If everyone is thinking alike, then somebody isn't thinking.
At a time when news fatigue in crypto has firmly set in and "Crypto traders" are making every case they can for a bullish outcome hopium is at an all time high and "Traders" are smoking the last of their supply. The responsible contrarian within me knows that the best way to prove a bullish outcome is to try and disprove it. We have all seen the countless articles and videos giving the case for a bullish outcome, here are some points to consider for why it may not be so clear cut.
Shorts distribution
No point in delaying the inevitable point someone will make "But the 11k shorts!". To which my response is, so what? How do you know a fiat whale actually at a intended dump... It's speculation, equally I could and will speculate that if I wanted to buy 11k BTC the free market is not where I would do it, OTC is. OTC you get better than market prices, when your order is for 100 mln $ you pay a fee than is much smaller than exchange fees and you dont have to wait around, once a seller is matched with you the deal can be done within a day if all goes well. So to buy 11k BTC on the open market is illogical.
What is far more logical is that a whale wash traded to hedge their bets. What do I mean by this. A whale places an 11k hidden wall with Fiat, they then with their spot holdings lev a 1x short and sell into their hidden wall. By doing this they now effectively have both a 1x long open and a 1x short open the difference is the long wasnt opened on margin so it shows on the L vs S that a fiat whale bought a lev whales dump but in reality the whale may have bought that 11k BTC at 6k and is looking to lock in profits and when you have that much BTC this is the best way to cash out to fiat without trying to find an OTC buyer as not many will want to buy at 7k as opposed to 6k and if you actually tried to sell 11k btc on open market you would cause the crash to 6k, even if sold slowly.
I'm not saying this is what happened, I'm just saying to presume the story that has been run with is ignorant and not the mentality of a good trader.
But that's not it for shorts, not just do I not think the 11k is anything to worry about, I also dont think the other 22k is anything to worry about either, here's why. There's something you need to understand that separates the stock market from the crypto market, the S&P is at ATH's and despite a few recessions over the last few decades it has been in a pretty consistent uptrend.
So when we try and compare an asset that has been in a consistent uptrend and spent most of its time at ATHs due to the never ending supply of new $ being printed against an asset that has spent most of its life in a consistent downtrend with short but violent up-trends which is down 60-70% from its ATH it is an incredibly inaccurate comparison. So to be worried when shorts outpace longs when down 60% is insane, here's why. There are 27k longs at the time of writing this. those 27k longs are in a 7k$ range, no question about it, they physically have to be.
However shorts, shorts have a 14k$ range that they can be in. We dont know where these shorts are but we can use what we do know to understand why 27k longs is a much more concerning worry than 33k shorts. We know 11k longs were taken out at 7200, so this leave us with 22k shorts. we also know from the shorts chart that back in February they hit their ATL of 9k short when the price was 12k. so we know at this time 9k shorts were taken out at or above 12k$. when we take away 9k from our 22k we are left with around 11k in unaccounted shorts.
Now we move to longs, we know that when we broke 6k during the 3 times this year our longs bottomed around 24k meaning that in that 6k$ range there are 24k longs. So I ask you this, are you more concerned about 11k unaccounted shorts from 7-12k or 24k unaccounted shorts from 1k-6k? Because they both lie in the same price range but one is twice the amount of the other... Moral of the story, shorts have a far larger price range to be diluted in, there being more shorts than longs is not a problem when the price has fallen so heavily, if we were at ATH's like the S&P I would be shitting myself but we aren't.
Rising wedge / Bear flag / dead cat on the daily
Right now we are in the middle of what feels like the most common pattern in crypto due to manipulation, a bear flag/ dead cat. If we look at previous crypto dead cat cycles we can see than not one of the 4 previous cycles have gone without at least 2 dead cats on the way down, usually one small one followed by a larger one shortly after.
We saw our small dead cat on the way down during our last cycle however we never saw our large dead cat, or did we?
Descending triangle on daily bearish,
People seem to care about ascending triangles but never descending despite them having a 72.93% success rate (one of the highest of any pattern in TA) I will admit that the 50% that BTC is charting that it should fall on the break from the base line is ambitious to say the least ( I would put our bearish outcome bottom at 3500) however irregardless of whether it falls to 6k, 5k, 4k or indeed all the way to under 3k, those are all south of the over 7300 we are on at the time of writing this. Let's not ignore the patterns that dont suit our beliefs. Ultimately longer term time frames always give us a clearer more accurate picture of the future a head as the remove the noise of short term volatility and there is no pattern playing out on a longer term time frame than this. Dont give into conformation bias.
