What goes up must come down (for now)… Trading Crypto with Eugene


The scores are out: Bears 1 – Bulls 0 in the past 24 hours. BTC slumped below $9k for the first time in more than a week after having failed to break out from it’s trendline resistance $9.8k region. Not helping matters as risk assets tumbled with US-China tensions rising with China announcing dramatic plans for a new Hong Kong security law and oil slumped 7% overnight.

Miners continued to be sellers this week after halving while retail and regulated capital/funds have been buying with what I suspect funds taking profit on their short-term holdings. Most have argued that the hashrate declined around 25% since halving due to miners dropping out. But what has really happened is that most fringer miners have already capitulated during the 12 March crash and besides, the latest machines have a breakeven cost of around $2,500 for $0.03kWh. Even the S9 machines have a b/e cost of $7,000. So I actually think the other underlying factor is that the rainy season is expected to be drier this time; and as a result, mining farms in Southwest of China wouldn’t be able to switch them on. 

Strategy? Scenario 1 played out from my previous daily update as I advise to be patient for a breakout. To put things into perspective, Bitcoin has rallied close to 50% from last month. So I think absent any imminent near-term catalysts, we’re likely sliding towards the $8 to $7k region, with a risk of even seeing $6+k. Those areas will be great levels to start accumulating for the long term. Over the next few days, I’ll be a seller on any major uptick towards $9.6k, and will be executing via futures or selling BTC calls. Gdluck and have a great weekend with your family. 

If 8k can’t hold, we are likely to test $7k. I am going to watch really closely how BTC trades at these critical support levels. If there are signs of stability, be quick to start accumulating

Will the naughty bears try to break the $8,8k handle today? If they do, expect to see some sharp moves lower…. open interest continues to stay relatively high which means there could be some pain further if we head lower… The pain trade is starting to feel like a lower BTC price…

Put/Call ratio hitting an almost yearly high, and open interest picking up from yesterday, is the market hedging for lower move in the short term? Quite a contrasting picture when you look at CME BTC options; where the P/C is lower… 


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