The sentiment is generally bullish when bitcoin moves $500 -$1000 up. Who is buying? Your uber-driver, your coworker, your therapist, your sugardaddy. What they all have in common? They cannot read charts, can’t see exhaustion and overextensions from the mean. I don’t blame them either. Trading is a expensive profession, eats up capital and time.
The statistics speak for themselves. The skewness suggest a extreme bias towards blasting moonboys.
We haven’t seen capitulation yet, especially with memes like stock2flow ratio, halving meme. Bitcoin is contrarian, it goes against mass-sentiment. There are still bulls left that need to be killed. 90% of the liquidations in 2018 and 2019 came from long-positions. This bullish bias isn’t healthy for bitcoin. I believe in the pareto principle, the concept that 20% of the market moves 80% of the volume. And they are shorting the fuck outta bitcoin. Trapping Moonboys with high leverage and slowly bleeding them to ……..
This isn’t a opinion either. The big PumpAndDump funds like FBG capital (who admitted the PumpAndDump campaigns on Forbes) are now buying equity in HighFrequencyTrading Firms like wintermute , in a space unregulated with zero morality anything goes. Spoofing, momentum ignitions, narrative manipulation, front-running.
The big VC’s killed the ICO, IEO market and now they after Bitcoin.
Binance made a fortune, peddling shitcoins, peddling ico tokens that racket collapsed in late 2018 then they came up with IEO’s that racket collapsed again in late 2019 now they are in the margin–trading business aka liquidating highly leveraged moonboys.
How I trade against the herd. If you regularly read my post you already know. And no, it’s not easy. Counter-trading in strong trending markets its difficult, the difficulty lies in position-sizing and estimating the over-extension. The idea is to short over-extensions at standard deviation 2-3 and keep adding ”sell orders” till the trend exhaust and returns back to the mean. I don’t have infinite capital. Position sizing, spread, quantity is important.
I trade mean reversions. How market makers balance out overextensions from the mean is how I trade. I trade like how meanreversion market-makers market make. It comes down to the theory that prices will eventually return to the average either naturally or by force.
Shorting Outer- Deviations
How do I know, price won’t breakout blast through resistance to $9000 when I am shorting overextensions at standard deviation 2-3 on the 15min? The answer = multiple timeframe analysis.
What happens when bollinger bands contract and squeeze? It implies that a explosive move is coming, a period of high-volatility is about to be unleashed. As general rule : Lower TimeFrames 15-minutes – 1Hour produce smaller moves. Higher-TimeFrames produce bigger moves.
When bollinger bands squeeze and contract, it signifies a period of low-volatility. Low volatility are followed by periods of high volatility.
What is low volatility? Low volatility means the supply is meeting demand – supply-demand balance. price trading sideways.
What is high volatility? supply-demand imbalance, supply greater than demand or demand greater than supply – price is trending.
Standard deviations measure the volatility. The width of the bollingerbands represent standard deviations from the mean.
If bollingerbands on 15 min contract and squeeze. Breakouts on smaller timeframes like 15 min are generally contained within the outerbands of the 1hour bolllinger band or the 20 Moving Average.