Some more risk averse members may choose to take partial profits in GBTC after its two-day surge.
Others who wish to ride out the volatility may wish to keep a core position.
GBTC tends to overshoot the actual gains and losses in bitcoin itself by a considerable margin.
The log plot above shows that bitcoin could get to at least 1400 which would be roughly a 2-fold move from its recent breakout.
Note how GBTC also loses more than bitcoin itself when it corrects. A linear plot visually exaggerates the drops:
So a trader has a few choices on how to trade GBTC:
1) Hold for the long haul given bitcoin's fundamentals. CME's decision to allow bitcoin futures will push immense amounts of trading capital into bitcoin which should be yet another tailwind for bitcoin. Keep in mind that bitcoin has had a number of corrections since 2009 that exceed -75%, and two corrections both at -94%. Yet even with such massive crashes, it has still managed to go from $1 in 2009 to about $6.6 million today. It speaks to the exponential power of the decentralized, network effect. Further, if bitcoin were not legitimate, it would have already gone to zero. When valueless schemes have massive corrections, they always go to zero. They never resuscitate and move to new highs.
2) Trade around a core position, selling into climax tops. We will alert members to such moves should they occur. In the current uptrend, such a climax top probably would not appear until GBTC at least doubled from its breakout point of roughly 700.
3) Take profits when you have them in line with your risk tolerance levels, then redeploy capital when GBTC offers a new entry point, perhaps in a number of weeks.
Pocket Pivot Review - GBTC Update 11-1-17
|Published:||1 Nov 2017 15:09 ET|
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2019 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.