of the prod. . . . better to be a proder than a prodee.
Money management keeps you on the right side of the stick.
The second fundamental that keeps me bullish is the Exthit (pronounced lisp and weak wrist). If free market money and banking is to succeed, only one standard will emerge . . . The Bitcoin Standard is the Hayek Standard. . . the basis for this premise is outlined elsewhere . . . so beyond the scope of this shorty. . . at this point you must either accept the premise or reject it.
What is not clear is just how this will be accomplished. It can be accomplished in any number of ways . . . but again beyond the scope of this shorty.
The third fundamental is that there is really no argument . . . the Bitcoin Standard will either succeed or fail . . . if it fails my premise is fundamentally mistaken. . . and all is for naught.
It is the Ugly Old Goat’s opinion that the Cruiseship debate marked the beginning of a divorce between Bitcoin Standard Bearers and the Crypto World. Jimmy Song lost in speaker points but hands down won the debate.
Jimmy Song’s paper along with Saifedeans Ammous THE BITCOIN STANDARD provides the fundamental roadmap of what lies ahead.
The upcoming www.unconfiscatible.com conference promises to be a landmark event. So much so it that I do not pretend it will not have a market effect.
No doubt if I am right on this score, the pundits will cry market manipulation. But it is not. The upcoming conference will simply be an affirmation of the fundamentals already in place. If our premises are correct, what is presented will be historic affirmation of basic premises and takes time for the market to digest. It is simply correct thinking applied to the correct premises. . . no magic . . . and no conspiracy.
Technically speaking if the market goes up, it goes up. And if the market goes down, it goes down. I say this facetiously as this is technical double speak. . . but with an element of truth.
By nature the respected TA was bullish when pressing 4000 and bearish when pressing 3500. This is the nature of markets and also of technical analysis. Now TA is extremely useful, but it also tends to get anal. That is when fundamentals come to be useful.
So while the fundamentals remained bullish, the TA got bearish . . . and I elected to stay with the fundamentals . . . accepting reasonable risk. . . . plus a number of TA indicators and new fundamentals made me stay bullish.
First, technically the primary shitcoin ETH exceeded the bitcoin market on the rally. This is due to the lower market cap and shitcoins dying hard. ETH took out December highs while bitcoin did not come close. This was fundamentally out of wack and made the rally suspect.
Second, the two-week low exception. After taking out the two-week high we took out the two-week low creating a whipsaw trade. . . but notice the two week low also happened to be at the January low . . . so we whipsawed all the bulls who got on board on January 1st. Sorry fellas, but if we are going up . . . it is not easy getting on board. It should be noted ETH failed to take out two week low. . . indicating underlying strength.
But during the selloff bitcoin gained on ETH and all other alts. . . affirming the fundamental situation
Third, the random number indicator 12 hour had a 9, while at the same time we had an outside day trading lower...essentially we had screaming buy indicators.
Fourth, now I am a goat and not a statistician. I know a lot of humans far smarter than me that do scatter studies, computer models, and algorithms (a ten dollar word I have no idea what it means, but part of the current lingo, like white paper) . . . but again KISS . . . keep it simple stupid. I stick with readin, writin, and rythmatic. If you get too anal you get lost in your own shit.
Look, on October 15th bitcoin was $6,700, on November 15th $5,500, on December 15th 3,200. My bet is we finish tomorrow somewhere between the $5,500 and the $3,200. . . my guess $3,800.
The psychology of the market is that a break above the two week high now . . . the previous bulls that got stopped out will be reluctant to follow. Remember the adage if we go up we go up and if we go down we go down. . . but this round it will be difficult for those who got stopped out to step back in.
Further, fundamentally it is likely all sellers are going to be trapped if the selloff to 3,000 was capitulation. For the same reason I was not bearish at 6,000 until late October, I am not bearish at the 3200–3500 area. A move above 6500 now will be like a general reset of the market.
This is not a prediction. . . simply an insight. I do not discount a move under 2,000 anymore than I discount a move above 6,000. . . I haven’t a clue. . . and neither does anyone else.
In line with this thinking, I added to my long at the two week low. I also, contrary to my original intention, added 4 BTC to the account so that I would not get rket unless things really fell apart. Moreover, this is right on the edge of my 5% rule.
It should also be noted that I missed the resting orders I placed on January 13th. However, the 30,000 purchased on January 10th paid great dividends since I collected a premium for being long. Again, this backwardation lends tremendous underlying support in this market.
It is time to be very demanding of this market.
I hope this helps.
UOG
PS: The website is almost ready. Hopefully up and running before the conference. The trading blogs will only be available by subscription but most of my content will remain free. Again, Bitmex shut me down because I am a U.S. citizen. If you like my work please use the following link to trade on Bitmex which belongs to my wife who is a citizen of Mexico. You get a 10% discount and she gets a small referral fee. Unfortunately, I lost all referrals when my account was closed. Thanks, everyone for appreciating this Ugly Old Goat. I do this out of love . . . and truly look forward to writing every article. . . for those who have ears to hear.
