Bitcoin: Coin Flip?

13 มี.ค. 2022

Bitcoin is gyrating around the mid point of the 35K to 45K range. Mid points of consolidations are the MOST random areas which means price action, price patterns, candle sticks, etc. carry very little weight. The more effective thing to do in these situations is WAIT for a specific level or price location before assuming any risk. Reacting to price movements, especially around a mid point will produce the same results as flipping a coin.

The current support is 35K. This is the location where buying activity has proven to appear previously. While that does not guarantee that it will hold again, IF a reversal appears in that specific area, it may be worth assuming the risk for a new swing trade long. Keep in mind the mid term trend does not favor longs. With a lower high established at 45K, price is not likely to go very far on any rally attempts. This means if a swing trade is taken, price targets should be very conservative. A reward/risk of 1:1 would be an acceptable max profit.

The current resistance is 42 to 45K. This is a LOWER high within the mid term trend. This means a LOWER LOW is likely to follow UNTIL this level is taken out. I can't place a specific probability on that idea but I would argue it is at least greater than 50% because of the structure has has proven to be within. How to use this information? IF price tests the low 40Ks and produces a sell signal, it is within reason to take risk on the short side. I don't short Bitcoin so this is not a choice for me, but those who are open to the idea, that is the location to wait for. Otherwise the risk is TOO HIGH for shorts at the current level.

Retail traders are continuously mislead to believe that being a "trader" or "investor" involves participating in a game of skill. A game of skill is when a participant has control over the outcome of the game. While its certainly a romantic and compelling idea, it is FAR from true. IF timing markets was more of a game of skill, then a positive correlation should exist between experience and positive returns. For example, the more time you invest in "learning" how charts work, or about news, or other market "relevant" information, the more consistent you should become at producing a positive return or beating the S&P over time. So based on this idea, a total beginner with absolutely no experience should not be able to make any money at all while a novice with a couple of years of experience (most fake gurus) should be able to produce some kind of consistent return (and prove it), while someone with many years of experience should be outperforming the S&P easily. As most of you should know, it doesn't work this way at all. So what does that tell you?

Chess is a game of skill. Timing markets is a game of chance AND a game of skill, LIKE POKER. This is why a novice can win (randomly) while an expert can just as easily lose. Combine a game of chance with the flaws of human bias, and you have a situation where random results will often reinforce ineffective behaviors or "bad habits" such as "hoping" a position back into the green. Now you know why everyone is a genius in a bull market.

There is a skill to timing markets, but it is not what you would expect or what the industry leads you to believe. The skill is NOT being able to interpret an oscillator (OLD information), or reacting to news (gap and go anyone?). The skill is in identifying, managing and adjusting to RISK, NOT maxing profits. This all begins with accepting that NO ONE KNOWS ANYTHING and that price action is RANDOM most of the time. Until you accept that, your results will be the same as flipping a coin or playing a slot machine.

If you are serious about improving your timing, place more emphasis on price locations, and assess risk from there. For Bitcoin that's the 35K support or the 42 to 45K resistance zone.

Thank you for considering my analysis and perspective. I hope you find it helpful.