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Pocket Pivot Review - GBTC Update 11-1-17

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.
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