RSI over bought
The mother off all indicators, I dont know a single trader who doesnt at least look at the RSI irrespective of whether or not you use it. The fact is simple, the RSI is either overbought or nearing it on the 1hr, 4hr and daily. This is very bearish. We have seen during our recent bear market the daily RSI really struggling to get into overbought conditions having only achieved it once this year during the initial CBOE ETF speculation run. I do acknowledge RSI divergence on the daily which is a great sign we are nearing the end but certainly not one to say we are at the end.
ETF rejection highly probable for 3 etfs this month alone.
It is what it says on the tin, Bitwise, Direxion, CBOE, all this month. They all suffer from the same flaw, manipulation. As someone who is a registered trader and has worked at 2 incredibly large investment banks as a analyst in the past, to be blunt, that shits not getting approved. Bitwise and Direxion both have the same proposal as previously rejected applications and CBOE while you may initially think because their index price is based on a OTC ticker that would resolve the SEC's concerns, how do you think the come to that OTC price? If the free market goes to 20k they arent going to be OTCing BTC for 7k still lol
Weekly vol decreasing again, this should not be the case on building anticipation:
If this is the start of the next bull run to 20-50-100k, where's the vol? Decreasing from the pump we saw 3 weeks ago. That's not bullish friends. If we cant make a higher high how do you think we are going to reach ATH
No flat accumulation period yet.
All markets from commodity's to stocks to Forex experience an accumulation zone where the market bottoms, even BTC had this period which lasted 9 months on its own. If we examine the 2014/15 correction even further we spent 14 months in a down trend before bottoming and entering this accumulation zone, so far we are 10 months into our current downtrend. I would suspect in the event all ETF's are delayed or rejected we will see this bottom in the first half of October before slow assent to an inevitable higher high which will get a lot of buyers interested.
But who's left to sell to cause this downside?
I think it's best we start here. 111k BTC from silk road was transferred to multiple exchanges a matter of days ago after over 4 years of inactivity.. I'm sure he's just looking to buy some cheap hot alts though... Yes that was a joke..
reddit.com/r/Bitcoin/comments/9bwsaf/investigating_the_1b_bitcoins_on_the_move_from_a/
Next, everyone saw the suspension of Mt. gox's selling as a bullish sign and sure short term it was but what do you really think is going to happen to those 100k+ coins when the get released? You really believe everyone is going to hodl?
There are still a lot of hodlers left to sell.
Conclusion
Maybes I am totally wrong and we are all headed to lamboland... All I'm saying is just because you are sick of us being in a bear market doesnt mean it's over. There's an argument to be made for both sides.
Shorts distribution
No point in delaying the inevitable point someone will make "But the 11k shorts!". To which my response is, so what? How do you know a fiat whale actually at a intended dump... It's speculation, equally I could and will speculate that if I wanted to buy 11k BTC the free market is not where I would do it, OTC is. OTC you get better than market prices, when your order is for 100 mln $ you pay a fee than is much smaller than exchange fees and you dont have to wait around, once a seller is matched with you the deal can be done within a day if all goes well. So to buy 11k BTC on the open market is illogical.
What is far more logical is that a whale wash traded to hedge their bets. What do I mean by this. A whale places an 11k hidden wall with Fiat, they then with their spot holdings lev a 1x short and sell into their hidden wall. By doing this they now effectively have both a 1x long open and a 1x short open the difference is the long wasnt opened on margin so it shows on the L vs S that a fiat whale bought a lev whales dump but in reality the whale may have bought that 11k BTC at 6k and is looking to lock in profits and when you have that much BTC this is the best way to cash out to fiat without trying to find an OTC buyer as not many will want to buy at 7k as opposed to 6k and if you actually tried to sell 11k btc on open market you would cause the crash to 6k, even if sold slowly.
I'm not saying this is what happened, I'm just saying to presume the story that has been run with is ignorant and not the mentality of a good trader.
But that's not it for shorts, not just do I not think the 11k is anything to worry about, I also dont think the other 22k is anything to worry about either, here's why. There's something you need to understand that separates the stock market from the crypto market, the S&P is at ATH's and despite a few recessions over the last few decades it has been in a pretty consistent uptrend.
So when we try and compare an asset that has been in a consistent uptrend and spent most of its time at ATHs due to the never ending supply of new $ being printed against an asset that has spent most of its life in a consistent downtrend with short but violent up-trends which is down 60-70% from its ATH it is an incredibly inaccurate comparison. So to be worried when shorts outpace longs when down 60% is insane, here's why. There are 27k longs at the time of writing this. those 27k longs are in a 7k$ range, no question about it, they physically have to be.
