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The Whimper Bitcoin Reversal
A Study of Volatility, Price, and Backwardation
One of my trading mentors Ted Warren taught me a very simple trading principle. Quiet sideways markets are under accumulation. Wide-swinging high-volume markets are in distribution. Nowadays we call it volatility and have all kinds of fancy mechanisms to measure it.
This principle applies to bitcoin and is a powerful tool for analysis in combination with other tools
The above is a must-read for any serious trader. Nothing fancy here, just a humble good old boy with a 6th-grade education whose simple analysis walked all over Wall Street.
Here we will do a cursory study of volatility, price, and backwardation.
I define volatility as the price action relative to the price. There are many ways to calculate volatility, but it is the principle rather than details that is important here. This is what separates analysis from analysis. Ted Warren not only recognized volatility but learned to successfully apply it visually through charts and simple arithmetic calculations.
Looking at a notional bitcoin chart the principle of volatility is readily seen by the wide swings at market tops compared to much more narrow swings at bottoms. The…
