Back in the channel

26 июн. 2019 г.

Notice: this is my first post, however, I have been investing in BTC through the good times and the bad. I see a lot of posts suggesting that BTC is going to crash below the yearly low and that makes me nervous. I'll be honest, this current rally makes me nervous. I'm left wondering whether to pull the trigger and take some profits. The rate of price increase is shocking. I actually feel like I'm being shocked with electricity with the constant feelings of fear that it will tank and fear (or greed in this case) that I'll miss out on further gains.

Looking at the chart, the thing that struck me most of all, is that we are only just back inside the historical channel of Bitcoin's price growth. Check it out for yourself - I'm showing a 1 day timeframe for resolution but if you zoom out to 1 week, you'll see the channel. The 3k lows that we experienced were a historical anomaly, which were the result of the bubble created by the 2017 media hype as well as the introduction of CBOE futures. CBOE futures were introduced at the Dec '17 high and seem to have put downward pressure on the price ever since (I tried to post a link to the impact of CBOE on BTC price here but I need more reputation points... Google it).

Now that the effects of futures trading have been eliminated, the price of BTC is allowed to return to it's natural growth. A conspiracy theorist might suggest that the derivatives were used as a tool to push the price down and create the lowest possible point for institutional investors to jump on board. I am not one for conspiracies but I do like to consider possibilities... and it's hard not to get caught up in causation vs correlation debates in this case. Now we have Fidelity providing crypto services to select institutional investors so it's no surprise that the price has been steadily rising with the Fidelity news. We might even speculate that Fidelity's top account holders have been slowly injecting capital into the market since well before the news hit. I can also imagine that they didn't want to inject a boatload of capital all at once; both to manage risk and to give themselves time to build larger positions before the price shoots up. It's my belief that those positions are still growing as the price increases. I believe that Fidelity will continue to open up their crypto trading to more investors as they work through their own learning curve and establish some success stories.

When I called to ask if I could participate in Fidelity's crypto services, they politely declined. I believe in Fidelity. I've used them as a broker ever since graduating from college. I believe that we may be underestimating the impact that the Fidelity news holds. I can imagine that as they offer their services to more and more investors and as those funds come on board, the price of BTC will continue to rise. I also recognize that new money is nervous money and a slide downward can happen just as quickly as a rocket upward.

Believe me, it hurt to see my assets cut in half and I certainly don't want that to happen again. That's why I'm nervous right now. But I also see a lot of things to be excited about. I'm not a sophisticated investor but this experience has taught me a lot. I learned that I should never try to catch a falling knife. I learned to wait for the trend to change before changing my position. I don't need to hit the top or the bottom. I just need to figure out which direction the train is going so I can jump on board. Also: stop-loss is your friend. Margin is not.