However shorts, shorts have a 14k$ range that they can be in. We dont know where these shorts are but we can use what we do know to understand why 27k longs is a much more concerning worry than 33k shorts. We know 11k longs were taken out at 7200, so this leave us with 22k shorts. we also know from the shorts chart that back in February they hit their ATL of 9k short when the price was 12k. so we know at this time 9k shorts were taken out at or above 12k$. when we take away 9k from our 22k we are left with around 11k in unaccounted shorts.
Now we move to longs, we know that when we broke 6k during the 3 times this year our longs bottomed around 24k meaning that in that 6k$ range there are 24k longs. So I ask you this, are you more concerned about 11k unaccounted shorts from 7-12k or 24k unaccounted shorts from 1k-6k? Because they both lie in the same price range but one is twice the amount of the other... Moral of the story, shorts have a far larger price range to be diluted in, there being more shorts than longs is not a problem when the price has fallen so heavily, if we were at ATH's like the S&P I would be shitting myself but we aren't.
Rising wedge / Bear flag / dead cat on the daily
Right now we are in the middle of what feels like the most common pattern in crypto due to manipulation, a bear flag/ dead cat. If we look at previous crypto dead cat cycles we can see than not one of the 4 previous cycles have gone without at least 2 dead cats on the way down, usually one small one followed by a larger one shortly after.
We saw our small dead cat on the way down during our last cycle however we never saw our large dead cat, or did we?
Descending triangle on daily bearish,
People seem to care about ascending triangles but never descending despite them having a 72.93% success rate (one of the highest of any pattern in TA) I will admit that the 50% that BTC is charting that it should fall on the break from the base line is ambitious to say the least ( I would put our bearish outcome bottom at 3500) however irregardless of whether it falls to 6k, 5k, 4k or indeed all the way to under 3k, those are all south of the over 7300 we are on at the time of writing this. Let's not ignore the patterns that dont suit our beliefs. Ultimately longer term time frames always give us a clearer more accurate picture of the future a head as the remove the noise of short term volatility and there is no pattern playing out on a longer term time frame than this. Dont give into conformation bias.
RSI over bought
The mother off all indicators, I dont know a single trader who doesnt at least look at the RSI irrespective of whether or not you use it. The fact is simple, the RSI is either overbought or nearing it on the 1hr, 4hr and daily. This is very bearish. We have seen during our recent bear market the daily RSI really struggling to get into overbought conditions having only achieved it once this year during the initial CBOE ETF speculation run. I do acknowledge RSI divergence on the daily which is a great sign we are nearing the end but certainly not one to say we are at the end.
ETF rejection highly probable for 3 etfs this month alone.
It is what it says on the tin, Bitwise, Direxion, CBOE, all this month. They all suffer from the same flaw, manipulation. As someone who is a registered trader and has worked at 2 incredibly large investment banks as a analyst in the past, to be blunt, that shits not getting approved. Bitwise and Direxion both have the same proposal as previously rejected applications and CBOE while you may initially think because their index price is based on a OTC ticker that would resolve the SEC's concerns, how do you think the come to that OTC price? If the free market goes to 20k they arent going to be OTCing BTC for 7k still lol
Weekly vol decreasing again, this should not be the case on building anticipation:
If this is the start of the next bull run to 20-50-100k, where's the vol? Decreasing from the pump we saw 3 weeks ago. That's not bullish friends. If we cant make a higher high how do you think we are going to reach ATH
No flat accumulation period yet.
All markets from commodity's to stocks to Forex experience an accumulation zone where the market bottoms, even BTC had this period which lasted 9 months on its own. If we examine the 2014/15 correction even further we spent 14 months in a down trend before bottoming and entering this accumulation zone, so far we are 10 months into our current downtrend. I would suspect in the event all ETF's are delayed or rejected we will see this bottom in the first half of October before slow assent to an inevitable higher high which will get a lot of buyers interested.
But who's left to sell to cause this downside?
I think it's best we start here. 111k BTC from silk road was transferred to multiple exchanges a matter of days ago after over 4 years of inactivity.. I'm sure he's just looking to buy some cheap hot alts though... Yes that was a joke..
reddit.com/r/Bitcoin/comments/9bwsaf/investigating_the_1b_bitcoins_on_the_move_from_a/
Next, everyone saw the suspension of Mt. gox's selling as a bullish sign and sure short term it was but what do you really think is going to happen to those 100k+ coins when the get released? You really believe everyone is going to hodl?
There are still a lot of hodlers left to sell.
Conclusion
Maybes I am totally wrong and we are all headed to lamboland... All I'm saying is just because you are sick of us being in a bear market doesnt mean it's over. There's an argument to be made for both sides.
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