Bitcoin: A "Safe" Bet Now?
Bitcoin pushing highs on the highly anticipated Bitcoin ETF that is set to start trading this coming week? Are you familiar with the old saying "buy the rumor, sell the news"? I think it applies here. In this brief evaluation I am going to outline why current prices are VERY unattractive for new swing trades and investments long while being much more ideal for those who know how to day trade.
At the moment, IF price takes out 62,500 that would be an aggressive buy signal for a swing trade. Why is this a bad idea for swing trades and investments? The RISK is too high. At the moment, 54K is the appropriate risk level based on the strategy that I employ. That means you have to realistically risk 8K points in hopes of a breakout, while going into a "buy the rumor" scenario. Can Bitcoin move 8K points from 62,500 in order to justify the risk? Structure favors bullish continuation, but these are low probability levels in my opinion. In other words, you are not buying a support. Instead you are buying into a location that makes more sense to lock in some profits.
Why is this better for day traders? IF you know how to manage risk on such a time frame, it is within reason to capture smaller bites and participate in the momentum without being exposed to the larger magnitude of risk. While this may sound like a good idea, if you are relatively new, you should NOT day trade. The reason is you will most likely get caught in the broader pullback because of a lack of agility and discipline when it comes to keeping risk under strict control.
So the easier thing to do (which no one wants to hear) is WAIT this out. Do NOT chase it. If you were not willing to take the risk at 40K or 50K, then 60K should be even LESS attractive. When a move is obvious, that means you MISSED it. Also just as an aside, I have noticed billboards in my local area that say "Buy Bitcoin". If that is not a contrarian sign, I don't know what is. The obvious is your enemy in this game.
Thank you for considering my analysis and perspective. I hope you find it helpful.
At the moment, IF price takes out 62,500 that would be an aggressive buy signal for a swing trade. Why is this a bad idea for swing trades and investments? The RISK is too high. At the moment, 54K is the appropriate risk level based on the strategy that I employ. That means you have to realistically risk 8K points in hopes of a breakout, while going into a "buy the rumor" scenario. Can Bitcoin move 8K points from 62,500 in order to justify the risk? Structure favors bullish continuation, but these are low probability levels in my opinion. In other words, you are not buying a support. Instead you are buying into a location that makes more sense to lock in some profits.
Why is this better for day traders? IF you know how to manage risk on such a time frame, it is within reason to capture smaller bites and participate in the momentum without being exposed to the larger magnitude of risk. While this may sound like a good idea, if you are relatively new, you should NOT day trade. The reason is you will most likely get caught in the broader pullback because of a lack of agility and discipline when it comes to keeping risk under strict control.
So the easier thing to do (which no one wants to hear) is WAIT this out. Do NOT chase it. If you were not willing to take the risk at 40K or 50K, then 60K should be even LESS attractive. When a move is obvious, that means you MISSED it. Also just as an aside, I have noticed billboards in my local area that say "Buy Bitcoin". If that is not a contrarian sign, I don't know what is. The obvious is your enemy in this game.
Thank you for considering my analysis and perspective. I hope you find it helpful.
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